Thank you for standing by. My name is Tina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Stride Second Quarter Fiscal Year 2026 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. To ask a question, simply press star on your telephone keypad. To withdraw your question, press star 1 again. It is now my pleasure to turn the call over to Tim Casey, Vice President of Investor Relations. You may begin.

Thank you, and good afternoon. Welcome to Stride's second quarter earnings call for fiscal year 2026. With me on today's call are James Rue, Chief Executive Officer, and Donna Blackman, Chief Financial Officer. As a reminder, today's conference call and webcasts are accompanied by a presentation that can be found on the Stride Investor Relations website. Please be advised that today's discussion of our financial results may include certain non-GAAP financial measures. A reconciliation of these measures is provided in the earnings release issued this afternoon and can also be found on our investor relations website. In addition to historical information, this call will also involve forward-looking statements. The company's actual results could differ materially from any forward-looking statements due to several important factors as described in the company's earnings release and latest SEC filings, including our most recent annual report on Form 10-K and subsequent filings. These statements are made on the basis of our views and assumptions regarding future events and business performance at the time we make them, and the company assumes no obligation to update any forward-looking statements. Following our prepared remarks, we will answer any questions you may have. Now, I'll turn the call over to James.

Thanks, Tim, and good afternoon, everyone. I'd like to begin our call today by providing an update on the platform issues we discussed last quarter. I think the bottom line is that we've executed on our plan and the core issues are behind Our focus now is to drive ongoing improvements that continue to enhance the customer experience. We will continue to build on the progress that we have made so far, and insofar as possible, we will work to find proprietary solutions in order to maintain more control of the user experience. I'm confident we will not have a recurrence of these issues in the upcoming season. In addition to the stabilization of our platforms, we also saw continued strength in demand for our products and resiliency in our existing enrollments. The trends that have driven our strong enrollment growth over the last few years remain. Families continue to seek alternatives to the traditional model of education to address their specific needs. So we were able to take advantage of the strong demand in applications to backfill much of our attrition during the quarter and end the quarter basically flat with the prior quarter. Our goal this year is stability and not growth, so that's what we prioritized. Now, there were still some uncertainties as we headed into this quarter. Most notably, our withdrawal trends shape up as we started the second semester. I'm pleased to share that so far, second semester withdrawal rates are within historical norms. Now, I'd like to circle back and discuss our approach to rolling out new platforms and why it is strategically important to us to make these investments. We operated a proprietary set of legacy platforms that were over 20 years old and had a lot of technical debt and were not going to scale with the business as we needed them to. So we went to the market to get what we believe and what the market has confirmed our market-leading platforms to replace our outdated ones. That thesis still holds true. However, we also want to ensure that we don't place too much reliance on third parties. So as part of our roadmap, we are working with our platform partners to build an architecture where we also have a degree of influence and control over our own destiny. This will be an evolving ecosystem which prioritizes our customer needs. and we are investing now to ensure we have plans in place to be able to move forward productively either way. We are confident the primary issues from this fall are behind us. The primary evidence we can point to are the reduction in the number and types of calls to our customer support center. As an example, after we addressed a significant login issue a couple of months ago, call volumes dropped over 90% week over week. Qualitatively, we've also seen a significant decline in the commentary on social media discussing the challenges students are facing on the platform. Thankfully, the families in our community are resilient and our teachers and school staff are superheroes. We continue to be in contact with them and solicit feedback as we roll out new improvements. And given the trends we are seeing in demand, withdrawals, and customer experience, we believe we are well positioned for a return to our expected growth patterns next year. I want to thank all the Stride employees and school staff who spent the last quarter moving us forward and toward our end goal of delivering results and the experience we can all be proud of. With that, I'll turn the call over to Donna. We'll talk more about our financial results. Donna?

