In the following video, Ronald Packard, CEO and founder of K12, sits down with Motley Fool analyst Matt Argersinger and explains how K12 is poised to meet the needs of the students of 2013 and beyond.
A transcript follows the video.
Matt Argersinger: So what should an investor be watching, say, in 2013 or maybe the next few years with K12? What are some of the milestones?
Ronald Packard: Well, I think what investors should watch is K12 continuing to do what it's always done. What does it always do? We continue to invest in great products. We continue to grow enrollment quite rapidly. We continue to expand our addressable market by having new states approve virtual schools or new virtual schools open that are partners. We're looking to open up more specialized schools, so you'll see multiple schools in each state that might have a slightly different value proposition. Some might cater to kids who need a lot of remediation. Some might cater to things like vocational or highly gifted kids, so we're going to see a lot more segmentation within the schools themselves, and I think that makes it better for customers, right?
Again, we're big believers in the more choices you give students, the higher the odds the student will find a school that meets their needs. So I think just watch what we're doing. We came under a lot of scrutiny with an article in The New York Times about a year ago, and we've continued to; students have come to us at the same rates, and we've continued to add new states. We have caps coming off in several states this year and next, so our business continues to move because we deliver great for students. Our students come to us, and that's why we get referral rates; despite whatever recruiting efforts we do to make kids aware, it's referrals from existing students. The best thing I can tell any investor is our business grows primarily because students like it and they tell their friends.
Argersinger: So you've kind of answered my last question, but I'll ask it anyway. What's maybe the No. 1 reason why an individual investor should buy K12 today and hold it for the long term?
Packard: I think the No. 1 reason is because we're doing great things for kids, and if you do that, we're going to continue to grow and have financial success. That's it. And now where you look where the valuation's trading at, it's incredibly compelling to find a company at this valuation growing like we're growing, doing a great thing for kids socially, and I don't think there's anything else that quite offers that.
Argersinger: Thank you very much.
Packard: It was a real pleasure, thank you.
Argersinger: A great pleasure.
