Aspen Group, Inc. (ASPU) Q1 2020 Earnings Call Transcript
Published at 2019-09-09 16:30:00
Good afternoon. Welcome to Aspen Group's Fiscal Year 2020 First Quarter Earnings Call. Please note that the company's remarks made during this call, including answers to questions, include forward-looking statements, which are subject to various risks and uncertainties. These include statements relating to future student enrollments and bookings, campus expansion plans, and capital expenditures. Adjusted EBITDA forecast operating metrics, anticipated operating leverage and gross margins, revenue growth, including Q2 meeting three key targets expectations from Aspen's monthly payment plan changes, expected G&A trends, expected cash flows and our liquidity. Actual results may differ materially from the results predicted and reported results should not be considered as an indication of future performance. A discussion of risks and uncertainties related to Aspen's business is contained in its filings with the Securities and Exchange Commission, mentioned in the press release issued this afternoon. Aspen Group disclaims any obligation to update any forward-looking statements as a result of future developments. Also I would like to remind you that during the course of this conference call, the company will discuss adjusted EBITDA and EBITDA, which are non-GAAP financial measures and talking about the company's performance. Reconciliation to the most directly comparable GAAP financial measures are provided in the tables and the press release issued by the company today. There will be a transcript of this conference call available for one year at the company's Web site. Please note that the earnings slides are available on Aspen Group's Web site at aspu.com in the Presentations page under Company Info. Now, I'll turn the call over to Michael Mathews, Aspen Group's Chairman and Chief Executive Officer.
Good afternoon. I will begin the call today by discussing the positive trends that we're seeing in our operating metrics, then I will discuss our pre-licensure BSN campus expansion plan for calendar year 2020, which we released details of this morning, then I will make a key strategic announcement related to our monthly payment plan at Aspen University. Joe Sevely will then follow with a review of our financial results. Okay, first, let's review our enrollment results in the first quarter. This of course is our seasonally slowest quarter given it falls during the summer months, but this year enrollments in USU's FNP program and Aspen's pre-licensure BSN campus business were so strong that on an aggregate basis, we didn't see the seasonal dip that we've seen in previous years. Aggregate enrollments for the company in fact grows 24% sequentially and 46% year-over-year to a quarterly record of 1,929 new student enrollments. As we announced last week, the company has now surpassed the 10,000 active student body milestones as Aspen University now has over 8,500 active students while USU now has over 1,500 active students. I'd like to express my gratitude to our faculty and employees at both universities for the care and commitment that they exhibit every day to ensure that our students are receiving a world-class academic experience. Leading the way with enrollments was USU's FNP program. We achieved 514 enrollments in Q1, which was a 62% sequential increase. Enrollments were averaging about 150 per month in the quarter until we announced the monthly payment plan change and subsequent July 31 deadline to sign up for the now discontinued six-year payment program. That deadline generated approximately 10% more enrollments than we would have otherwise delivered for the quarter. Consequently, on a go-forward basis, we're forecasting the enrollment run rate to remain in the 150 per month range. We continue to implement every other month start date for our FNP program and continue to target 150 new FNP students each start date. Because of the spike in enrollments in late July, I'm pleased to announce that we had 243 new students begin our FNP program on our September 3 start date. Congratulations to everyone at United States University for the great work preparing for this very large start date that began last week. As I stated before, when we acquired USU, we saw the potential for student body growth and competition that mirror Aspen University. USU has grown from 684 to 1,491 students year-over-year or 118%, and the student body composition is even more heavily weighted to nursing students as USU student body is now composed of 94% degree-seeking nursing students, while Aspen University is at 80%. Our newest unit, the Aspen University pre-licensure BSN campus business, currently based in the Phoenix Metro delivered record enrollments in the first quarter. We achieved 276 enrollments in Q1, which was a 48% sequential increase, and an increase of 197% year-over-year. This quarter, we continued to enroll students in our second campus in Phoenix, the HonorHealth campus, which is set to begin its first semester on September 17, which contributed to the increase in the enrollment growth in the quarter. Our traditional online Aspen nursing plus other units delivered an enrollment increase of 7% year-over-year, and our doctoral unit increased enrollments 68% year-over-year. So, those businesses continued to grow as expected. The three key takeaways from this quarter's enrollment results are: Number one, how that translates to increases in our Marketing Efficiency Ratio, or MER, and the related decrease in our Cost Per Enrollment or CAC. Number two, our rising Average Revenue Per Enrollment or ARPU, and number three, the increase in total