Thank you, James, and good afternoon. Our employees and school staff continue to work hard to meet the needs and improve the experience of the families we serve and we continue to see strong demand for our core offerings as families seek us out for educational alternatives our results this quarter reflect that continued demand some highlights from our quarterly results revenue of 631.3 million dollars up nearly eight percent from the second quarter of fiscal year 2025 adjusted operating income of 159 million dollars of 23.4 million dollars of 17 percent from last year adjusted eps of two dollars and fifty cents up 13 cents from last year adjusted evita of 188.1 million dollars up 17 percent and capital expenditures of 16 million dollars up from fourteen point eight million dollars last year as a result of the continued demand for our offerings and the stabilization of our straws our total enrollments for the second quarter were 248.5 thousand up 7.8 percent from last year and up slightly from the first quarter Revenue in our career-learning middle and high school programs grew 29% to $275.6 million, driven by enrollment growth of 17.6% year over year. General education revenue declined 3.6% to $341.4 million compared to last year. Average enrollments were up slightly from last year to $137,000, the revenue per enrollment was down 3.6%, largely due to MIX. Total revenue per enrollment across both lines of revenue were $2,437, up 1.8% from last year. As we mentioned last quarter, we are generally seeing a positive state funding environment. However, we still anticipate some impacts from state and program mix and timing, So, we expect to finish the year flattish to last year. Gross margins for the quarter were 41.1%, up 30 basis points from last year. During the quarter, we recognized a gain related to a non-core business. We were able to reach an agreement to exit a long-term commitment in that business, which positively impacted gross margins. As I mentioned on the call in October, we will continue to see additional expenses related to the platform implementation throughout the rest of the year and we now expect full year gross margin to be similar to fy 2024. selling general and administrative expenses total 112.8 million dollars down nearly two percent from last year we saw some benefits from the continued right sizing of our adult learning business and we also pulled back our marketing spend during the quarter Stock-based compensation for the quarter was $10.3 million, an increase of $2.4 million compared to last year. We expect to see stock-based compensation in the range of $41 to $43 million for the full year. Now, turning to our balance sheet cash flow, capital expenditures in the quarter were $16 million. Free cash flow, defined as cash from operations less capex, for $75.9 million, compared to $208.6 million last year. Cash flow during the quarter was impacted by the timing of some payments, specifically a large receivable we typically get in Q2 or push to Q3. We don't think there's any risk for this payment. Rather, it's a timing issue between quarters. We finished the quarter with cash, cash equivalents, and marketable securities of 676 million dollars as in past years we expect to see positive free cash flow for the balance of the year in november our board authorized the repurchase of up to 500 million dollars in shares the authorization allows us to purchase shares through october 31st 2026. during the second quarter we purchased 88.6 million dollars in shares even with this authorization we will continue to consider our best use of cash and our capital allocation priorities remain unchanged. We will continue to balance investments in organic growth and potential M&A transactions with our share repurchases. As we've said in the past, our strong balance sheet enables us to maintain financial flexibility. Now turning to our guidance, as James mentioned, we are seeing positive trends in demand. and overall customer experience, and we are reaffirming our full-year revenue guidance of $2.480 to $2.555 billion. Given this year's trends, I want to provide a little more commentary on seasonality. Over the past few years, we've seen the second-half revenues weighted towards the fourth quarter. This year, our quarterly enrollment trends are slightly different, And therefore, we believe that the third and fourth quarter revenues will be more evenly split. Also, it's important to remember that many schools start closing enrollment for the school year in the third quarter. So even with the demand remaining strong, we still expect our third quarter average enrollment to be similar to the first and second quarters. Historically, we have seen seasonal decline in enrollments during the fourth quarter and we expect comparable trends this year. Now returning to our guidance. We expect adjusted operating income between $485 and $505 million, up from our prior guidance of $475 to $500 million. dollars capital expenditures between 70 and 80 million dollars unchanged from our prior guidance and an effective tax rate between 24 and 25 percent also unchanged for the third quarter of 2026 we expect revenue in the range of 615 to 645 million dollars adjusted operating income between 130 and 140 million and capital expenditures between 16 and 21 million dollars We feel confident that the biggest challenges to our tech implementation are behind us. We still have work to do, but we believe we are well positioned to see continued long-term growth based upon the strong demands we see for our offerings. Given this, we believe we remain on track to achieve our FY2028 financial goals. These goals allow us to continue to appropriately invest in the business to ensure that we are set up for long-term success. Thank you for your time today. Now I'll turn the call back to the operator for questions.

Operator? At this time, I would like to remind everyone to ask a question. Press star 1 on your telephone keypad. Again, that is star 1 on your telephone keypad to ask a question. And our first question comes from the line of Alex Paris with Barrington Research. Please go ahead.

Congratulations on an outstanding quarter. What a difference. Three months makes. So we've got a couple questions. I'm going to start with enrollment. Enrollment was certainly in line with your guidance and a little bit better than consensus expectations as you offset elevated attrition by in-year enrollment. I just wanted to get a point of clarification. James, you said withdrawal trends in the second quarter are within historical norms. So have we returned to a more normal attrition rather than the elevated attrition we talked about last quarter?

