Barnes & Noble Education, Inc. (BNED) CEO Mike Huseby on Q2 2021 Results - Earnings Call Transcript

Barnes & Noble Education, Inc. (NYSE:BNED) Q2 2021 Earnings Conference Call December 8, 2020 8:30 AM ET

Company Participants

Andy Milevoj - IR

Mike Huseby - Chairman and CEO

Tom Donohue - CFO

Jonathan Shar - EVP, BNED Retail and Client Solutions

Lisa Malat - President, Barnes & Noble College

David Henderson - President, MBS

Conference Call Participants

Ryan MacDonald - Needham

Alex Fuhrman - Craig-Hallum Capital

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Barnes & Noble Education Fiscal 2021 Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Andy Milevoj. Thank you. Please go ahead, sir.

Andy Milevoj

Good morning, and welcome to our fiscal 2021 second quarter earnings call. Joining us today are Mike Huseby, CEO and Chairman; Tom Donohue, CFO; Jonathan Shar, Executive Vice President, BNED Retail and Client Solutions; Lisa Malat, President of Barnes & Noble College; and David Henderson, President of MBS.

Before we begin the call, I’d like to remind you that the statements we make on today’s call are covered by the Safe Harbor disclaimer contained in our press release and public documents. The 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.

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.

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

Mike Huseby

Thanks, Andy, and thank you all for joining us this morning. During the past few months we've seen a vastly different college experience take place nationwide. Our campus partners have adapted to a fall semester. It looks very different than in years past. Between navigating the late start dates introducing blended learning format implementing widespread student testing and more colleges and universities adjusted as best they could to the ongoing challenges that COVID-19 pandemic continues to present. Through all of this BNED has been able to pivot accordingly ensuring that our customers receive uninterrupted service no matter where, when or how their learning took place this fall.

As we have highlighted since the onset of this pandemic the strategic investments we have made in our digital offerings e-commerce solutions warehouse operations and campus stores have uniquely positioned us to offer the flexible and adaptable solutions that institutions students and faculty need.

Over the past few years we have introduced solutions such as our BNC First Day model and the BNC Adoption and Insight Portal to drive convenience for students and administrators and respond to institutions increased emphasis on affordability access and achievement. We have also developed a new digital offerings such as our bartleby suite of services to ensure students have access to 24/7 academic support.

Coupled with our virtual bookstores dropship offerings and fulfillment capabilities powered by our MBS subsidiary, BNED has created an unmatched value proposition which we believe has become only more relevant in light of the challenges this pandemic has presented for institutions. It is because of this that we have continued to attract new clients and generate new business growth $93 million in new business today this fiscal year or $71 million on a net basis.

With that being said, we are continuing to experience the impacts of the pandemic in other areas of our business and our adjusting and adapting accordingly. As anticipated, we experienced substantially lower general merchandise sales this quarter, which significantly impacted our profitability given the relatively high margins of our GM business. Our second quarter traditionally sees higher general merchandise sales due to athletic events many of which were either completely canceled or took place in a reduced capacity this fall. Our field team has done a tremendous job managing expenses to help mitigate these declines, which Tom will discuss further detail.

Compared to our expectations, textbooks performed relatively well particularly considering many students did not have the traditional on-campus experience or did not attend on-campus classes at all. Textbook sales declined 19% for the quarter as compared to 7.7% decline in the prior year period. Because of substantially reduced foot traffic on campus and in our campus stores due to pandemic restrictions, eCommerce remains an important and accelerated sales channel for us.

We continue to see a large percentage of shoppers purchasing their textbooks and general merchandise on our bookstore website. eCommerce sales represented 56% of our total Q2 sales as compared to just 36% in the prior year. We have made continued progress in the development of our new eCommerce platform this quarter. This exciting platform will provide a hyper personal, hyper local shopping experience for customers.