bookings. As a reminder, we define MER as revenue for enrollment or LTV divided by Cost Per Enrollment or CAC. In Q1, our cost per enrollments declined by 10% sequentially, and our traditional Aspen nursing plus other units down from $1,231, delivering at 6.0 times MER. Our doctoral unit saw similar improvements as our cost of enrollment declined by 31% sequentially, down to $1,987, delivering a 6.3 times MER. Our cost of enrollment for our USU FNP program declined by 33% sequentially, down from $1,078, delivering a 16.5 times MER. Finally, the cost of enrollment for our pre-licensure BSN program remained under $500, $478 to be exact, which delivers a whopping 62.8 times MER. The second takeaway is that our strategy of investing our marketing spend to drive enrollment growth in our highest LTV units is working. This has delivered material improvements in our Average Revenue Per User or ARPU and our overall bookings. Year-over-year, our ARPU has risen from $11,185 to $13,919, or 24%. Our total bookings resulting from waiting enrollment growth, primarily to our highest LTV businesses, increased 83% year-over-year from $14.7 million to $26.9 million. This strategy of driving enrollment growth in our highest LTV businesses positions the company for sustained, consistent, top line growth of over 30% for the current fiscal year and for next fiscal year. Specifically, we now anticipate fiscal year 2020 revenue growth to be at least 34%. Now, I'd like to make two announcements. First, we announced this morning that we have signed clinical affiliation agreements with the largest healthcare organizations in the Austin, Texas; and Tampa, Florida metros, and plan to launch standalone Aspen pre-licensure campuses in those two metros next calendar year. We are targeting opening Tampa next summer, and Austin next fall, so both will begin after the end of our current fiscal year. Our primary clinical partner in Austin will be Baylor Scott and White, who are in fact the largest not-for-profit health care system in Texas, and one of the largest in the United States. Baylor Scott and White Health was born from the 2013 combination of Baylor Health Care System, and Scott and White Healthcare. Today, Baylor Scott and White includes 48 hospitals, more than 800 patient care sites, more than 7,800 active physicians, and over 47,000 employees. Our primary clinical partner in Tampa will be Bayfront Health. They are regional network of seven hospitals and over 1,900 medical professionals on staff serving the residents of Florida's Gulf Coast. Tampa, St. Petersburg, and Austin are ideal metropolitan areas for our initial expansion outside of Phoenix. As both enjoy population centers of over 2 million people, and are expected to be among the top 20 fastest growing metros over the next two decades. As we look to maximize return on our invested capital, we've targeted existing campuses that are already substantially built out to reduce the total expenditure for each new location. This will allow the CapEx for each new campus to be in the same range as the cost of Aspen's embedded campus at HonorHealth, located in North Phoenix. Locations of each campus will be announced following the execution of long-term leases, which are expected to be completed over the next 60 to 90 days. Joe will provide an update on liquidity in a few minutes. As we've previously stated, these two new campuses are planned to be funded with our existing liquidity resources. On to our second announcement, if you recall on the last earnings call, we announced the change to our monthly payment plan program for our USU FNP students. In order to improve our working capital in coming years, while still maintaining our mission of making college affordable and providing innovative payment plans, we are only offering monthly payment plans for the first academic year of an FNP students, which is a liability of about $9,000 payable at $375 per month over the duration of a two-year academic program. The second academic year, which is a liability of 18,000, will now need to be paid by students using conventional payment methods. This will allow the company to reduce their operating cash requirements by over $2 million next fiscal year and much more in future years. We are balancing the management of our cash resources with the strategy to grow the business in our highest LTV units. As a result, we are always looking for ways to accelerate the timing of the company achieving free cash flow results. Therefore, effective October 1, all new students at Aspen University that enrolls in a Bachelor Degree program now pay $300 per month on a go-forward basis, up from 250 per month. In addition, all new MTP students at Aspen University that enroll in a Master's Degree program will now pay $350 per month on a go-forward basis, up from 325 per month. Assuming we increased our enrollments in our traditional Aspen Online Nursing plus other programs like 15%, that would equate to approximately 4,400 new student enrollments on an annualized basis. That will now pay the company approximately $40 per month in addition on weighted average basis. Therefore, 12 months out, we expect to be receiving approximately $125,000 more cash per month as a result of this change, which on an annualized basis is a positive cash flow improvement of over $2.1 million. We've carefully researched this monthly payment increase, both internally and externally, and feel confident these changes will not have a detrimental effect on our conversion rate and our overall enrollment forecast. Now, I'll turn the call over to our CFO, Joe Sevely, to review our financial results for Q4, and to provide an update on our liquidity.