Yeah. So just to be 100% clear, we are, you know, three and a half weeks, I guess, into this month. And so, you know, there's not yet a full quarter of data. So I don't want to say, you know, the quarter, but, yeah, we, in the January month to date, which is where we actually had, I think, the sort of, that sort of second semester risk potential where, you know, a lot of withdrawals would happen for the second semester, we saw withdrawal rates return to normal levels, which was very good news for us.

Yeah, absolutely good news. All right. And then demand, both you and Donna said demand continues to be robust as measured by applications, I'm assuming. Any degradation or any increase or just continued strong? How would you characterize that or just a little additional color would be helpful?

Yeah, I think you're right. Sorry if I didn't clarify. We measure demand through application volumes, and demand continues to be strong. Last year was by far a record-breaking year, and we're seeing volumes that are similar to last year. So, you know, and I would say for a little bit of context, this is we're seeing very strong demand volumes at a time where we're not as aggressively in market either trying to acquire enrollments. You know, so that really speaks to a little bit of the strength of the organic demand that we see for our programs, which is also, I think, long term good news.

Absolutely. And then the last question I'm going to ask, and then I'll get back in the queue. I just, so really great news to see that attrition has sort of stabilized and is back to a more normalized level. I get it that we're early in the second semester here. I had a question about school or program relations since this summer. Obviously, this was unexpected, not only for investors, but also for those who run, those who are in charge of the programs that you run. What are you hearing from your schools, the boards of trustees of the schools, with regard to the issues that you faced and the remediation efforts that you have embarked on so far? And what have you done to be in front of these clients? And, you know, any additional color there would be helpful.

Yeah, it's actually a great question. I think the first thing I would say is that we have just really fantastic partners. I think most people know that we have basically two categories of partners. We have these independent charter school board partners, and then we have these districts, which are brick-and-mortar school districts predominantly, And they partner with us to offer this full time offering, a full time online offering, you know, and I'll say, you know, when you have a failure in your system somewhere where your partners are relying on you, I think it's natural for your partners to be frustrated and upset. And and I wouldn't expect anything different. I think the thing that I see, and we actually had late in the fall after we announced this, we actually had a summit for our partners. We'll bring all our partners into the office here. And I think that I see is that our partners understand and recognize, by and large, not that they don't have frustration. They understand that we have shared mission. And I think that shared mission gives us a common sense of purpose. And that common sense of purpose allows us to work through these issues together. And, you know, and I think it's really productive. Again, that doesn't say that some of our partners aren't frustrated. Of course, they're frustrated on behalf of our clients, just as we are. And I think I understand and appreciate the frustrations they have. But we had a record turnout here for our summit. I was able to personally speak to a lot of our partners. A lot of our partners, you know, expressed a lot of faith in our ability to turn this around. So we're just very appreciative of the partners that we have. I think in a different situation, our partners, you know, could have reacted differently. I think they stay the course. They understand we have common mission. And I think it's been very productive.

great that was great color i really appreciate it as i said i'll get in the queue our next

question is from greg parish with morgan stanley please go ahead hey good evening um hey james

donna thanks for taking our question and congrats on the stabilization here in the quarter i want to double click on the potential for in-year enrollment growth in third quarter because I mean it sounds like the core platform challenges are behind you withdrawal rates are within historical norms and demand is still strong so not really understanding why you wouldn't grow um you grew 10,000 students sequentially last year so um and maybe you're taking across this approach just given you know the last few months or maybe there's something else to call out but I just wanted to help understand that.

Yeah, I mean, I guess I would, first of all, I would really caution investors or analysts to get maybe ahead of themselves here. And I think the answer is actually really a follow-up to the last question that Alex asked with our partners. uh we just think it's prudent and i think our partners think it's prudent to give ourselves time to settle in here for this year and um you know could in theory do we see demand trends that theoretically could allow for growth probably yeah um do we think it's the right thing to do i don't think so and when you go through a tough few months like we have putting your foot back on the gas i think just it sends the wrong signal all around to our partners internally uh you know to our employees and so uh it's just not the right thing to do long term for our business so it's not what we're going to do um it has it has really no correlation to the demand or the withdrawal characteristics it has to do with setting ourselves up for long-term success and that's sort of the decision that we've made and

what's sort of the decision we're going to stick with yeah okay so that's fair and helpful so i mean is the right way to think about it that i mean you're going to potentially turn some students away here and say hey we don't have capacity because we're sort of ingesting where we're at is that one way to think about it uh every year by the way for a host of reasons