We continue to see growth and momentum of our First Day and First Day Complete inclusive access programs, which has become even more relevant institutions in light of the current learning environment. At a time when many things remain uncertain, our First Day offerings enable schools to provide a more affordable and highly convenient model that ensures students receive their course materials and are ready to learn by the first day of class. This is more critical now than ever.

At the start of the fall semester, we successfully launched First Day Complete in 12 campuses and we expect to implement the program at additional campuses for the start of the spring semester. As we look ahead to next fall we are in deep discussions with a significant number of our campus partners about transitioning to First Day Complete as they look to take advantage of the benefits of our -- in all inclusive model to enhance access affordability and student academic achievement.

As we continue to support our campus partners to our bookstore operations and course material offerings we also continue to serve students directly through our DSS segment. The demand for bartleby’s homework health solutions has recently exploded. October 2020 was our highest traffic month ever with approximately 4 million unique visitors in the month up 378% versus last year and up almost 80% versus spring peak traffic.

We are focused on scaling this business in a quality manner that will lead to sustainable subscriber growth. Bartleby’s potential to add significant shareholder value to BNED is truly exciting. The rapid emergence and persistence of online and blended learning format only strengthens the need for this digital solution. This past quarter we saw continued demand for our bartleby products from a student’s reserve. Bartleby grow subscribers grew to over 120,000 over 120,000 with revenue increasing 53%.

On a year-on-date basis subscriber growth is up over 40% because fewer students are on campus right now, we have seen a smaller percentage of bartleby sales taking place through our in-store channel and while our store teams are still putting great effort into selling their customers we've also increased our focus on other sales and marketing channels to ensure that bartleby is available to as many students as possible. This includes SEO which has continuously seen our expectations in driving users to bartleby remains a core aspect of our growth strategy.

Additionally during the second quarter we entered into a partnership with Blackboard a leading ed-tech company to offer our bartleby solutions in their newly launched Blackboard assist feature. Blackboard assist as a feature, within Blackboard learning management system that enables higher ed students to search and access academic support services from their institutions as well as from curated third party tutoring and homework tools such as bartleby right within their LMS.

Bartleby will offer two products to Blackboard system in the United States. Bartleby help and Bartleby right. Bartleby help is institutionally branded version of our Bartleby Learned product which provides asynchronous online tutoring from experts who are available 24/7. We are very excited about this new partnership and expanded distribution it provides for our bartleby suite of services in the United States. Blackboard learn as a leading global learning management system in the US and serves millions of students many of whom are outside of the BNED footprint.

We believe that partnerships such as this one vital source will allow us to grow brand awareness for bartleby in turn driving increased subscriptions and revenue. As we look to further scale our Bartleby suite of solutions, we will continue to explore additional partnerships such as this one, which will allow us to scale at faster rates. This was obviously a very unique fall rush for our stores, for students, for faculty and for our campus partners.

With our focus on the health and safety of our people and communities, our stores resumed operations on campuses, where it was deemed safe to do so this fall. Supporting customers with safety measures such as mobile curbside pickup, contactless payments and socially distant store layouts. We are immensely proud of our teams for the ways in which they have adapted to change these past few months.

One of our biggest strengths as a company lies in the relationships we have on campuses nationwide. Our partners, students and faculty rely upon us for best-in-class service and even in the midst of a global pandemic, we have been able to continue delivering just that. As we've noted previously, we continue to expect COVID-19 to impact our business throughout this fiscal 2021. In response, we have substantially adapted our cost structure and continue to take actions to reduce costs and operate more efficiently in this environment. We will remain vigilant and highly focused on managing expenses and liquidity prudently.

I would like to take this opportunity to once again thank all of our campus partners and our people at BNED, their tireless efforts throughout these challenging times. Even as we have had to adapt to difficult circumstances, our teams have continued to make significant progress on our goals and I'm very proud of the ways in which they’ve all continued to innovate and move forward. With that, I will turn it over to Tom for the financial review.