Good afternoon. I will begin today by reviewing our financial results for fiscal 2020 first quarter, and we'll then make some observations on the key drivers of shareholder value and our expectations for coming quarters. First, quarterly revenue was approximately $10.4 million, a 43% increase from the comparable prior year quarter. Sequentially, revenue increased from $10.2 million. Given that the first quarter is our slowest seasonal quarter with many students not taking classes during the summer months, we were pleased with the sequential increase. Revenue for Aspen's Nursing plus other unit increased by approximately $1 million or 17% compared to last year's first quarter. This is an area with solid economics as we posted a 17% EBITDA margin in the first quarter, and expect in the future over 20% margin on average in this area. Despite those economics, this is the lowest expected margin business within our current mix, and therefore we have unlimited spread in favor of other higher expected margin businesses. USU revenues more than doubled from a year ago. And the pre-licensure BSN programs revenue continue to grow at a rapid pace since the launch a year ago. Sequentially, these two programs revenues grew 13% and 52% respectively. Together, they now account for 34% of our total revenue, up from 29% last quarter. Aspen Group's gross profit for the first quarter increased to approximately $5.8 million from $3.3 million last year, an increase of $2.5 million or 74%. Gross Margin was 56%, which is up from 46% last year, an improvement of 10 percentage points. We expect continued margin expansion as we continue to grow. Aspen University's gross profit represented 59% of Aspen University's revenue for the quarter, while USU's gross profit equals 55% of its revenue for the quarter. Total instructional costs and services for the quarter rose to approximately $2.1 million or 21% of revenue for Aspen University, instructional costs and services represented 18% of revenue for the quarter, while USU's instructional costs and services equal 28% of its revenue for the quarter. Marketing and promotional costs for the quarter were approximately $2.2 million or 21% of revenue, declining from 23% as a percentage of revenue in the previous quarter. Aspen University's marketing and promotional costs were 20% of Aspen University's revenue for the quarter, down from 21% from the previous quarter. USU's marketing and promotional costs equals 17% of USU's revenue for the quarter down from 19% last quarter. General and administrative costs for the quarter were approximately $7 million compared to approximately $5.8 million during a comparable prior year quarter, an increase of $1.2 million or 21%. This is in line with our expectations. The G&A will grow in about half the growth rates of revenues, which were up 43% compared to the prior year quarter. Net loss of clickable the shareholders was approximately $2.1 million or diluted net loss per share of $0.11 for the quarter, as compared to a net loss of $2.8 million or $0.15 per share for the comparable prior year quarter. During the first quarter, Aspen University generated approximately $0.9 million of net income. USU experienced a net loss of approximately $0.4 million in AGI corporate incurred $2.6 million of expenses. AGI's expenses were up sequentially about $400,000 largely due to expenses that are not expected to recur, including, for example, the severance payments and recruiting costs for a new corporate controller. USU's operating loss declined by about $750,000 compared to the first quarter fiscal year 2019. USU's revenue increased by about $1.4 million over that same one-year period. As a result, USU achieved operating leverage of about 53%. We expect strong continued operating leverage on average as USU continues to grow in future quarters. With regard to our liquidity position, cash used in operations for the quarter was approximately $1.7 million, 50% less than the amount used in the prior year quarter. Aspen Group ended the quarter with approximately $7.7 million in cash and restricted cash, together with our unused revolver at $5 million. We ended the quarter with $12.7 million of liquidity resources, which we believe are adequate. Looking forward, we expect to deliver increased value to our shareholders by achieving three important financial targets, continued strong revenue growth, rapidly improving profitability, and a path to substantial positive free cash flow. Let's talk about each of those factors. We have a very strong track record of aggressively growing revenue. And as Mike Matthews said, we expect that to continue with 34% revenue growth or higher this fiscal year and at least 30% annual growth next fiscal year. With regard to profitability, we expect Aspen's Nursing plus other units continue to have double-digit revenue growth and moderately improving margins. As noted earlier, this area already has solid profitabilities. USU is not yet profitable, it has experienced strong operating leverage, as revenues have increased significantly, and expenses have grown on a much slower pace. We expect us to reach positive net income within the next couple of quarters. We also expect that EBITDA margin reached the mid-20s. Our pre-licensure program is the fastest-growing program and has the highest long-term expected profitability level. As expected, this unit turned profitable in the first quarter of fiscal year 2020, just one year after launch. We