um we do not have enough capacity for the demand not say every year every year the past few years for certain for sure um for a whole host of reasons sometimes it's because we have caps sometimes it's because um we don't have just enough uh uh you know whether it's uh teacher capacity or whatever the reason our partners um want to uh cut enrollments off at a certain date Whatever the reason, we always deal with this. We deal with it at different orders of magnitude. As I think Donna mentioned, during this semester, in a normal year, enrollment windows will be closing anyway. So anybody who's applying after the enrollment window gets turned away. So, again, this is not an unusual circumstance from that perspective. It's, you know, we have people who essentially get put on a wait list or get deferred. We often encourage our families to apply for the fall. We help them do that. So it's not an unusual situation for us. It's a situation I think we'll manage and handle very well. I think the good news is that the demand for our products and services continues to outstrip the capacity and supply that we have. And as long as that continues into the future, I think we're set up well. I think also the overall trends, forget about just the demand and applications that we're seeing. I think we continue to see the overall macro trends for our business for alternative forms of education continue to grow. And I think, again, long-term, that bodes well for our business. I think we've got to be really careful not to make short-sighted, short-term decisions. I think we're trying to do things that will build value for our customers over the long-term. And so I just don't think it's that unusual of a situation that we're in. And I think that we know how to manage through it.

Okay, that's a very helpful caller. And maybe just a couple more cleanup questions for me. On the revenue per enrollment, and I'm sorry, maybe this is a little messy, but I know it can be noisy as you accrue through the year, but, you know, the gen ed revenue per enrollment down four, I think you called out mixed on a career learning up 10. Maybe just help us unpack there if there's anything sort of one time or how to think about why those moved so much.

Yeah, Alex, and part of the reason why I've sort of been sort of focused on the combined revenue per enrollment is because the revenue per enrollment between Gen Ed and career, as well as the enrollment between Gen Ed and career, could get a little bit wonky, right? And so as we, when we typically talk about mixed, we think about it from a state perspective, but there's also a mix between Gen Ed and career, right? So as we think about how we do the forecasting of our enrollments, and if we forecast our enrollments with an assumption for Gen Ed, and we have more careers and we have Gen Ed or vice versa, we still have to do a true adjustment, right? It doesn't impact the full year, it doesn't impact the total number, but it could impact the variance between Gen Ed or career. So it gets a little bit wonky. And so overall, the impact of our revenue per enrollment for the year, as I said, will be flat. The impact of the revenue per enrollment for, you know, for the quarter, I would sort of focus on the total as opposed to the difference between gen ed and careers. It's really, as I pointed out in my prepared remarks, about state mix and also about program mix. When I say program mix, I mean between gen ed and career and also some timing as well.

Okay, that's helpful. I mean, just a last sort of model cleanup question for me. I think you called out some long-term agreement adjustment that benefited gross margin. And I'm sorry if I missed it, but can you size that at all? I don't know if either in dollars or what sort of gross margin would have been excluding that impact, any way for us to think about it?

Yeah, the total amount, it's really, you may recall when we purchased our boot camp business, we purchased a community business, which is sort of a business where you can lease space And so it was not core to our business. And so that business, we have been sort of talking about trying to get rid of that business. We've had some success over the years in getting rid of small parts of it. We were able to negotiate and get out of one of the larger leases that was set to expire in 2030. The impact on the gross margins in Q2 was roughly around 200 basis points.

Okay, and that doesn't sound one time then, right, because you got out of that lease, so that should come out of your cost based on a go-forward basis? Yeah, right.

So now we will no longer have that lease expense that we would have otherwise had through 2030.

Okay, perfect. Thanks so much.

Our next question comes from the line of Jason Kilchin with Canaccord Genuity. Please go ahead.

Good afternoon, and thanks for taking my questions. And just to go back a little bit to Q2, I was hoping maybe we could unpack the overall enrollment growth. You mentioned sort of increased about 800 students sequentially. Can you just talk about the level of growth ads and withdrawals relative to a typical Q2 that you saw and maybe a little bit more color you can share on what some of the conversations were that you had with some of the families who are experiencing some of these issues? That'd be very helpful.