Tom Donohue

Thanks, Mike. Please note that our fiscal 2021 second quarter ended on October 31, 2020 and consisted of 13 weeks. All comparisons will be to the prior-year period unless otherwise noted. Total sales for the quarter were $595.5 million compared with $772.2 million in the prior year. This decrease of 176.7 million or 22.9% was comprised of $165.2 million decrease from the retail segment, a $3.8 million decrease from the wholesale segment and a 0.7 million increase from the DSS segment. BNED’s fiscal 2021 second quarter results were significantly impacted by the ongoing COVID-19 pandemic as many schools continued to adjust their learning model and significantly reduced their on-campus activities in response to the pandemic.

While many big conferences resume their sporting activities, fan attendance was either eliminated or severely restricted which had a substantial impact on the company's high-margin general merchandise business. Sales were also affected by overall enrollment declines which were further exacerbated by the decline of international students who either studied online or deferred their studies as a result of the pandemic. Retail comparable store sales declined 28.1% during the quarter comprised of a 19% decline in textbook sales and a 52% decline in our general merchandise business.

Our general merchandise business which includes clothing and food, and relies on store traffic throughout the semester was far more impacted by the reduction of students, on campus and the elimination of a campus social events and sporting events. These declines were partially mitigated by BNC’s rapidly growing First Day offerings, which incorporate course material fees into students’ tuition fees and grew 77% to $53.4 million during the quarter. Net sales for the Wholesale segment decreased $3.8 million or 9.5% to $36.4 million, primarily due to decreased gross sales, partially offset by lower returns and allowances.

DSS sales grew $0.7 million or 14% to $5.9 million, benefiting from the growth in Bartleby subscriptions and our Student Brands business. Bartleby subscriptions revenue increased 53% to $1.7 million, while Student Brands’ revenue increased 3.8% to $4.3 million. The consolidated gross margin rate for the quarter was 19.4% compared to 24.2% in the prior year period. This decrease was primarily due to the shift to lower margin digital courseware and lower sales of our higher margin general merchandise products, coupled with higher markdowns. This is partially offset by our efforts to negotiate lower contract costs.

In anticipation of the challenging sales environment, we continue to prudently manage payroll and store operating expenses. These actions coupled with the cost reduction actions taken in fiscal 2020 enabled us to reduce selling and administrative expenses by $21.4 million or 18.9% compared with the prior year period. As we look ahead to the spring rush period, we anticipate that schools will continue to prioritize the health and safety of their faculty and students and continue to adjust their learning models in response to the pandemic.

We expect that they will continue to restrict on campus social events including sporting events to reduce crowds and follow COVID-19 safety protocols. We remain committed to serving our partners how I really choose to resume learning and we'll continue to prudently manage expenses and liquidity in light of the lower sales environment. Due to all the uncertainty that COVID presents in the near and intermediate term we are not providing fiscal 2021 guidance. We do expect that COVID will continue to have a significant impact on our business during fiscal 2021.

At the end of the quarter our cash balance was $7.4 million with outstanding borrowings of $99.5 million as compared to $24.6 million of cash and no borrowings in the prior year period. This difference is directly the result of the lower sales environment we are experiencing, but better than our own expectations. Our current liquidity position remains strong despite the challenging climate.

CapEx for the second quarter was $9.1 million compared with $10.9 million in the prior year. Currently, our retail segment operates 1,439 college, university and K-12 school bookstores comprised of 768 physical bookstores in their e-commerce sites as well as 671 virtual bookstores. As of today we have contracts to open an additional nine stores in fiscal 2021 with one additional known closing primarily of the smaller unprofitable store. This will bring our total physical and virtual store count to 1,447 locations net of closed stores.

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

Question-and-Answer Session

Operator

[Operator Instructions] And your first question here comes from the line of Ryan MacDonald from Needham. Please go ahead. Your line is now open.