expect similar timings for the new campuses and also expect each new campus to generate over 30% EBITDA margins. Once it reaches maturity, approximately two to three years after the launch of each campus. In aggregate for Aspen Group, we expect positive adjusted EBITDA for every quarter going forward. Within a few quarters, we expect EBITDA to turn positive and a few quarters later to achieve positive net income. So during our next fiscal year, we expect to hit an important milestone reporting our first positive quarterly net income results. We also expect a strong positive trend with respect to cash flow. Obviously, the expected trends in earnings that I just discussed should contribute to improved cash from operations. In addition, we expect a favorable trend on average for working capital. Historically, our monthly payment plan has been a drag on our working capital as we help finance our student's education. Flip side of that is we have an increasing number of graduates who continue to make MPP payments. In addition, we announced last quarter that we we're changing the structure of the FNP program. Sorry, changing the structure of the MPP program for USU's FNP program that has now been implemented and should contribute in the future to much more favorable working capital position. The increase in monthly payments at Aspen that might just announce will also improve the working capital position. We plan to continue to grow our pre-licensure campus business and add two new campuses in calendar year 2022. As Mike also stated, whoever is indicated, we think we can limit CapEx needed to launch those campuses, relatively low initial CapEx, a quick path to profitability, and a high expected margin all contributes the expectations for positive cash flow. In addition, we do not offer a monthly payment plan for this program. So we won't need working capital funding as we have in our other programs. White Health, this should lead to a strong cash flow position for Aspen Group. As I've stated in the past, I continue to expect the company be generating significant positive EBITDA cash from operations and free cash flow by the fall of 2021 two years from now, and of course we expect to hit some of those milestones sooner. That concludes our prepared remarks. I will now turn the call back to the operator for questions.
Thank you. [Operator Instructions] And our first question comes from Eric Martinuzzi with Lake Street. Your line is now open.
Yes. First a comment and then the question, so congratulations to you on that 10,000 total active students, that's definitely a major milestone for you guys. So, let me dive in on the question. See, I want to make sure I have the guidance correct here, you talked about at least 34% growth in fiscal '20, and then another 30% on top of that in fiscal '21. So, just a quick back-of-the-envelope math here would be $45.6 million in 2020 and over $59 million in 2021, is my math correct?
Yes, would be approximately $45.5 million, and then yes, $59 million. You are correct.
Terrific to see that. I'm wondering that $59 million is certainly well ahead of what I was modeling for fiscal '21. How much of that is driven by the two incremental hybrid campuses, and how much is -- maybe the price increase related?
Well, we haven't done a price increase. The changes that we made today simply require our new enrollments at Aspen University if they sign up for the monthly payment plan to pay either $50 or $25 per month respectively whether it's a bachelor or a master student. We don't expect our two campuses next fiscal year because of course we are launching them after this current fiscal year. We don't expect them to have a significant material effect on that $59 million. The very strong $89 million of bookings that we're estimating for this fiscal year will deliver that result of $59 million plus.
Okay, that's a good point to clarify. So, not a change in tuition rates, but the change in the monthly payment plan per month, is that correct?
That's correct. We're simply asking them to pay a little bit more per month, and again as we said in our earnings remarks today, we don't feel like that's a risk to our fundamental business model.
Yes. That to me still seems like a manageable monthly payment for most families. The last thing I wanted to touch on here is the new hybrid campuses. You talked about CapEx there, could you remind me what was the CapEx for the HonorHealth hybrid campus?
Yes, HonorHealth ended up being just a touch over $1.2 million, and the agreement we had with that great organization, that great partner of ours was to split the cost 50:50. So, it's slightly more than $600,000 for each of the partners, them and us.
Got you. Okay, thanks for taking my questions, and congrats on the Q1 results.
Thank you. And our next question comes from Darren Aftahi with ROTH Capital Partners. Your line is now open.
Hey, guys. Thanks for taking my questions. Really great to see the growth coupled with the cash burn reducing. If I could piggyback on Eric's question from a different light, so with Bayfront and Baylor Scott & White, given kind of the footprint of employees, Mike, can you talk about is there a dynamic where customer acquisition costs is going to kind of under index given there be a nice [indiscernible] in terms of potential candidates, and as you think about future campuses in addition to the dynamics like population growth, et cetera, is that something that you are focusing on?
