Barnes & Noble Education Inc (BNED) 2023 Q3 法說會逐字稿

Good afternoon. Thank you for attending today's Barnes & Noble Education Fiscal 2023 Third Quarter Earnings Conference Call. My name is Hannah, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. (Operator Instructions) I would now like to pass the conference over to our host, Hunter Blankenbaker, Vice President of Investor Relations. Please go ahead.

下午好。感謝您參加今天的 Barnes & Noble Education 2023 財年第三季度收益電話會議。我叫漢娜，我將擔任今天電話會議的主持人。在通話的演示部分，所有線路都將靜音，最後有機會提問和回答。 （操作員說明）我現在想將會議轉交給我們的主持人，投資者關係副總裁 Hunter Blankenbaker。請繼續。

Good morning, and welcome to our Fiscal 2023 Third Quarter Earnings Call. Joining us today are Mike Huseby, CEO; Tom Donohue, CFO; Jonathan Shar, Executive Vice President, BNED Retail, and President, Barnes & Noble College; and David Henderson, President of MBS.

早上好，歡迎來到我們的 2023 財年第三季度財報電話會議。今天加入我們的是首席執行官 Mike Huseby；湯姆·多諾霍，首席財務官； Jonathan Shar，BNED Retail 執行副總裁兼 Barnes & Noble 學院院長；和 MBS 總裁大衛·亨德森 (David Henderson)。

Before we begin the call, I'd like to remind you that statements we make on today's call are covered by the safe harbor disclaimer contained in our press release and public documents. Contents of this call are the property of Barnes & Noble Education and are not for rebroadcast or use by any other party without prior written consent of Barnes & Noble Education.

在我們開始通話之前，我想提醒您，我們在今天的電話會議上發表的聲明包含在我們的新聞稿和公開文件中的安全港免責聲明中。本次通話的內容是 Barnes & Noble Education 的財產，未經 Barnes & Noble Education 事先書面同意，不得轉播或供任何其他方使用。

During this call, we will make forward-looking statements with predictions, projections and other statements about future events. These statements are based upon current expectations and assumptions that are subject to risks and uncertainties, including those contained in our press release and public filings with the Securities and Exchange Commission. The company disclaims any obligation to update any forward-looking statements that may be made or discussed during this call.

在此次電話會議中，我們將做出前瞻性陳述，包括對未來事件的預測、預測和其他陳述。這些聲明基於當前的預期和假設，這些預期和假設存在風險和不確定性，包括我們的新聞稿和向美國證券交易委員會提交的公開文件中包含的那些。公司不承擔任何更新本次電話會議期間可能做出或討論的任何前瞻性陳述的義務。

And now I'll turn the call over to Mike Huseby.

現在我將把電話轉給 Mike Huseby。

Thanks, Hunter, and good morning, everyone. Thank you for joining us today. I want to start today's call by thanking our BNED team members. When I consider our journey over the last 3 years, the operating environment has been anything but predictable or easy. While we are certainly seeing some green shoots, we are still well below pre-pandemic enrollment levels. Nonetheless, our teams have adapted and responded with resolve and innovation to area challenges and actions we have taken to meet them, including a significant reduction to our headcount in December.

謝謝，亨特，大家早上好。感謝您今天加入我們。我想通過感謝我們的 BNED 團隊成員來開始今天的電話會議。當我回顧過去 3 年的旅程時，運營環境絕非可預測或輕鬆。雖然我們確實看到了一些復甦跡象，但我們仍遠低於大流行前的入學水平。儘管如此，我們的團隊已經適應並以決心和創新來應對地區挑戰和我們為應對這些挑戰而採取的行動，包括在 12 月大幅裁員。

Despite the uncertain macro environment and specific challenges we address, our team continues to rise to the occasion every single day to deliver for the students, educators, and institutions we serve. I'm both grateful and proud of our people and their tremendous efforts. Through their efforts, we continue to innovate and adapt our unique platform to the rapidly changing higher education market. As we discussed with you last quarter, we did not see the expected improvements in the operating environment in the fall rush period and recognize the need to take swift and decisive actions.

儘管不確定的宏觀環境和我們應對的具體挑戰，我們的團隊每天都在繼續奮起應對，為我們服務的學生、教育工作者和機構提供服務。我為我們的員工和他們的巨大努力感到既感激又自豪。通過他們的努力，我們不斷創新並使我們獨特的平台適應瞬息萬變的高等教育市場。正如我們在上個季度與您討論的那樣，我們沒有看到秋季高峰期運營環境的預期改善，並認識到需要採取迅速果斷的行動。

We began undertaking a broad set of measures to manage our cost structure and improve our execution. While some of the strategic initiatives we are implementing will take time and results won't be linear, we are taking the appropriate actions to deliver consistent and profitable long-term growth.

我們開始採取一系列廣泛的措施來管理我們的成本結構並提高我們的執行力。雖然我們正在實施的一些戰略舉措需要時間，而且結果不會是線性的，但我們正在採取適當的行動來實現持續且有利可圖的長期增長。

Our third quarter results reflect the early benefits of these actions. We delivered consolidated top line growth of 11%, expanded our gross margins, and significantly grew adjusted EBITDA on a year-over-year basis. First Day Complete revenue grew 76%, and we made meaningful progress in the discussions with our institutional partners to accelerate market adoption of the FDC model. Before providing more detail on those discussions, let's review our high-level financial results.

我們第三季度的業績反映了這些行動的早期收益。我們實現了 11% 的綜合收入增長，擴大了毛利率，並在同比基礎上顯著增長了調整後的 EBITDA。 First Day Complete 收入增長了 76%，我們在與機構合作夥伴的討論中取得了有意義的進展，以加速 FDC 模型的市場採用。在提供有關這些討論的更多細節之前，讓我們回顧一下我們的高級財務結果。

Total Retail segment revenue increased 12.4% to $421.2 million fueled by strong First Day Complete, First Day by Course, and general merchandise sales. The traditional a la carte course material model continued to decline, albeit at a much slower rate than we saw in the fall '22 rush. Special recognition goes to our in-store teams that continue to explore ways to improve execution to drive sales. This includes providing better in-store support, partnering on collecting more adoptions, enhanced content sourcing through MBS, and significant system enhancements to receive and fulfill orders faster.