Ryan MacDonald

Yeah. Good morning everyone. Thanks for taking my questions. Congrats on a nice quarter here during challenging times. As you started to look towards the spring semester, I think there's a recent New York Times article that discussed that a number of universities are expecting more students on campus this coming spring. Just would be curious to hear sort of how that compares to the conversations you're having with your university partners and how you're approaching sort of inventory building as we get to the spring semester here?

Mike Huseby

Hey Ryan, it's Mike. I'll give a general answer and then let Lisa Malat, President of our B&N College Operations jump it. Obviously, it's very hard to predict what's going to happen because as we saw in the [indiscernible] on how COVID moves and how well it gets controlled, we saw today the first vaccines are starting, but how fast will they get rolled out, et cetera.

We still have a number of schools that is different by geography as you saw in California that many of the schools are state schools decided to go full remote. That was fairly unusual. Many other schools went hybrid in the fall and those that didn't go hybrid and went full on-campus some ended up having to change their plans.

I think the same thing as a risk of happening in the spring although now that the schools have been through a full semester of this adaptation and there's going to be a relatively long break for most schools between Thanksgiving and many schools business students other than to have finals taken virtually for the winter break to be fairly long break there. So I'll let Lisa talk about what we're actually hearing from our campus partners so we can address your question.

Lisa Malat

Sure. Good morning, Ryan. I saw that article as well and immediately reached out to our field vice presidents just to make sure that we had the latest insights on what's happening on campus. I mean Mike’s right, it is very geography driven. The trend we are seeing is that schools are pushing their openings. Right. They're not opening till mid-January or late January. We heard that yesterday as an example for Yale and Kentucky. Pretty universally, they're canceling spring breaks. Obviously they don't want students leaving campus, come back to campus et cetera.

So there are many universities that are not making a definitive decision in terms of what's going to happen later on in this spring but this trend has gotten up later opening and the cancellation of the spring breaks. Our expectation is that learning will continue to be driven remotely at this time.

Mike Huseby

Maybe Tom can answer your question on the spend, inventory spend.

Tom Donohue

Yeah. Thanks. This is Tom, Ryan. Our intention and plan has always been to not be ahead of what we see in sales. So to the extent that the sales aren't coming, we're not going to be ahead of ourselves on the inventory and we'll continue to manage that prudently and really manage to the campus activities that we see in terms of the activities and the events that to this point in time have really been non-existent.

Mike Huseby

You can see that -- the comments on the scripts, this comes in the script that we are with an increasing percentage of sales going to e-commerce which is fairly obvious as to why, not only e-commerce from our own fulfillment but we instituted drop ship capabilities of general merchandise and many of our general merchandise partners and that's increasing. So that, that helps us in the context of being able to fulfill and also the breadth of the selection that our customers can get it. These are orders that are being filled directly by manufacturers through the common subject drop ship system.

Ryan MacDonald

Thanks for that direction and it leads right into my next question nicely around e-commerce. It's great to see sort of the materially increasing percentage of merchandise sales coming from e-commerce. Can you talk about what your expectations for the space rollout of the new platform on, as you get into calendar 2021 and perhaps what's really potentially constraining or preventing on a university term from really rolling that out and implementing it more quickly?

Mike Huseby

Jon Shar, can you address that question.

Unidentified Company Representative

Okay. Yeah. Hey, Ryan. It's Jonathan Shar. Again our plan is to continue our developments and have a phased rollout of our new e-commerce platform starting after the spring rush and then how that phased throughout and have that implemented prior to fall rush for our next fiscal year.

Ryan MacDonald

Excellent. And I guess on the…

Mike Huseby

Okay. And in terms of the and answering your question about what's preventing any time you put in a new e-commerce system particularly under these circumstances you want to make sure that we do things on a very customized basis for each school. So this isn’t flipping a switch. We have 770 or so microsites and so that we have begun to roll it out, it's not a flipping a switch type of an exercise and it's very customized.