Well, I mean, there's multiple variables that go into making a decision to enter a major metro market such as in Austin or Tampa. The first and most important critical variable for us is to ensure that we have a clinical partnership with the "Gorilla" healthcare conglomerate in that metro, and we were able to accomplish that in both cases. That's critical for us, because when we enter a market, we want to be able to build a very large campus and you can't do that if you don't have the clinical placements available. So that's the first critical component. The second for us is again we want a very large metro market, two million plus population, and we feel very confident having to -- what we do is we have conversations with these clinical partners to understand not only what places they have available, but the potential for recruiting various employees within their organization, and also their expansion plans. So for example, we talked to Baylor Scott & White about not only potentially opening Austin, but other metros in Texas, and they recommended we go to Austin first because they're launching a new hospital there, which is their third or fourth in the metro. So, the point I'm making here is that we make these kinds of strategic decisions very carefully and in very close concert with our partners.
That's helpful. Then a question on the pre-licensure business, Joe, you rattled off a bunch of numbers, did I hear you correctly, you said that the initial Phoenix campus is already profitable at this point?
Yes, that's right. For the last quarter, we announced our expectations to return profitable this quarter, and we're now announcing that it did. We expect similar results, four maybe five quarters after launch, but our future campuses should be profitable.
Got it. So, when we think about kind of the balance of that Phoenix campus and how that can help fund some of these newer campuses, how should we kind of think about that dynamic?
Sure. So, yes, when a campus gets to maturity, which takes about three years, we're expecting it to be generating about $9 million of revenue, and as I said, we expect over 30% EBITDA margins at that point in time. The other end of the spectrum for a newly launched campus, there's -- we talked about the initial CapEx, Mike mentioned that, and there's also the operating loss during the first year, which is about $0.50 million. So, it is a little bit of a drag during the first year, but given that this is -- as I said, a low investment, quick turnaround and then a high profitability, it makes a lot of sense to grow that aggressively.
Got it, and I'm just kind of curious, last question for me, the underlying assumption on the margins on pre-licensure, I assume that transcends into other campuses, what's kind of the assumed longer term customer acquisition cost and better than non-assumption?
Well, I mean right now, since we launched our Phoenix operations, and of course, we've -- in the last several months, we began enrolling students in our HonorHealth, our second campus. As you guys know, it's -- we've remained under $500. We don't have an expectation that it's going to remain at $500. I mean I'd love to be here in the next several quarters and tell you that we accomplished that, but we think if we can keep the enrollment costs below $1,000, that would be an outstanding result.
Got it, great. Nice work, thank you.
Thank you. Our next question comes from Mike Malouf with Craig-Hallum. Your line is now open.
Great, thanks for taking my questions, and well done this quarter, nice to see.
This question on the USU chains that you did -- last quarter you announced, can you talk a little bit about are you getting any kind of a change in behavior? You commented that you expect still 150 enrollments regularly, and I'm just wondering how confident are you in that, and have you seen any kind of change?
Yes. So we've been -- we've been averaging about 150 enrollments per month for a number of months now, and it wasn't until we announced this monthly payment plan change that we had a flow in of kind of an incremental 10% over the couple of weeks that preceded the end of this quarter. We still continue to believe that that run rate that we've had for a number of months, 150 per month is going to remain in that range, and in future quarters, we will give you guys some heads up in terms of what our marketing spend plan is and the call center size plan is. We believe that we have some nice room for growth in the S&P program, but at this point, we're still again targeting 150 per month, but in future quarters, we could announce somewhat of an increase in that.
Got it. Okay, that's helpful. And then you engaged with these other institutions in Tampa, and Austin, I'm wondering if you can give us just a little bit of color with regards to your conversations on how the program as you sort of laid it out, did it change at all, is it roughly that basically a cookie-cutter thing or is it pretty custom between each entity, I'm just trying to get a sense of how that process went?
Yes, great question. So yes, our innovative program that which we created in Phoenix, where 69% of the credits are online, and of course, it's a three-year accelerated BSN, which totals about $47,000. We're planning to keep that exact same program, which is proving to be very, very successful and very, very attractive to our perspective students. We're going to keep that model exactly as is as we expand to these two new metros, but we don't plan any changes. And one other thing, I wanted to mention is that as we started looking for location, being a bolt-in -- in terms of leases both in Austin as well as in Tampa, one of the things we realized is because the for-profit education -- because the for-profit education industry has -- there has been a number of for-profits that has gone out of business, or contracted. There are a handful of campuses available in each of these metros that we can pick from that are in some cases fully build out that we can strategically do a deal with the landlord to put a lot of the [indiscernible] into the TI, and as a consequence, we come up with really interesting strategy of "CapEx-light approach," and so, we're pretty pleased with that, and again it's an opportunity that we started to uncover as we started to do tours of those metros.