零售部門總收入增長 12.4% 至 4.212 億美元，這得益於強勁的首日完成、首日課程和一般商品銷售。傳統的點菜課程材料模型繼續下降，儘管速度比我們在 22 年秋季熱潮中看到的要慢得多。特別表彰我們的店內團隊，他們繼續探索提高執行力以推動銷售的方法。這包括提供更好的店內支持，合作收集更多的採用，通過 MBS 增強內容採購，以及顯著增強系統以更快地接收和履行訂單。

Results on a same-store basis were encouraging. Total retail gross cost or sales increased 5.9%. Course materials same-store sales grew 7.4%, driven by the continued momentum of our First Day Complete offering. General merchandise same-store sales increased 2.3%, aided by strong performance in logo, general merchandise, and cafe and convenience. Third quarter retail EBITDA was $6.2 million, a $21.6 million year-over-year increase.

同店業績令人鼓舞。總零售總成本或銷售額增長 5.9%。課程資料的同店銷售額增長 7.4%，這主要得益於我們“第一天完成”課程的持續增長勢頭。通用商品同店銷售額增長 2.3%，這得益於標識、通用商品、咖啡廳和便利店的強勁表現。第三季度零售 EBITDA 為 620 萬美元，同比增長 2160 萬美元。

As we announced last quarter, we are taking decisive and aggressive actions to significantly adjust staffing and related costs based on the trends we experienced in the fall rush. This quarter, we saw the initial and partial quarterly positive impact of these cost savings initiatives, which we began implementing in December. We continue to focus on reducing costs and operating more efficiently.

正如我們在上個季度宣布的那樣，我們正在採取果斷和積極的行動，根據我們在秋季高峰期經歷的趨勢大幅調整人員配置和相關成本。本季度，我們看到了這些我們於 12 月開始實施的成本節約計劃的初步和部分季度積極影響。我們繼續專注於降低成本和提高運營效率。

DSS revenues decreased 4.5% to $9 million as we shifted our priorities to optimize return on our existing assets with a much more rigorous approach to profitability. The team has executed quickly and well on our initiatives to optimize our marketing spend, drive improved conversion rates, and lower content development costs while investing in the continued optimization of our SEO capabilities. Within our U.S. bartleby operations, after several months of declining traffic and lower gross subs, January subscriber growth was positive.

DSS 收入下降 4.5% 至 900 萬美元，因為我們將優先事項轉移到採用更嚴格的盈利方法來優化現有資產的回報。該團隊在優化我們的營銷支出、提高轉化率和降低內容開發成本的同時，對我們優化營銷支出的舉措執行得非常好，同時投資於持續優化我們的 SEO 功能。在我們的美國 bartleby 業務中，在經歷了幾個月的流量下降和總訂閱量下降之後，1 月份的訂戶增長呈正增長。

As well publicized recently, the learning market is evolving at a rapid pace. Within DSS, we're focused on building differentiated capabilities, leveraging our years of AI experience. We continue to use AI to enrich and curate content to provide contextually relevant results to learners to optimize the teaching path for our subject matter experts and to do demand analysis at scale.

正如最近廣為宣傳的那樣，學習市場正在快速發展。在 DSS 中，我們專注於構建差異化功能，利用我們多年的 AI 經驗。我們繼續使用 AI 來豐富和策劃內容，為學習者提供上下文相關的結果，以優化我們的主題專家的教學路徑，並進行大規模的需求分析。

For example, we are using open AI API to help our experts answer questions faster and at a lower cost. In addition, we're harnessing the power of large language models, including GPT-3 to create tools that will guide a student through their own writing experience and teach them to be better writers. We strongly believe that the future of AI and higher education is to support a student's learning journey, but never to substitute for it.

例如，我們正在使用開放的 AI API 來幫助我們的專家以更低的成本更快地回答問題。此外，我們正在利用包括 GPT-3 在內的大型語言模型的力量來創建工具，這些工具將指導學生完成他們自己的寫作體驗，並教會他們成為更好的作家。我們堅信人工智能和高等教育的未來是支持學生的學習之旅，但絕不會取代它。

Moving on to wholesale. Revenue increased 5.2% during the quarter after more than 2 years of decline. During the quarter, we saw an easier supply constraints and more textbook purchasing opportunities, enabling us to fill increasing demand at BNC and other bookstores. Additionally, we believe the recent consolidation in the wholesale textbook market provides a larger opportunity for MBS to meet the continued demand of physical courseware materials and further highlights the unique competitive differentiation that MBS' wholesale capabilities provide to BNED.

繼續批發。在經歷了 2 年多的下滑後，本季度收入增長了 5.2%。在本季度，我們看到更輕鬆的供應限制和更多的教科書購買機會，使我們能夠滿足 BNC 和其他書店不斷增長的需求。此外，我們認為批發教科書市場最近的整合為 MBS 提供了更大的機會來滿足對物理課件材料的持續需求，並進一步突出了 MBS 的批發能力為 BNED 提供的獨特競爭優勢。

Now let's take a deeper look at First Day Complete, our #1 strategic priority. In December, we kicked off a journey to accelerate the transition of the schools we serve to our subscription-like SEC model. While we are still relatively early in this process, I'd like to provide some color on our conversations.

現在讓我們更深入地了解第一天完成，這是我們的第一戰略重點。 12 月，我們開始了一段旅程，以加速我們所服務的學校向類似訂閱的 SEC 模式的過渡。雖然我們在這個過程中還處於相對較早的階段，但我想為我們的談話提供一些色彩。

The SEC strategy and overall communication plan has created urgency and prioritized discussions on campuses across our footprint. We are in active dialogues with hundreds of institutional partners regarding First Day Complete and we're encouraged by the progress we're making. We plan to provide more specificity on our expected fall of 2023 First Day Complete enrollment growth in connection with our year-end earnings release in June.