So, I think it's a very cooperative process between us and the school. So, to answer your question directly some of it will depend on the resources that the schools devote and some of it depends on us making sure that as we're scaling this we're doing it in a way that optimizes the transition from the old system to the new system.

Ryan MacDonald

Excellent. And just one last one from me, I'll jump back in the queue. On first day and first day complete great to see 12 implementations during the semester, as you look at sort of expectations for additional roll out in the spring, what are your expectations in terms of number of universities or maybe a comparison order of magnitude compared to the fall and how’s the pipeline looking for fall 2021? Thanks.

Jonathan Shar

Yeah. Hey, it's Jonathan again. Yeah for spring, we are and we thought and we've announced publicly that Sam Houston State University is launching for spring term which from an enrollment standpoint will be our largest campus implementing first take complete and then -- and we haven't properly communicated what the other schools would be for spring but looking ahead the pipeline as noted in the script is really robust.

We are in deep discussions with a significant number of campus partners about transitioning to the model and the benefits of the whole inclusive model and the access affordability and achieving an overall convenience is even more relevant today. So we're really excited about the number of conversations and the opportunity to really show significant growth in First Day Complete for next fiscal year and really starting with fall term in 2021.

Mike Huseby

The other thing, this is Mike. The other thing I would add to that is that as we said we had a $93 million of new business thus far this year in fiscal 2021 and as we're doing that we're having these conversations with the new schools on First Day Complete.

We're trying to target our efforts towards those schools to have an open mind towards inclusive access and -- in First Day Complete that does it mean all the schools will do that that we're picking up business schools, but that's an important point because it validates -- the new business that we're selling validates our overall model which is things are more complicated for schools. They have more of an emphasis on managing the fiscal aspects of their business and because they share every dollar that we produce under our contracts with them, they're very incentivized to outsource to us.

So the model -- the overall business model within Barnes Noble College has been validated by the new business as well as the move to First Day and First Day Complete and by the way and with our very recent conversations with the top management of large publishers and in general they're very committed to inclusive access as a way to grow their digital businesses which is important to us.

Operator

Your next question comes from the line of Alex Fuhrman with Craig-Hallum Capital. Please go ahead. Your line is now open.

Alex Fuhrman

Great. Thanks very much for taking my questions. I'd love if we could take a step back for a sec as you think about planning for next year and years to come. As you engage with your partner schools and look at potential new contracts, do you feel that universities are still envisioning the campus bookstore as a central community space? Can you talk about maybe how that might look different after the pandemic or the same as it has been before 2020?

Mike Huseby

Yeah let me handle that. I think my overall comment would be that as I just said many of the reasons that we're growing our new business have to do with the complexities of not just content procurement, but also retailing and I think one of the things we really bring to the table, is we strengthen in the retail experience within the stores we expect that to continue and as I've said in the past I personally believe and this is our corporate view, this is not necessarily supportable by fact, but there's going to be quite a pendulum swing back to students and others who are interested in learnings getting back to social distance, while they will be careful in certain respects, I think that there is going to be a real urge to get back together and spend time physically, which we're not necessarily planning our business Alex to return to physical store traffic levels of fiscal year '19 and the fall of next year, I don't think that would be smart but we're expecting the overall community hub feel of our stores to continue and maybe even more important than even given what's changed prior over the course of last year, but we think we can…

Lisa Malat

Yeah. What you said is exactly right. Alex, as we go to market, it’s really too key really value prop for us, it's obviously affordability and what we're able to do to drive that through digital and First Day Complete etcetera. But the other is really our expertise and prowess as a retailer and our ability to build community to drive traffic to celebrate the school brand and to drive revenue right.

