Much of this info was gleaned from www.2u.com investor webpage
What does it do?
We are a leading provider of cloud-based software-as-a-service solutions that enable leading nonprofit colleges and universities to deliver their high quality education to qualified students anywhere.
What I think:
Up until this year they were focused on Graduate online courses, working with the likes of Yale and Harvard to mention a few.
This is a niche that might protect them more than just your average community or 4 year college type degrees.
Not sure if this adds value, I would think it might:
The Washington Post Names 2U, Inc. a Top Workplace for the Fourth Consecutive Year $TWOU
Does it have any moat?
The overall market for technology solutions that enable higher education providers to deliver
education online is highly fragmented, rapidly evolving and subject to changing technology, shifting
needs of students and educators and frequent introductions of new delivery methods. Several
competitors provide platforms that compete with some of the capabilities of our platform. Two such
competitors, are Pearson Online Learning Services and Wiley Education Services, owned by Pearson
and John Wiley & Sons, respectively, both of which are large education and publishing companies. In
addition, traditional massive open online course providers have evolved from providing massive open
online courses to providing short course certificates, nano degrees and similar non-degree alternatives.
Many of these companies provide components of the technology and services we provide and these
companies may choose to pursue some of the institutions we target. Moreover, nonprofit colleges and
universities may elect to continue using or develop their own online learning solutions in-house.
We expect that the competitive landscape will expand as the market for online education offerings
at nonprofit institutions matures. We believe the principal competitive factors in our market include the
• brand awareness and reputation;
• ability of online graduate programs and short courses to deliver desired student outcomes;
• robustness and evolution of technology solutions;
• breadth and depth of service offering;
• ability to make significant investments in launching and operating graduate programs;
• expertise in marketing, student acquisition and student retention;
• quality of student and faculty experience;
• ease of deployment and use of technology solutions;
• level of customization, configurability, integration, security, scalability and reliability of
technology solutions; and
• quality of university client base and track record of performance.
We believe we compete favorably on the basis of these factors. Our ability to remain competitive
will depend, to a great extent, upon our ability to consistently deliver our high-quality platform, meet
university client needs for content development, acquire, support and retain students and deliver
desired student, faculty and university outcomes.
Full-Year 2017 Highlights
• Revenue was $286.8 million, an increase of 39.3% from $205.9 million for the year ended
December 31, 2016.
• Net loss was $(29.4) million, or $(0.60) per share, compared to $(20.7) million, or $(0.44) per
share for the year ended December 31, 2016.
• Adjusted EBITDA was $11.4 million, compared to $4.5 million for the year ended December 31,
• Our Graduate Program Segment launched ten new graduate programs.
• We acquired GetSmarter in July 2017 for a net cash purchase price of $98.7 million and an
earn-out payment of up to $20.0 million in cash, subject to the achievement of certain financial
• We completed a public offering of common stock in September 2017 in which we sold 4,047,500
shares and received net proceeds of $189.5 million.
What are it’s revenues?
Revenue for the year ended December 31, 2017 was $286.8 million, an increase of 39.3%, from
$205.9 million for the same period of 2016. Graduate Program Segment revenue was $270.5 million for
the year ended December 31, 2017, an increase of 31.4%, from $205.9 million for the same period of
2016, primarily due to a 27.9% increase in full course equivalent enrollments. We also reported
incremental revenue of $16.3 million for the year ended December 31, 2017 related to our Short
Course Segment, which was created as a result of our acquisition of GetSmarter in July of 2017.
Revenue for the year ended December 31, 2016 was $205.9 million, an increase of 37.1%, from
$150.2 million for the same period of 2015, primarily due to a 35.6% increase in full course equivalent
Revenue 2017 2016 2015
Graduate program segment … $270,432 $205,864 $150,194
Short course segment … 16,320 — —
Total revenue … $286,752 $205,864 $150,194
What are their “impressive” gross margins? Are they rising or falling?
The Company’s total assets by segment are as follows:
December 31, December 31,
Total assets Dec 31, 2017 Dec 31, 2016
Graduate program segment … $359,597 $244,320
Short course segment … 122,465 —
Total assets … $482,062 $244,320
How much are they losing? What percent are losses of revenue?