SEC 戰略和整體溝通計劃在我們足蹟的校園內產生了緊迫性和優先討論。我們正在與數百家機構合作夥伴就 First Day Complete 進行積極對話，我們對正在取得的進展感到鼓舞。我們計劃在 6 月份發布的年終收益報告中更具體地說明我們預期的 2023 年秋季第一天完全入學人數增長情況。

Some schools where we required a follow of 2023 SEC launch has submitted to SEC but have asked us to defer its adoption until the Fall of 2024, primarily due to their internal process and governance constraints. In cases where we could run a store at an acceptable profitability level, we're working with these schools to provide a bridge year to make the transition in Fall 2024.

我們要求遵循 2023 年 SEC 發布的一些學校已向 SEC 提交，但要求我們將其採用推遲到 2024 年秋季，這主要是由於他們的內部流程和治理限制。如果我們可以以可接受的盈利水平經營一家商店，我們正在與這些學校合作，提供一個過渡年，以便在 2024 年秋季完成過渡。

As expected, certain schools chose not to make the transition to FTC with us. We're taking a disciplined approach to protect the integrity of the FTC conversion strategy and accordingly, we are winding down our relationships with these schools that have a different vision for their institution. In Fiscal 2024, our total score count is expected to be lower than today, but our store platform will be more profitable and better positioned for future growth. Our commitment to growing profitability is the key to strengthening our ability to serve our students and institutions in a manner that they deserve and expect.

正如預期的那樣，某些學校選擇不與我們一起過渡到 FTC。我們正在採取紀律嚴明的方法來保護 FTC 轉換策略的完整性，因此，我們正在逐步結束與這些對其機構有不同願景的學校的關係。在 2024 財年，我們的總得分預計會低於今天，但我們的商店平台將盈利更多，並為未來的增長做好準備。我們對提高盈利能力的承諾是加強我們以學生和機構應得和期望的方式為他們服務的能力的關鍵。

We remain confident in our ability to successfully accelerate the scaling of our FTC model and the long-term growth and sustainable financial benefits of the equitable access model. In summary, after the initial round of conversations with schools, we are confident that accelerating the shift to FTC is the right move for all parties. The access, achievement, mental health, and affordability benefits to students are clear. The economic benefits that institutions receive are compelling and a much more predictable higher-margin revenue growth is a critical part of BNED's successful path forward with our institutional partners whose success and ours are truly shared.

我們對成功加速 FTC 模型的擴展以及公平獲取模型的長期增長和可持續財務收益的能力充滿信心。總之，在與學校的第一輪對話之後，我們相信加速向 FTC 的轉變對各方來說都是正確的舉措。對學生的獲取、成就、心理健康和負擔能力的好處是顯而易見的。機構獲得的經濟利益是引人注目的，更可預測的高利潤收入增長是 BNED 與我們的機構合作夥伴成功前進的關鍵部分，他們的成功和我們的成功是真正共享的。

In closing, our third quarter provides evidence that we are moving in the right direction and regaining positive momentum. We're highly focused on improving our operational and financial performance as we continue to put the most significant of our environmental operating challenges over the last several years in our rearview mirror. We will also have headwinds such as the broader issues facing all businesses today that we need to diligently manage. However, as we finish fiscal 2023 and look ahead to fiscal '24, we are in a much improved position than we were the last 3 years.

最後，我們的第三季度提供了證據，證明我們正朝著正確的方向前進並重獲積極勢頭。我們高度專注於改善我們的運營和財務績效，因為我們繼續將過去幾年中最重大的環境運營挑戰放在我們的後視鏡中。我們也會遇到不利因素，例如當今所有企業面臨的更廣泛的問題，我們需要努力應對。然而，隨著我們完成 2023 財年並展望 24 財年，我們的處境比過去 3 年有了很大改善。

I am confident that the actions we are taking, along with the progress we have made put us on the right trajectory to achieve more predictable and sustainable growth and profitability. I'm excited about the road in front of us as we continue to build a stronger, more resilient, and more profitable business model and company aimed at unlocking long-term value for our shareholders.

我相信，我們正在採取的行動以及我們取得的進展使我們走上了正確的軌道，以實現更可預測和可持續的增長和盈利能力。我對我們面前的道路感到興奮，因為我們將繼續建立一個更強大、更有彈性、更有利可圖的商業模式和公司，旨在為我們的股東釋放長期價值。

Now I'll turn the call over to Tom to discuss the quarter in more detail.

現在我將把電話轉給湯姆，更詳細地討論這個季度。

Thanks, Mike. Please note that the Third Quarter of Fiscal 2023 consisting of 13 weeks ended on January 28, 2023. All comparisons will be to the Third Quarter of Fiscal 2022, unless otherwise noted.

謝謝，邁克。請注意，2023 財年第三季度包括截至 2023 年 1 月 28 日的 13 週。除非另有說明，否則所有比較都將與 2022 財年第三季度進行。

Total consolidated sales for the quarter were $447.1 million, an 11% increase. The Retail and Wholesale segment sales increased 12.4% and 5.2%, respectively, while the DSS segment sales decreased by 4.5%. Retail gross comparable store sales increased 5.9% during the quarter. Gross comparable course material sales were up 7.4%, driven by the rapid growth of our First Day offerings. BNC's inclusive and equitable access programs increased revenue by 59% to $121 million during the quarter as compared to $76.1 million in the prior year period.

本季度綜合銷售額為 4.471 億美元，增長 11%。零售和批發部門銷售額分別增長 12.4% 和 5.2%，而 DSS 部門銷售額下降 4.5%。本季度零售可比店面銷售額增長 5.9%。在我們第一天課程的快速增長的推動下，可比課程材料的總銷售額增長了 7.4%。 BNC 的包容性和公平接入計劃在本季度增加了 59% 的收入，達到 1.21 億美元，而去年同期為 7610 萬美元。

Within this, FTC revenues increased 76% to $67 million. Gross comparable general merchandise sales increased 2.3%. General merchandise sales benefited from strength in logo and emblematic sales as well as Café and Convenience. Net sales for the wholesale segment increased 5.2% to $38.9 million. The increase was primarily due to a slight easing of supply constraints, which improved our ability to meet customer demand. The increase was offset by higher returns and allowances as well as the continued shift from physical textbooks to digital products.