And we recently did a de-brief Alex of around 12 of our schools recently signed schools to understand what drove their decision and how did we differentiate in the marketplace and working through so loud and clear and all of those responses was our ability to drive community and to create that dynamic community space not just for the students, but obviously for parents alumni, but also in more of the retail community locations to bring in the outside community into the store. So universities are very, very focused on making sure that the student experience continues to evolve and that we remain really a central hub on campus.

Alex Fuhrman

Great. That's really helpful. And then you're just thinking about the numbers real a little bit, what are some of the things that you're going to be looking towards over the next few months and quarters as you make the decision to start bringing some expenses back and personnel back or are there kind of signposts that you're going to be looking for over the next semester or two as you start to make those decisions?

Mike Huseby

Well, all that’s tied into our planning for spring and beyond obviously is you’re inferring and we've done a very painful but I would say great job of managing costs and costs related to the payroll and other costs and other capital spend and that started as soon as the pandemic hit we furloughed almost 11,000 people. And then we've been bringing people back into stores. Primarily, we're talking about Barnes Noble College in terms of this question because MBS has been running three shifts 24x7 since COVID hit given their assets and their ability to satisfy virtual and remote learning requirements and probably the same thing and they're exploding in terms of their growth right now.

So the Barnes Noble College is really the focal point in terms of expense management because that's where most of the costs are and that's where most of the challenges. And so what we're planning -- excuse me what we're planning on is doing the same thing that we've done which has been very flexible and changing our cost structure, so that much more of it is variable as opposed to fixed.

We have changed the mix of our full-time employees with the mix of our seasonal and tougher employees and we changed, Tom can get into this to explain in a little more detail, but our objective is to maintain that change in our cost structure which allows us to be much more nimble and reactive quite frankly on a short-term basis which is once we get news from various schools how are we able to staff and accommodate and at the same time use technology to try to reduce payroll costs, but as you may what you may want to comment further on this.

Jonathan Shar

Yeah. No thanks, Mike. I was hitting some of the guide posts that we're thinking of generally revolve around the activities or what we've been experienced with a lack of activities on campus, but the severely restricted or non-existent fans at football games and the likes, we're heading into obviously basketball season, one of the NCAA tournament look like, so as these events and social events start returning more than normal I think that's some of the guideposts we're thinking of, as we consider some of the expense items that you're referring to, but we’ll make it pretty well in terms of how we've adjusted the model and this is really attributable to the college team and the field staff on how we switch from a longer standing full time employees to more temporary seasonal and that's helped to reduce costs significantly.

Mike Huseby

I think the other unknown and I wouldn't call it a guidepost necessarily but as the vaccine progress which I don't think they have enough information on yet, you can even form your own speculation based on all the information that -- that’s out there. I mean that we are starting to see the actual roll out of the vaccine and that’s not just how does it impact students, but how does it impact faculty who are concerned, will they get the vaccines earlier that, that we don't know the answers to those questions but what it does look like from the early reports even listening to you around this morning from the healthcare experts is that the vaccines do look like they're effective and thus far I mean the clinical files, I mean and that et cetera. So that's a big thing that we'll keep our eye on and every school is keeping their eye on. And I'm sure it's going to be pushing to get their faculty and the administration involved in [indiscernible]

Alex Fuhrman

Terrific. Well, you guys have done a great job managing through this year and I appreciate all the answers. Thanks.

Operator

[Operator Instructions] Your next question comes from Maureen Wallace [indiscernible] Capital. Please go ahead. Your line is now open.

Unidentified Analyst

Thanks for taking my questions and congrats on the strong results. I just wanted to follow-up on bartleby where I think you mentioned Mike 378% increase in your monthly unique and up 80% in Spring. I was just trying to square that with the growth in revenues which I assume that maybe you were getting higher conversion rates on the in-store traffic last year and that's why the revenue is not growing quite as fast, but I just want a higher level sense of how you think the price performing in the marketplace and also any ways that you see to enhance the product and distribute it more broadly?

