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| And what we've seen is that, and again, I mentioned this, not only do we see strong participation rates overall, but as schools participate in FDC year-over-year, those participation rates at those schools are actually improving as students who are freshener, sophomore experience FDC, understand the convenience, the affordability aspect, the impact it has on their academic success |
| Next, we've improved operational efficiency and maintained top line growth despite operating in 128 fewer stores |
| The momentum behind our shift to a more profitable and predictable FDC model, combined with our focus on operating efficiencies, presents a compelling opportunity to create a sustainable long term value for our stakeholders |
| We've had great momentum in terms of what we've done and the number of campuses that we're now running First Day Complete with |
| Our team's agility and resilience enabled us to not only deliver a successful Fall rush in a very dynamic operating environment, but also to execute on our strategic initiatives over the last year |
| In closing, we had another solid quarter and we are making excellent progress against our strategic priorities |
| Second, our innovative Equitable Access Program, First Day Complete, continues to positively impact students, higher education and our business |
| We are confident in our strategy, our highly capable and motivated team and our strong competitive position to continue the successful execution of our strategic focus on sustainable and profitable growth |
| And the other benefit is it's a much more predictable revenue stream |
| It's been gratifying to see cost discipline, productivity and efficiency embedded into our culture will continue to provide an outstanding experience for our campus partners |
| This evolution to a subscription like B2B model significantly improves revenue and revenue visibility, which enables us to better align costs with revenue, improve inventory management and operating efficiency and ultimately achieve much higher four wall EBITDA per store |
| First Day Complete not only grew in the quarter due to the year-over-year store count growth, but comp FDC stores experienced 6.5% growth in course material sales due to increasing student participation rates, which highlights FDC's positive impact on access, affordability, convenience and academic success |
| We've achieved our planned $30 million to $35 million of annualized cost savings and as a result, consolidated adjusted EBITDA increased 28% to $50.3 million in the second quarter |
| Looking ahead, we've identified additional opportunities to improve efficiencies further and reduce operating expenses to continue improving our profitability and cash flow |
| Importantly, the actions we have taken and continue to take position us to deliver more consistent, sustainable and profitable growth in the years ahead |
| And the rates continue to get better with each year for each of those cohorts, which is a really exciting development and even highlights more upside in the First Day Complete model for us and our campus partners |
| The combination of top line growth, improving operating efficiencies and further progress on our cost savings initiative actions drove a 180 basis point increase in EBITDA margin to 8.2% |
| And the value proposition of affordability, access, convenience, which ultimately is leading to enhanced student outcomes continues to resonate on campuses throughout the country |
| So incredibly excited about the pipeline and the accelerated growth of our First Day Complete program |
| Our team delivered a solid second quarter, driven by strong operating performance that enabled us to grow revenue while increasing retail adjusted EBITDA by 23% |
| Given the strength of our pipeline, we remain confident in our ability to successfully accelerate the scaling of FDC and the long term growth and sustainable financial benefits of the equitable access model |
| And so it's incredibly positive |
| And revenue increases from First Day offerings exceeded the decrease in revenue from the traditional à la carte model by $30 million on a year-to-date basis |
| In the second quarter, FDC revenue increased 52% year-over-year to $136 million, and the combined First Day programs revenue reached $199 million |
| In particular, First Day Complete revenue increased by 52% to $136 million |
| I think all the conversations are really positive |
| We made substantial progress on these initiatives and our second quarter financial results are further proof points that our strategy is working |
| I am truly grateful for their hard work and commitment |
| Consolidated adjusted EBITDA grew by 28.3% or $11.1 million to $50.3 million |
| And then the pipeline, we're really encouraged, as we said in our remarks, by the pipeline of schools that have either already committed or are on the verge of committing for a Fall term '24 launch, which would be our fiscal '25 |
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| Retail gross margin of 20.9% decreased by 70 basis points from the prior year period |
| Comparable store sales growth declined by 1.7% |
| Second quarter retail gross profit of $125.5 million decreased by $4 million or 3.1% |
| Retail gross sale margins decreased due to a decline in course materials gross margin due to higher markdowns, including markdowns related to closing of underperforming and unprofitable stores, as well as higher percentage of lower margin digital course material sales and lower commissions for our emblematic general merchandise |
| These two categories were most impacted by the delayed inventory receipts we discussed with you last quarter |
| It's very clear now that with the acceptance by the market of the equitable access, inclusive access models that when you combine those together that we're reversing that trend of courseware sales declined from à la carte kind of traditional à la carte model, that's just huge |
| The decrease was primarily due to declines in trade books and cafe and convenience items |
| While this is impressive growth, we believe we are just scratching the surface |
| CapEx decreased by $5.3 million to $4 million from $9.3 million due primarily to a continued focus to reduce spending and capture additional efficiencies |
| Wholesale selling and administrative expenses for the quarter decreased by 9.7% to $3.5 million |
| Alex Fuhrman If I'm not mistaken, I believe you said that First Day Complete dollar revenue growth was more than enough to offset the decline that you saw in the quarter in dollars in à la carte course materials |
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