其中，FTC 收入增長 76% 至 6700 萬美元。可比一般商品銷售總額增長 2.3%。一般商品銷售受益於徽標和象徵性銷售以及咖啡廳和便利店的強勁勢頭。批發業務的淨銷售額增長 5.2% 至 3,890 萬美元。這一增長主要是由於供應限制略有緩解，這提高了我們滿足客戶需求的能力。這一增長被更高的回報和津貼以及從實體教科書向數字產品的持續轉變所抵消。

DSS sales of $9 million decreased by $0.4 million or 4.5%. As Mike discussed, the DSS team has taken a more rigorous approach to profitable growth and cash generation. As a result of the operating model changes we made in December, DSS reached cash flow breakeven in January. We expect to maintain this discipline and continue to achieve free cash flow breakeven in Fiscal 2024.

DSS 銷售額為 900 萬美元，下降 40 萬美元或 4.5%。正如邁克所討論的那樣，DSS 團隊已採取更嚴格的方法來實現盈利增長和現金生成。由於我們在 12 月對運營模式進行了更改，DSS 在 1 月實現了現金流盈虧平衡。我們希望保持這一紀律，並在 2024 財年繼續實現自由現金流盈虧平衡。

Third quarter consolidated gross profit was $104.2 million, an increase of 19.8%. Consolidated gross margin rate was 23.3% compared to 21.6% in the prior year period. This was primarily due to higher retail gross margins, which benefited from an increase in higher-margin FTC and general merchandise sales. Consolidated selling and administrative expenses were down $2 million. Consolidated selling and administrative expenses as a percentage of revenue decreased to 22.3% from 25.2% in the prior year. The decrease is to lower payroll and compensation expense for long-term incentive awards as well as a partial quarter benefit from the actions to optimize our cost structure and streamline our operations that we announced in December.

第三季度綜合毛利為 1.042 億美元，增長 19.8%。綜合毛利率為 23.3%，而去年同期為 21.6%。這主要是由於較高的零售毛利率，這得益於較高利潤的 FTC 和一般商品銷售的增長。綜合銷售和管理費用減少了 200 萬美元。綜合銷售和管理費用佔收入的百分比從去年的 25.2% 下降到 22.3%。減少是為了降低長期激勵獎勵的工資和補償費用，以及部分季度受益於我們在 12 月宣布的優化成本結構和簡化運營的行動。

Since initiating the cost reduction activities in December, we achieved approximately $7 million to $8 million of run rate savings in the third quarter compared to our prior plan, which assume a return to a more normal, higher volume operating environment. We continue to expect $30 million to $35 million in annualized run rate savings once fully implemented, which includes $10 million to $15 million in FY 2023.

自去年 12 月啟動成本削減活動以來，與我們之前的計劃相比，我們在第三季度實現了大約 700 萬至 800 萬美元的運行率節省，該計劃假設恢復到更正常、更高容量的運營環境。我們繼續預計，一旦全面實施，年化運行率將節省 3000 萬至 3500 萬美元，其中包括 2023 財年的 1000 萬至 1500 萬美元。

We recorded a restructuring charge of $6 million primarily related to severance and other termination benefits. $1.5 million of the charge was in retail, $0.9 million was in wholesale, $1.8 million was in the DSS segment, and $1.7 million was in Corporate Services. During the quarter, we evaluated our store level, long-lived assets in the retail segment for impairment. As a result of this impairment testing, we recognized a $6 million noncash charge.

我們記錄了 600 萬美元的重組費用，主要與遣散費和其他解僱福利有關。其中 150 萬美元用於零售，90 萬美元用於批發，180 萬美元用於 DSS 部分，170 萬美元用於企業服務。在本季度，我們評估了零售部門的商店級別和長期資產的減值情況。作為減值測試的結果，我們確認了 600 萬美元的非現金費用。

Moving on to the balance sheet. Our cash balance was $11.1 million at the end of the quarter with outstanding borrowings of $285.6 million as compared to borrowings of $200.4 million in the prior year period. Receivables increased to $277.5 million, a $27.3 million increase from the prior year. This increase is mostly due to the timing of receivables associated with the significant growth of our First Day offerings as schools generally remit payment for students enrolled in First Day Courses after the student drop at date. As a result, the third fiscal quarter, which has been a source of cash, has shifted to the fourth quarter.

轉到資產負債表。本季度末我們的現金餘額為 1110 萬美元，未償還借款為 2.856 億美元，而去年同期的借款為 2.004 億美元。應收賬款增至 2.775 億美元，比上年增加 2730 萬美元。這一增長主要是由於與我們的第一天課程顯著增長相關的應收賬款的時間安排，因為學校通常會在學生退學後為第一天課程的學生匯款。結果，一直是現金來源的第三財季轉移到了第四季度。

As noted in our press release, we worked with our existing bank group to amend and extend our existing asset-backed facility and term loan. The ABL maturity was extended through August of 2024 and the term loan was extended through December of 2024. CapEx for the quarter was $6.3 million, a $5.8 million decrease from the prior period. This decrease was due to reduced store build-out and product and system development.

正如我們在新聞稿中指出的那樣，我們與現有的銀行集團合作修改和擴展了我們現有的資產支持設施和定期貸款。 ABL 期限延長至 2024 年 8 月，定期貸款延長至 2024 年 12 月。本季度資本支出為 630 萬美元，比上一期間減少 580 萬美元。這一減少是由於商店擴建以及產品和系統開發的減少。

At the end of the quarter, our Retail segment operated 1,388 college, university, and K-12 school bookstores comprised of 785 physical bookstores and their e-commerce sites as well as 603 virtual bookstores. As we continue to execute on our FTC strategy and simplify our cost structure to create a more efficient operating model, our total store count is expected to be lower than today, but our store platform will be more profitable and better positioned for future growth. Moving to guidance. Given our results to date and our expectations for the fourth quarter, we continue to expect FY 2023 adjusted EBITDA of $20 million to $30 million.