Mike Huseby

That's a question I could spend a lot of time on because I’ve been spending a lot of time personally with team which you know did a wonderful job getting us to this point and has built a really strong team within DSS, lots of further opportunities at the end of November. So I've been spending a lot of time with that team and to give you a short answer I guess first off, in terms of how does it square with revenue and how does it relate to the in-store really what you're asking is what did the sub look like that is sold through our POS system in-store versus the great growth we've had, much of which has come from our long term SEO strategy and in Q&A in particular, we’ve taxable solutions with Q&A in terms of home work in Q&A is just literally exploding.

I mean we’re spending a lot of time right now just working on the quality of our responses, the turnaround time in our responses, and all those things that we need to do from a competitive perspective and also a client service perspective to make sure we have a sustainable business and great customer experience.

So what you'll start to see is, you'll start to see because of the technology that the team has put in place will start to see a service of volume of activity we get in, we're prioritizing those questions and that we're getting in daily to make sure we’re answering our paid subscribers first, okay. So this product has been built largely as you know on a model where it’s largely from a functional and our focus hasn’t been on really the financials. It’s really getting the product build, the content put in place and getting everything put in place that we need to offer. That's changing.

We're now focusing more so on as you ask and building the quality of the product to differentiate it. So when we bought Student Brands in 2017, one of the main reasons we brought that company into our family is because they have a tremendous team of people that are ahead of what we think of -- where we think the competition is on artificial intelligence and machine learning. That’s enabling us to sort through volumes of questions that are about three times what we’re expecting on a daily basis as of right now in our plans and to prioritize them using what we call bottle reconnect, it’s basically a router that takes using artificial intelligence and really being able to analyze the source of the question, it allows us to sort of huge amounts of - large amounts of questions, so that we're focusing on paying subscribers and our strong, our strongest prospects for converting questions and answers to more sustainable subscribers.

The LTV associated historically, the LTV associated with an in-store sale has been substantially higher than one that we get from an SEO out of a footprint we call it a sale and we have ways that we're working on to close that gap and by enhancing the product. I don't really want to get into our specific product roadmap on this kind of a call for competitive reasons. But we have a tremendous team that's working on a lot of things that are not distant objectives that are being worked on and rolled out as we speak whether it's expanding subjects getting a lot more with video and various contacts and that type of thing.

So you'll see a much more I think robust product in the very near term from bartleby even though it's performing very well right now in terms of improving its performance on Q&A and textbook solutions. So we're very excited about it. I'm personally very excited about it, because I'm getting the much more involved personally with the team and seeing what a strong team we’re having in DSS and what a great job we’re doing.

Unidentified Analyst

Yeah. Thanks Mike. And I appreciate that. And I guess dovetailing on that just since you did bring it up I mean I know that you obviously have a great handle on how that's performing and what you're working on. But do you think that there is -- is there an organizational strategy I guess as far as eventually consolidating that under someone else is currently with the company or would you look to potentially make an external hire at some point around managing DSS and bartleby.

Mike Huseby

Our objectives with bartleby are to take it to the next level as a business and how we do that and we will announce when we're ready to do it. So I think we have a plan. I just don't think it makes sense to talk about that and so we have specifics.

Unidentified Analyst

Understood. And then as far as First Day, I thought the revenue number was pretty high compared to what I was expecting $53 million and I assume a lot of that is -- the bulk of it is still complete, but is there any sense that you can give us as far as how much of it might be First Day Complete at this stage?

Mike Huseby

We're not going to break those -- we're not going to break those numbers out today. I mean at the end of this fiscal year, we may provide some context on the growth potential. I think what's really exciting about it is the margin expansion. And we have to be a little careful about disclosing those numbers given how new the product is.

We want to make from a competitive perspective and also just I think that inclusive access as a -- as an offering and a concept incorporates both First Day and First Day Complete. And until we scale First Day Complete which we expect to do based on the pipeline discussion we heard in a much more substantial way in the fall of next year, I don't think we can look towards breaking those numbers out. I don't think it benefits us right now to do that other than in the context of like Jon's metrics around enrollment for example.

