Aspen Group, Inc. (NASDAQ:ASPU) Q2 2020 Earnings Conference Call - Final Transcript

Dec 10, 2019 • 04:30 pm ET


Aspen Group, Inc. (NASDAQ:ASPU) Q2 2020 Earnings Conference Call - Final Transcript


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Frank J. Cotroneo

USU revenue versus 29% in the year-ago period.

Total marketing and promotional costs for the second quarter were $2 million or just 17% of total revenue, an improvement over the prior year period, which was $2.2 million or 28% of total revenue. Marketing and promotional costs for Aspen University represented 16% of Aspen University revenues, down from 25% in the fiscal Q2 quarter of 2019. USU's marketing and promotional costs were 11% of USU's revenue, down from 27% in fiscal Q2 2019.

General and administrative costs for the quarter were approximately $7.6 million compared to approximately $6.2 million during the comparable period year quarter, an increase of $1.4 million or 22%. This is, of course, significantly better than our long-term expectation that G&A will grow at about half the growth of the rate of revenues. This clearly was a key factor in the company turning EBITDA profitable this quarter.

From a bottom line perspective, net loss applicable to shareholders was $638,000 or diluted net share -- net loss per share of $0.03 for the quarter as compared to a net loss of $2.5 million or $0.13 per share for the comparable quarter -- prior year quarter. From a unit perspective, Aspen University's net income for the quarter was $1.8 million versus $400,000 in the prior year period. USU's net income was approximately $150,000 versus a net loss of $1.1 million in fiscal Q2 2019. AGI corporate expenses were $2.6 million in the quarter versus $1.8 million in the prior year. The year-over-year increase in corporate expenses was primarily due to corporate staff increases in finance and marketing as well as higher noncash stock compensation expenses.

With regard to our liquidity position, cash used in operations for the quarter was approximately $340,000 versus $2.1 million in the year-ago period and $1.7 million in the prior quarter. Cash flow in the second quarter was positively impacted by the 75% reduction in net income loss year-over-year. And as Mike indicated, we received the benefit of about $500,000 in FA drawdown or USU's FNP program a few days prior to quarter end.

As we've stated in the past, we continue to expect the company to be generating significant positive EBITDA, cash from operations and free cash flow by the fall of calendar 2021. Based on today's results, we anticipate potentially achieving those milestones sooner, and we'll provide updates to that timing in subsequent quarters. Aspen Group ended the quarter with approximately $6.9 million in cash, with approximately $400,000 of that being restricted cash. Together with our unused revolver of $5 million, we ended the quarter with $11.9 million of liquidity resources, which we believe are adequate to continue executing our growth strategy.

This concludes our prepared remarks, and I'll now turn the call back to the operator for questions.