截至本季度末，我們的零售部門經營著 1,388 家學院、大學和 K-12 學校書店，其中包括 785 家實體書店及其電子商務網站以及 603 家虛擬書店。隨著我們繼續執行我們的 FTC 戰略並簡化我們的成本結構以創建更高效的運營模式，我們的門店總數預計會比現在少，但我們的門店平台將更有利可圖，並為未來的增長做好準備。轉向指導。鑑於我們迄今為止的業績和我們對第四季度的預期，我們繼續預計 2023 財年調整後的 EBITDA 為 2000 萬至 3000 萬美元。

With that, we will open the call for questions. Operator, please provide instructions for those interested in asking a question.

有了這個，我們將打開問題的電話。接線員，請為有興趣提問的人提供說明。

Certainly. (Operator Instructions) The first question is from the line of Ryan MacDonald with Needham.

當然。 （操作員說明）第一個問題來自 Ryan MacDonald 與 Needham 的對話。

Congrats on a nice quarter here. Great to see all the progress is being made. I wanted to start on First Day Complete. In the investor presentation, a lot of great detail in terms of the number of potential students and sort of the market opportunity there. As you think about sort of the strategy for accelerating the adoption in the cohorts, can you talk about sort of how quickly you think you can move each of the cohorts to First Day Complete? And then if we think about that 4 million students that you mentioned in the presentation that is sort of the potential opportunity, how much of that do you expect to be able to retain as you kind of make this transition?

祝賀你在這裡度過了一個愉快的季度。很高興看到正在取得的所有進展。我想從 First Day Complete 開始。在投資者介紹中，有很多關於潛在學生數量和那里市場機會的詳細信息。當您考慮某種加速隊列採用的策略時，您能否談談您認為可以多快將每個隊列移動到“第一天完成”？然後，如果我們考慮您在演示文稿中提到的 400 萬學生，這是一個潛在的機會，那麼在您進行這種轉變時，您希望能夠保留多少學生？

Ryan, it's Jonathan Shar. Thanks for the question. And yes, we're really excited about the progress we're making on First Day Complete, the growth we've had to date. And then all of the conversations we're having post the launch of our acceleration strategy. I think from just highlighting where we're at and where we're going, broadly, we're having substantive conversations with like hundreds of institutions on First Day Complete and it's really exciting to see the alignment on how the model can really enhance student outcomes and support their key objectives of driving greater affordability, convenience, and access for their students. So we're excited about that.

瑞安，我是喬納森·沙爾。謝謝你的問題。是的，我們對我們在第一天完成中取得的進展以及迄今為止的增長感到非常興奮。然後我們在加速戰略啟動後進行的所有對話。我認為，從廣義上強調我們所處的位置和前進的方向，我們在第一天完成時與數百家機構進行了實質性對話，看到該模型如何真正提高學生的一致性真的很令人興奮結果並支持他們的主要目標，即提高學生的負擔能力、便利性和訪問權限。所以我們對此感到興奮。

It's really, as we announced a multiyear journey. I think our focus is on driving the majority of our institutions to that model for Fall term of 24 or Fiscal '25 be and we're confident we're making great progress against that and the cohort strategy has been really effective. So we're excited about that, excited about we're going. We've seen many of the institutions that we're marching towards and focused on a Fall 23 launch really excited about the model, really happy with the service and support and product assortments that we're providing for their campus and campus community.

真的，因為我們宣布了多年的旅程。我認為我們的重點是推動我們的大多數機構在 24 或 25 財年的秋季學期採用這種模式，我們相信我們在這方面取得了很大進展，並且同類群組戰略非常有效。所以我們對此很興奮，對我們要去感到興奮。我們已經看到許多我們正在走向並專注於 23 秋季發布的機構對該模型感到非常興奮，對我們為他們的校園和校園社區提供的服務和支持以及產品分類非常滿意。

But as Mike mentioned, as for a bridge to be able to get through the consensus building and the governance that's required and approvals that are required to move to this subscription-like model for course material acquisition and distribution. And we've been able to do that and move folks over via a bridge to something that's profitable for running the store in an acceptable level of profitability and a great sort of sign of partnership and then allow us to work with those schools to implement the model for the following semester. So making really good progress on all of that and continue to have great conversations every day with our institutions and prospective institutions about the model.

但正如 Mike 所提到的，關於能夠通過建立共識和所需的治理以及遷移到這種類似訂閱的課程材料獲取和分發模型所需的批准的橋樑。我們已經能夠做到這一點，並通過一座橋樑將人們轉移到能夠以可接受的盈利水平和良好的合作夥伴關係標誌經營商店的有利可圖的地方，然後讓我們與這些學校合作實施下學期的榜樣。因此，在所有這些方面都取得了非常好的進展，並繼續每天與我們的機構和潛在機構就該模型進行精彩的對話。

Yes, Ryan, it's Mike. I'd just add one thing. Your question about how many of the -- in the illustrative slide in the investor presentation, we used $4 million and if you look at the footnote, it explains why that's $4 million and it's a ballpark area. We knew when we launched this strategy of requiring many schools to go to First Day Complete on a more accelerated basis because the a la carte model just wasn't working for them or for us, quite frankly, that we were going to lose some of those schools. But that's positioning us.

是的，瑞安，是邁克。我只想補充一件事。你的問題是——在投資者介紹的說明性幻燈片中，我們使用了 400 萬美元，如果你看腳註，它解釋了為什麼這是 400 萬美元，這是一個大概的區域。我們知道當我們啟動這項要求許多學校以更快的速度進入第一天完成的策略時，因為點菜模式對他們或我們來說都不起作用，坦率地說，我們將失去一些那些學校。但這就是我們的定位。

As I said in my comments, to have a platform of schools, whether it's more or less students, it's much more profitable. We anticipate that the platform will go down from where it is today, but then we expect to be able to build it back up on a different basis. And the bridge here that John describing is evidence that we're not going to shoot ourselves in the foot so to speak. And if there are situations where we can manage through one more year for some schools because they just can't get there in a year and have a very, very profitable relationship for a year by, for example, not paying any commission or charging a management fee or whatever it is that gets worked out with each of the schools because there are so many discussions, and they're age different.