yeah um so we don't really disclose uh specific withdrawal volumes and things like that and so um you know i i think what i would just say that um you know with demand being as strong as it is we were able to to backfill you know i think pretty effectively uh and that's a good thing Um, you know, I think when we talk to the families and, uh, you know, it's, um, uh, it's really actually pretty amazing how resilient the families themselves are because, uh, you know, and I've had a chance to talk to a number of families myself personally. And the sentiment tends to be, you know, I need this alternative. And, you know, basically, I'm willing to grit and bear some of the pain, if you will, because of how important this alternative is to me and my family. And that's a pretty, I find, eye-opening testament to how important, I think, structurally these types of programs are, you know, within our society. And, you know, obviously, particularly in the earlier days of the fall, the user experience, you know, was difficult for a lot of families. And for as many families as we saw really grit through it with us, it's a real testament to their resiliency and I think a real testament to the need for some of these alternative programs that we operate. And, you know, so I think the conversations are never easy. You know, when you're disappointing a customer, the conversation is never easy. You know, and I can just, you know, I don't know that I had a statistically significant number of conversations where I can say that, you know, it was representative, but I think the numbers sort of bear it out that, you know, you don't have this many families persist in a program that had some, you know, technical glitches for this long if they're not really resilient and if the alternative program isn't that important to them. So I think that's sort of the message.

Okay, really, really helpful. And then just in terms of the sort of the operational performance of the platform today, sort of relative to historical normal operations, can you just give us a little bit of context about how things are performing, if there are still any issues that are in the process of being resolved? And then just sort of the follow-up to that is maybe a little more color on the roadmap to continuing to work on sort of in-housing some of that tech over time.

Yeah, I think the context in the answer to this question is that prior to this year, we were dealing with an increasing number of issues on the platform. That's sort of what I was referring to in our comments to the technical debt that we were incurring that was growing year over year. And so it's not like the previous platforms were not experiencing issues. And I I think that sort of when you get back to a place where, you know, you most platforms like this are going to, you know, they're not perfect. And, you know, so, yeah, there are there still issues that pop up from time to time, of course, no different than than prior platforms. so uh and you know there are there are edge cases often whether that's you know whatever the the device somebody's trying to use as an edge case or the software somebody's trying to use as an edge case or the connectivity that they have uh is an edge case and uh and so you know we obviously we try to eliminate as many of those edge cases as possible but um you know but i feel i feel like we're at a point where we have a good foundation now to build off of. And, you know, and I think we learned a lot through this experience, you know, and I think that we need to make sure that we have better redundancy. And a lot of what we're trying to do is to ensure sort of better redundancy. We still have to rely on our third parties, you know, and I'm hopeful that our third parties are going to continue to step up and be good partners um and um you know and i think that we have through this experience gotten a lot of feedback from our customers and a lot of it has to do with the user experience uh how the workflows are um you know the the the sort of um distinguishment in grade levels and sort of you know what's more appealing for lower grade levels versus middle grade levels versus upper grade levels and a lot of those things are things that you know over time we can just continue to refine and build and iterate into our system and um you know and continue to to get that feedback and improve so uh i'm optimistic i think we've got um you know a long road ahead of us of creating really incredible experiences for our customers. And just to round out the answer, that's not exclusive to the academic elements of the experience. We are investing in a lot of elements of the experience that actually extend beyond the academic elements that just give a fuller, richer experience to the

families. Very helpful. Thank you very much. Our next question is from Steven Sheldon with

William Blair. Please go ahead. Hi. Good afternoon, team. You have Pat McElwee on for Steven, and congratulations on all the progress you made this quarter. My first question, James, you've acknowledged that you still have some work to do here, but you've clearly made a ton of progress since the fall. So if we were to assume that you're largely past the issues, you saw that last fall, how were you thinking about the risk from any negative word of mouth activity going forward and the risk to top of funnel trends heading into next year? Is there any sign that

that could have a more lasting impact? Yeah. So I actually think that we were worried about that pretty acutely in the fall. And I think that we were concerned that you know, that sort of overhang, if you will, of a bad press, bad word of mouth, whatever, you know, would carry over into, you know, I'll say sort of a post-normalization period. And we've just not seen evidence of that. You know, in fact, I would actually suggest we've seen the opposite. We think that we had momentum and sort of word of mouth. I mentioned earlier that our demand characteristics continue to look strong, and they look strong in spite of us being less aggressive in the marketplace, as you can imagine, as we're sort of tempering our growth this year. And so when you see the organic strength that we've seen in demand, that would run counter to an assumption that there would be this overhang in sort of negative sentiment. I think it speaks to the macro conditions of our business that are very strong and the strength of, you know, 25 years operating this business as a leader. And the reality is if you're, you know, and this, you know, we've done some sort of, you know, I'll say quote unquote focus groups or talk to some families about some of their experiences. And, you know, if you're not in the market for this alternative, there's really no reason for you to hear the negative sentiment. And when you're in the market, largely, you're not going to the places where you're going to hear the negative sentiment because you need this alternative. And so we just haven't seen evidence that the demand characteristics are negatively impacted so far, at least, by an overhang of sentiment around what happened this fall. We just haven't seen it.