That's great to hear. Thanks. Thanks for the color, and congrats on a great quarter.
Thank you. And our next question comes from Austin Moldow with Canaccord. Your line is now open.
Hi, congrats on the quarter, and thanks for taking my questions. My first one is on your new student enrollment growth guidance that you gave last quarter. Just wondering if you could comment on where you stand on those rates that you draw out there, given that you have one quarter under your belt now?
Yes. I mean, so we called for enrollment growth in each of our four units, and we sort of specified for each of those last quarter. We expect to overachieve at the minimum in our USU FNP unit, as well as in our pre-licensure BSN units. The other two units I would sort of keep the forecast in the same range that we've had before. Our plan would be next quarter to provide some more detail once we complete the enrollments for the current for Q2 and give an update on the full-year enrollment plans, but right now we'd like to keep the forecast as is worth the $89 million total of bookings.
Got it. And then turning to marketing, I know you'll be committing more marketing dollars towards your higher LTV programs, but wondering if you could give anything more specific on your outlook for spending in marketing expenses in the three program segments.
Yes. So, our Aspen online nursing plus other, our traditional Aspen post-licensure online business, we mentioned previously that we're looking to increase our enrollments year-over-year by about 15%, and that's going to be more -- the increase in that business, it can be more heavily weighted towards the second-half of the fiscal year, because we need time to increase the call center. As you probably noticed our tax for our traditional business actually went down this quarter, which we're very pleased about, and so, at this point, we are planning that 15% increase, but as we continue to increase the call center, we may decide to spend more in that area. As we've mentioned before, the primary increases are going to be in our pre-licensure business and our USU FNP business, and you'll see us continuing to increase that on a material basis. Sequentially, probably by -- I would say, 15% to 20%.
Got it. And I wanted to ask one more to -- maybe more philosophical question on the pace that you're building the pre-licensure campuses at. Is the reason for the two campuses a year based more on finding -- the time it takes to find the right metro and the leases, or is it mainly a cash constraint, and are there variables that if they changed would lead you to maybe get more aggressive in your rollout strategy, and if you could just talk through your general thoughts on that?
Yes, that's a great question, Austin. I have to tell you that I'm a big believer in focus and operational execution. So, I don't know if we have the liquidity resources available. I don't know if we do more than two a year, because I want to make sure when I go to a new metro that we are very successful, but yes, I mean, to be honest, we have three metro markets kind of in mind already, following Austin and Tampa. So yes, we could go quicker, and -- but again at this point in time, we feel like we'd like to do these two in this next calendar year, and we want to make sure we're operationally effective, and then we'll take it from there.
Got it. That's really helpful. And then my last question if I can, is just on a competition, for-profit industry has faced a lot of headwinds, but there are a couple that have survived and some have been more flexible and converted back to non-profits. I'm wondering if you're -- what you're seeing in terms of competition as maybe in the marketing environment, are things -- are prices going up, because you're -- more people are crowding into the market, or do you find yourself going up against peers when you look at leases?
Yes, so, yes, great question. So first of all, I mean, I'll capture the first question first. There are not many competitors in the Austin and Tampa metro market. That's again one of the variables we looked at when we make a decision. There are a handful, but the competition in those markets is not significant. So we're pretty confident and these two metros are going to be very, very effective for us. What's the second question, sorry?
[Technical difficulty] leases, if you're, if you're running into peers there?
Oh, yes. Not at all. Yes, we're -- from a lease point of view, we're kind of locking in on one specific location in Austin, and it is a existing university that's downsizing, and the Tampa location is a situation where we have a couple of different opportunities, and one of them is -- actually both of them are universities that are looking to expand beyond the space that they have. So, Tampa is a unique metro, where there's not a ton of commercial real estate occupancy supply in that market. So, both the markets were a little bit different in terms of how we're strategizing and where the leases that we're going to complete.
Awesome. Thanks very much and congrats again.
Thank you. Ladies and gentlemen, this concludes our question-and-answer session. I'd now like to turn the call back over to Michael Matthews, CEO for any closing remark.
Thank you everyone. I look forward to having you in our next earnings call in 90 days, and I appreciate everyone's attendance today and the great questions that we received from the analysts. Talk to you soon.
Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program, and you may all disconnect. Everyone have a wonderful day.