正如我在評論中所說，擁有一個學校的平台，無論是學生多還是少，它都更有利可圖。我們預計該平台將從今天的位置下降，但我們希望能夠在不同的基礎上重新構建它。 John 描述的這座橋證明我們不會搬起石頭砸自己的腳。如果在某些情況下，我們可以為某些學校再管理一年，因為他們無法在一年內到達那裡，並且在一年內建立了非常非常有利可圖的關係，例如，不支付任何佣金或收取費用管理費或與每所學校一起解決的任何問題，因為討論太多，而且他們的年齡不同。

We're not doing this to the schools. We're doing this with them, and that requires conversation on each one of their preferences. So yes, I don't think we can give you a number about how many of the $4 million will be there in Fall of '23 or '24, but very confident going to be a more profitable, sustainably profitable company with this approach.

我們不會對學校這樣做。我們正在與他們一起做這件事，這需要就他們的每一個偏好進行對話。所以是的，我認為我們不能給你一個數字，說明 23 年或 24 年秋季將有多少 400 萬美元，但非常有信心通過這種方法成為一家盈利能力更強、可持續盈利的公司。

Super helpful color. I appreciate it. And then as we think about, I guess, the pathway to getting -- in terms of the transition process, what sort of time line are we looking at for the full transition to reflect?

超級有用的顏色。我很感激。然後，當我們考慮，我想，就過渡過程而言，我們正在尋找什麼樣的時間表來反映完整的過渡？

I know you talked about getting schools that are interested giving them up until the fall of 2024, which is in your fiscal '25. So there's a bit of a runway on that. But in terms of the schools that are unwilling, how quickly do you think that those come out of the model as we start to think about over the next 12 to 24 months?

我知道你談到讓有興趣的學校放棄它們，直到 2024 年秋季，也就是你的 25 財年。所以在這方面有一些跑道。但是就不願意的學校而言，您認為我們在接下來的 12 到 24 個月內開始考慮的時候，這些學校會以多快的速度從模型中脫穎而出？

Yes. I think that there are some that are already coming out of the model that we've notified, exercised a communication with as we have the right to under our contracts. So some have already moved in anticipation of going through a different solution than Fall of '23. Many went under proposal this past year, and we're still involved in part of the conversations that John is talking about are in that proposal stage.

是的。我認為已經有一些已經從我們已經通知的模型中脫穎而出，按照我們有權根據我們的合同進行溝通。因此，有些人已經開始期待採用與 23 年秋季不同的解決方案。在過去的一年裡，很多人都在接受提案，我們仍然參與了 John 所說的處於提案階段的部分對話。

Yes. And Ryan, it's Jonathan. And not all of our stores are targeted for FDC or that is the priority conversation. We have many stores within our portfolio that are performing really well. We're driving a high sell-through against enrollment on course materials to date and driving significant GM sales, as we showed in the -- at least we grew our general merchandise sales, logo products, Café/Convenience, were the drivers of that. And so it's not every school in the portfolio that is in a cohort for conversion to FDC. So I just want to make that clear, but it is the majority of our institutions.

是的。瑞安，是喬納森。並非我們所有的商店都針對 FDC，或者這是優先對話。我們的投資組合中有許多商店表現非常好。迄今為止，我們正在推動課程材料的高銷售率並推動顯著的通用汽車銷售，正如我們在 - 至少我們增加了我們的一般商品銷售，標誌產品，Café/Convenience，是驅動因素那。因此，並不是投資組合中的每一所學校都在轉換為 FDC 的隊列中。所以我只想說清楚，但這是我們大多數機構。

And then new business, we have new business that's coming into the company. We're using an SBC model from Day 1. So some of that's happened in the spring, University of Memphis would've been an example of that. They were a new client that we picked up, and they started with us from Day 1 using First Day Complete, and that's our objective. Our real objective is to get as many schools using this model because it's the best model for students. It's the best model for the schools. It's the best model for us and the publishers.

然後是新業務，我們有新業務進入公司。我們從第一天開始就使用 SBC 模型。所以其中一些發生在春天，孟菲斯大學就是一個例子。他們是我們接手的新客戶，他們從第一天開始就使用 First Day Complete 與我們合作，這就是我們的目標。我們的真正目標是讓盡可能多的學校使用這種模式，因為它是最適合學生的模式。這是學校的最佳模式。這對我們和出版商來說是最好的模式。

And using a model that allows you to sustain the level of service that you want. And it gives tons that improvement in access and outcomes is really what we should be all about. That's our mission. And the fact that it benefits us financially really just mass us that it's the right thing for us to be doing.

並使用允許您維持所需服務水平的模型。它表明，改善獲取途徑和結果確實是我們應該做的一切。這是我們的使命。事實上，它在經濟上使我們受益，這讓我們意識到這是我們應該做的正確事情。

That's really helpful clarification. I appreciate that. Maybe one more for me, just shifting to the DSS segment. It's interesting to hear that you talk about how you're sort of integrating and utilizing ChatGPT and starting to try to like weave that into the offering. I'm curious, as you think about the bartleby business and then the broader DSS business, we've obviously seen a pretty wide adoption usage among students of ChatGPT.

這真的很有幫助。我很感激。也許對我來說還有一個，只是轉移到 DSS 部分。聽到您談論如何集成和利用 ChatGPT 並開始嘗試將其融入產品中，這很有趣。我很好奇，當你想到 bartleby 業務以及更廣泛的 DSS 業務時，我們顯然已經看到 ChatGPT 的學生中有相當廣泛的採用。

Curious if what you're seeing from a competitive perspective there? Or if that's driving any pressures of students sort of only using GPT versus the bartleby study tool or other study tools? What are you seeing sort of in that segment of the business?