That's really encouraging. And one more on margins. understand there was some one-time benefit to the gross margins this quarter, but the GNA also took a nice step down. Can you talk about how you managed to drive that efficiency despite the unforeseen circumstances you were dealing with in the quarter and maybe some of the labor and

capital that might have required? Yeah, one of the things that we have been talking about for the past couple of years is that we've got to internally, I say to our senior management team, we've got to remain disciplined during the good times so when things are difficult um that we can continue to maintain that level of discipline we continue to be disciplined uh with that discipline there are a couple of other things that we've done um and i've said that in my prepared remarks uh we continue to right-size our adult business um given the sort of stability and the focus on stability and not growth uh we sort of pull back on our marketing spin um so those are some of the things that we've done to be able to reduce the costs in our SG&A. And so some of the additional costs you might expect, given the impact of our platform challenges that we have, you would see those in our gross margins, not in our SG&A.

You know, I also got to say, you know, give a huge shout out to the team here. the the team here that have been working to resolve some of these problems I mean they've been working 24-7 for the past several months and they just they just don't give up you know they're they're on top of it I mean it's just it's it's it's really amazing to see how our mission has rallied our employees on behalf of our customers and yeah listen And again, it's not perfect, you know, not everything's perfect, but, you know, we just see a lot of a lot of employees just step up in amazing ways. I mean, just the number of stories I could tell you there are countless on the way that the way that the employees in this company just step up because they believe so much in our customers and they want to help our customers so much that, you know, it's not sustainable, by the way. But, you know, you get a lot of leverage out of that, you know, when you have employees that are that committed.

Okay. Understood. Thank you both for the thoughts, and congrats to the whole team on progressing past these issues.

Again, to ask a question, simply press star, followed by the number one on your telephone keypad. Our next question comes from the line of Jeff Zivler with BMO Capital Markets.

Thank you so much. I know you're focused on maintaining stability this year, and that makes a lot of sense. And then you're not going to get specific guidance next year, but I'm just curious, in terms of potential new partner pipeline, can you talk a little bit about that? And I'm just wondering how discussions are going based on what happened a few months ago, if there's been any change?

Yeah. So, I mean, it's sort of an interesting and timely question, only because I was visiting a potential partner uh last friday i won't give you the state but uh wasn't an easy state for me to fly in and out of and um you know uh you know and we dealt with uh the questions of what happened this fall pretty directly and you know i'll say our reputation on reputational issues that they might have questions around. And, you know, I spent a couple of good hours with this potential partner. They haven't signed yet, but they gave no indication that any issues that we've had, whether they're platform-related or otherwise, by the way, reputational issues that, you know, may be floating around in the market, they're just sort of unconcerned because, again, and this is sort of, I guess, maybe how powerful the macro conditions are and the mission is, is that they really believe in what we're doing. They recognize that we're the leader. They want to help families in their state and they think that their state, uh, deserves, uh, these types of alternatives and they really want to be a part of it. And so, again, I just, you know, I, I can't speak for every partner or every potential partner or whatever. I just happened to be visiting one last week and, um, there's, there's no overhang that I, that, that, that I have experienced from a potential partner on this past fall or sort of any events that have happened, you know, in this past year or so.

Okay, that's very helpful. You also mentioned that you cut back a bit on marketing expenses in the second quarter. Should we expect that to ramp back up, especially in the fourth quarter as we're entering into the potential enrollment season?

Our assumption for the back half of the year is that our SG&A will continue to benefit from some of the what you saw happening in the first half of the year. We want to sort of maintain that level of flexibility in Q4. We typically start to ramp up a little bit in Q4. And so we want to have some flexibility there. But when you think about the overall SG&A in the back half of the year, we will expect that number to continue to be reflective of what you saw in Q2, and maybe down a little bit. But we're going to have some flexibility to ramp up on the marketing spend as we get to later in the fiscal year.

And I think that just from a planning perspective, we expect in the normal cadence of the rest of this fiscal year and going into next fiscal year to be in-market business as usual. There is no expectation that we would not be returning to business as usual for the fall season in whatever cadence that is this year or next year. Okay, that's great to hear. Thanks so much.

With that, this concludes today's closing remarks. You may now disconnect.