The enrollments that we talked about Sam Houston State and the size of that relative to other First Day Complete clients. We're pushing for First Day Complete metrics that really revolve around the -- of enrollment increase and margin contribution. So I think that yes we'll start to see those numbers highlighted that it will probably be -- probably won't be done on a -- done this year. I just don't think it makes sense to do that yet.

Unidentified Analyst

Sure. Yeah. That makes sense and I guess with the sales motion there being tied strongly to new business which I know Lisa is running, but then as far as what John you've been specifically doing there? Have you been able to I guess sort of staff that sales team up? And are you experimenting with anything new around go-to-market or what you have in place working pretty well?

Jonathan Shar

Yeah. We've actually have a significant dedicated focus to First Day Complete and communicating the value proposition to both current clients and prospects alike and we have implemented a number of new marketing and -- sales and marketing programs that are doing a really effective job of getting the attention of our campuses to have detailed and substantive conversations on First Day Complete and if the value proposition is -- that it delivers is a priority on many campuses and the businesses, the answer is yes.

So we're driving those conversations where the pipeline is really, really robust and sort of aligned for a significant growth from a number of institutions and as Mike said also the overall enrollment of students within our campuses that will be participating in for stay complete as well as margin contribution.

Mike Huseby

Yeah. Thanks. John and his team as well as we said the field has done a tremendous job focusing on first day complete. And the marketing and creativity, I don’t want to get into that over the phone in terms of what we’re doing specifically, given the different some of the competitive issues. But they’ve been very creative. We even have certain board members that are getting directly involved because of their backgrounds and their expertise and endorsement of this product which has been effective as well. So we’re pulling out all stops.

I guess I would say in a very thoughtful but an aggressive way to market that pipeline that we have. And the good news about it is that a lot of the things have been put in place such as the integration with the student information system which is basically a very simple thing to do. AIP with option inside portal, a lot of these tools that we've produced under John’s leadership have been put in place and many of these tools already. So they’re going to first day complete is the next step in the sequence and if not difficult to do.

It’s a heavy lift anytime you go from a conventional part model to a first day complete for a campus the first time you do it. But having these tools in place makes it much simpler and much more productive for the school as well as for us. So there’s been a strategy behind this as you know for the last couple of years in terms of what we’ve been developing and putting into schools in terms of tools to make this the first day complete implementation sequentially fairly, fairly easy to do. It's a logical next step for many of the schools.

Unidentified Analyst

Great. Thanks. Thanks a lot both of you. And then I guess for Lisa just on the new business side, the $72 million of net new business year-to-date is a great number. I guess, how are you feeling about the pipeline heading into 2021 and even I guess calendar 2021 in the back half of fiscal 2021?

Mike Huseby

Yeah. We're feeling very, very bullish about in the numbers, prove that out our prices up on around $100 million and where it was last year worries, so as everyone has talked about and in the complexity of the industry and the pressure that the schools are under having to make those really tough decisions about cutting academic programs or tenure track faculty is really driving schools to wake up and recognize that they need to operate more like a business and we are in such a position of strength because of our ability to really customize and break apart our models and rebuild them in anyways that the schools need. So I am very, very bullish about the strength of the opportunities and the pipe going into next year.

Unidentified Analyst

Great. Well, thanks, thanks a lot, everyone, and good luck going forward.

Operator

And there are no further questions in the queue at this time. I'll turn the call back over to Andy Milevoj for any closing comments.

Andy Milevoj

Great. Thank you. And thank you all for joining us on today's call and for your continued interest and interest in BNED. Please note that our next scheduled financial release will be our fiscal 2021 third quarter earnings on or about March 4, 2021. Have a great day everybody. Bye, bye.

Operator

And ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.