想知道您是否從那裡的競爭角度看到了什麼？或者，如果這會導致學生只使用 GPT 而不是 bartleby 學習工具或其他學習工具的壓力？您在該業務領域看到了什麼？

Well, obviously, I think there's been -- you can't turn on any kind of a media outlet without seeing some form of discussion almost every hour about Open AI and ChatGPT-3. And so every competitor in this space, bartleby itself, Student Brands, in particular, there's a lot of application for Open AI that, for example, Student Brands has been building into their product for some time. DSS is pivoting, I would say, quickly to incorporate ChatGPT and other large language models into the mix. It helps to drive speed and efficiency. It also reduces cost in our subject matter experts when they're entering questions for bartleby subscribers on Q&A.

好吧，很明顯，我認為已經 - 你不能打開任何類型的媒體渠道而幾乎每小時都會看到關於 Open AI 和 ChatGPT-3 的某種形式的討論。因此，這個領域的每個競爭對手，尤其是 bartleby 本身，Student Brands，都有很多開放人工智能的應用，例如，Student Brands 已經在他們的產品中構建了一段時間。我想說，DSS 正在迅速將 ChatGPT 和其他大型語言模型納入其中。它有助於提高速度和效率。當我們的主題專家在 Q&A 上為 bartleby 訂閱者輸入問題時，這也降低了他們的成本。

And a partial answer to your question is that we did have positive subscriber growth for bartleby in January. We talked a lot about the direction it was taking last year and how we pivoted bartleby a much -- a very sharp focus on profitability, efficiency and kind of getting back to some more of the basics on pricing, competition ,and that type of thing. We'll have some information coming out some news coming out about some products we've developed for helping faculty to identify uses of Open AI, plagiarism, and detection tool that Student Brands is actually in the process of releasing. There'll be a separate discussion of that in the media next week.

對您的問題的部分回答是，我們在 1 月份確實為 bartleby 帶來了積極的訂戶增長。我們談了很多關於它去年採取的方向以及我們如何轉向 bartleby - 非常專注於盈利能力、效率以及回歸定價、競爭和類似事物的更多基礎知識.我們將發布一些信息，關於我們開發的一些產品的一些新聞，這些產品是為了幫助教師識別學生品牌實際上正在發布的開放人工智能、剽竊和檢測工具的用途。下週媒體將對此進行單獨討論。

We didn't let all today, we still want to bury it. It's such an important announcement. But yes, I think that you'll find that Open AI has been around for a while. ChatGPT is a phenomenon. It's got 100 million users in 2 months and I think that's going to affect everybody's traffic across their website that has a competitive product for some time. But I think we feel comfortable and confident in the value proposition that we have been different enough than kind of a plan vanilla, Open AI, ChatGPT use case that we see tremendous value in incorporating that technology than what we already do.

我們今天沒放過，還想把它埋起來。這是一個如此重要的公告。但是，是的，我認為您會發現 Open AI 已經存在了一段時間。 ChatGPT 是一種現象。它在 2 個月內擁有 1 億用戶，我認為這將影響每個人在一段時間內擁有競爭產品的網站的訪問量。但我認為我們對價值主張感到滿意和自信，我們已經與普通計劃、Open AI、ChatGPT 用例不同，我們認為整合該技術比我們已經做的具有巨大價值。

Excellent. Thanks. I'll hop back in the queue.

出色的。謝謝。我會跳回到隊列中。

The next question comes from the line of Alex Fuhrman with Craig-Hallum.

下一個問題來自 Alex Fuhrman 和 Craig-Hallum 的對話。

As you kind of move to this all First Day Complete model, can you give us a sense of, at this point, how many schools have said they're definitely not going in that direction? And as you kind of move through this transition, is there an opportunity to maintain perhaps a scale-down relationship with some of these schools, whether that means you're opening a virtual bookstore or selling general merchandise? Or is it really more you're just going to be walking away from some of these less profitable relationships and really focusing on the best ones?

當你轉向這種全“第一天完成”模式時，你能否讓我們了解一下，在這一點上，有多少學校表示他們絕對不會朝那個方向發展？當你經歷這種轉變時，是否有機會與其中一些學校保持縮小規模的關係，這是否意味著你要開設一家虛擬書店或銷售一般商品？還是您真的要放棄其中一些利潤較低的關係，而真正專注於最好的關係？

I think we'll answer the question more specifically in June when we have a real tally of what the efforts are in terms of how many schools we're going to have for fall of '23 on First Day Complete, perhaps those that the store count, so to speak, and those that didn't go that way that have a different vision, et cetera. So I don't think we're going to get into that today because it's really in-process. We're not trying to be evasive on that. It's just it's true that there are so many conversations that are in process still that have to be resolved.

我想我們會在 6 月更具體地回答這個問題，屆時我們將真正統計我們將在 23 年秋季第一天完成的學校數量方面所做的努力，也許是那些商店計數，可以這麼說，以及那些沒有走那條路的人有不同的願景，等等。所以我認為我們今天不會討論這個問題，因為它確實在進行中。我們並不是要迴避這一點。確實有那麼多仍在進行中的對話需要解決。

And in terms of your other question -- second part of your question, yes, there are different ways to skin the cat, so to speak, to achieve profitability. Quite frankly, many of the stores, we try to manage our business on a portfolio basis. Many of the stores that we were requiring consider going to FTC in Fall of '23 very strongly requiring it, but we exited the relationship. But probably not those stores where it's going to make sense and agree to go to First Day Complete in Fall '24. And then in the bridge year, we'll go to some kind of an economic change that will allow us to service them and be profitable. But I don't think there's a possibility that something go to a virtual only, but most of these are going to be model shifts. They may not be a Fall of '23, but there'll be a Fall of '24 or will be exiting.