Me: (please note there was an increased loss for 2017 because of Deprectiation and amortization expense = $19,624)
2017 2016 2015
Net loss … (10.3)% (10.1)% (17.8)%
2017 2016 2015 2014 2013
Net loss … $(29,423) $(20,684) $(26,733) $(28,999) $(27,953)
Interest income … (371) (383) (167) (92) (26)
Interest expense . . . . . . . . . . 87 35 552 1,213 (27)
Foreign currency loss . . . . . . . 866 — — — —
Depreciation and amortization expense19,624 9,750 7,220 5,572 4,335
Income tax benefit … (1,297) — — — —
Stock-based compensation expense 21,930 15,823 12,499 7,527 2,426
Total adjustments … 40,839 25,225 20,104 14,220 6,708
Adjusted EBITDA (loss) … $11,416 $4,541 $(6,629) $(14,779) $(21,245)
What is their dollar based retention rate?
couldn’t find anything on this
Consolidated Balance Sheet Data: 2017 2016 2015 2014 2013
Cash and cash equivalents … $223,370 $168,730 $183,729 $86,929 $7,012
Accounts receivable, net … 14,174 7,860 975 350 1,835
Total assets … 482,062 244,320 231,041 113,039 28,652
Total liabilities … 94,230 49,083 35,252 25,028 22,629
Total redeemable convertible preferred stock.— — — — 98,047
Additional paid-in capital … 588,289 371,455 351,324 216,818 7,817
Total stockholders’ equity (deficit) … 387,832 195,237 195,789 88,011 (92,024)
First Quartery 2018 Results
Revenue was $92.3 million, an increase of 42% from $64.8 million in the first quarter of 2017.
Net loss was $(14.9) million, or $(0.28) per share, compared to $(3.4) million, or $(0.07) per share, in the first quarter of 2017.
Adjusted net loss was $(6.1) million, or $(0.12) per share, compared to adjusted net income of $0.5 million, or $0.01 per share, in the first quarter of 2017.
Adjusted EBITDA loss was $(1.5) million, compared to adjusted EBITDA of $3.9 million in the first quarter of 2017.
“Our short course business has emerged as a powerful contributor to our growth story. When combined with the expected growth of our Graduate Program Segment, revenue guidance is up about $8 million over our prior guidance,” said CEO and Co-Founder Christopher “Chip” Paucek. “In addition, the annual number of launched graduate programs has increased substantially over the past few years and shows no signs of slowing down. Our pipeline also continues to be strong, giving us confidence in our revenue expectations in that core segment in future years.”
Fourth Quarter 2017 Results
Revenue was $86.7 million, an increase of 51% from $57.4 million in the fourth quarter of 2016.
Net income was $0.5 million, or $0.01 per share, compared to net loss of $(2.2) million, or $(0.05) per share, in the fourth quarter of 2016.
Adjusted net income was $7.9 million, or $0.14 per share, compared to $2.0 million, or $0.04 per share, in the fourth quarter of 2016.
Adjusted EBITDA was $12.7 million, compared to $4.5 million in the fourth quarter of 2016.
Full-Year 2017 Results
Revenue was $286.8 million, an increase of 39% from $205.9 million in 2016.
Net loss was $(29.4) million, or $(0.60) per share, compared to $(20.7) million, or $(0.44) per share, in 2016.
Adjusted net loss was $(4.3) million, or $(0.09) per share, compared to $(4.9) million, or $(0.10) per share, in 2016.
Adjusted EBITDA was $11.4 million, compared to $4.5 million in 2016.
“A decade into our journey, 2U is now at the forefront of the digital transformation in higher education and the strength of our business performance and the high-quality student outcomes in our partner programs prove it,” CEO and Co-Founder Christopher “Chip” Paucek said. “The positive momentum in our GetSmarter short course business combined with the organic growth in our graduate program business produced strong fourth quarter and full-year 2017 financial results and sets us up nicely for 2018.”