至於你的另一個問題——你問題的第二部分，是的，有不同的方法可以給貓剝皮，可以這麼說，以實現盈利。坦率地說，對於許多商店，我們嘗試在組合的基礎上管理我們的業務。我們要求的許多商店都考慮在 23 年秋季非常強烈地要求 FTC，但我們退出了這種關係。但可能不是那些有意義並同意在 24 年秋季完成第一天的商店。然後在橋樑年，我們將進行某種經濟變革，這將使我們能夠為他們提供服務並獲利。但我不認為有可能只進行虛擬化，但其中大部分將是模型轉換。它們可能不是 23 年秋季，但 24 年秋季或將退出。

Yes or further, Alex, it's Jonathan. And I think the positives that caused the outcome of the acceleration of the conversations and hundreds of conversations we've had is that there's not a lot of marketplace resistance in terms of the value proposition of equitable access in the First Day Complete. There seems to be pretty universal alignment on that. It's just about the prioritization from a campus perspective, and that's what we're trying to help those campuses do is drive urgency and drive prioritization to be able to implement the new model. And so I'm really encouraged about the alignment, the impact we can make on student outcomes and supporting providing a more affordable solution for students and institutions.

是的，或者更進一步，亞歷克斯，是喬納森。而且我認為導致對話加速和我們已經進行的數百次對話結果的積極因素是，在第一天完成的公平訪問的價值主張方面沒有很多市場阻力。在這方面似乎有相當普遍的一致性。這只是從校園的角度來看的優先級排序，這就是我們正在努力幫助這些校園做的是推動緊迫感和推動優先級排序，以便能夠實施新模型。因此，我對這種一致性、我們可以對學生成績產生的影響以及支持為學生和機構提供更實惠的解決方案感到非常鼓舞。

It is an important topic on all campuses. So it's really about partnering with our institutions, helping guide that discussion, moving them to a solution that ultimately is going to have a really significant impact, whether that's a much more convenient model that supports greater student well-being affordability, or just access to materials and having materials on Day 1 that's driving improved academic success in an institution. So I think it's really about partnership, driving people, supporting a process, and getting to end goal, where there's a lot of sort of mutual alignment on the value proposition and the ability to shift this model.

這是所有校園的重要話題。因此，這實際上是關於與我們的機構合作，幫助指導討論，將他們轉移到最終將產生真正重大影響的解決方案，無論是支持更大的學生福祉負擔能力的更方便的模型，還是只是獲得材料和在第 1 天擁有的材料可以推動機構的學術成功。所以我認為這實際上是關於合作夥伴關係、推動人們、支持流程和實現最終目標，在價值主張和轉變這種模式的能力上存在很多相互一致的地方。

Okay. That's really helpful. And then if I could just ask one more. It looks like if you just kind of strip out what you've reported and what you're guiding to, you're looking for adjusted EBITDA in Q4 to be more than it has in Q3, which typically -- not always, but for the most part, over the last 5, 10 years, that has not been the case. So are we still kind of in this post-COVID reopening period where your typical seasonality maybe doesn't apply? Or can we maybe interpret that to mean that maybe some of your efforts to enhance profitability are working and should carry forward into next year?

好的。這真的很有幫助。然後我能不能再問一個。看起來如果你只是去掉你報告的內容和你的指導，你正在尋找第四季度調整後的 EBITDA 比第三季度更多，這通常 - 並非總是如此，但對於大多數情況下，在過去的 5 年、10 年裡，情況並非如此。那麼，我們是否仍處於 COVID 後的重新開放時期，您的典型季節性可能不適用？或者我們是否可以將其解釋為您為提高盈利能力所做的一些努力正在奏效並且應該延續到明年？

Yes, Alex, a couple of things. First off, the FTC program has scaled quite a bit year-over-year, and some of that revenue does fall into the fourth quarter the way that it sells and the way it gets earned and booked. And then the other part of it is, as you said, the cost management measures we disclosed the in-year benefit, we estimate to be something like $10 million to $15 million with about $7 million to $8 million this quarter time. So that's kicking in for a full quarter for the first time in the fourth quarter. And we're continuing to take measures beyond what we did in December that will help to impact the fourth quarter as well. And Tom, you might want to comment.

是的，亞歷克斯，有幾件事。首先，FTC 計劃同比擴大了很多，其中一些收入確實以其銷售方式以及賺取和預訂的方式進入第四季度。然後，正如您所說，另一部分是我們披露的年內收益的成本管理措施，我們估計本季度收益約為 1000 萬至 1500 萬美元，其中約有 700 萬至 800 萬美元。因此，這是第四季度首次出現一個完整的季度。我們將繼續採取我們在 12 月所做的措施之外的措施，這也將有助於影響第四季度。湯姆，你可能想發表評論。

Yes. No, Mike, that's right. And Alex, I think given where we are in a year, we still feel confident we're within the range, but we might be towards the lower end of it.

是的。不，邁克，沒錯。亞歷克斯，我認為考慮到我們在一年中所處的位置，我們仍然相信我們在這個範圍內，但我們可能會接近它的低端。

Okay, that's really helpful. Thank you, guys.

好的，這真的很有幫助。感謝你們。

There are no additional questions waiting at this time. So I will pass the call back to Hunter Blankenbaker for any further remarks.

目前沒有其他問題等待您回答。因此，我會將電話轉回給 Hunter Blankenbaker，以徵求任何進一步的意見。

Okay. Great. Thanks, Hannah, and thanks, everyone, for joining us today and certainly for your continued interest in BNED. As a reminder, our fourth quarter earnings will be in late June, and thanks again for joining today.

好的。偉大的。感謝漢娜，感謝大家今天加入我們，當然也感謝你們對 BNED 的持續關注。提醒一下，我們的第四季度收益將在 6 月下旬發布，再次感謝您今天的加入。

That concludes today's Barnes & Noble Education Fiscal 2023 Third Quarter Earnings Conference Call. Thank you for your participation. You may now disconnect your lines.

今天的 Barnes & Noble Education 2023 財年第三季度收益電話會議到此結束。感謝您的參與。您現在可以斷開線路。