2U, Inc. (TWOU) SEC Filing 10-Q Quarterly Report for the period ending Thursday, June 30, 2022

Exhibit 99.1

2U Reports Results for Second Quarter 2022

Implements Plan to Accelerate Platform Strategy and Deliver Sustainable Profitability

Expects Increased Marketing Efficiency and an Additional $70 Million in Annual Operating Expense Savings

LANHAM, Md. — July 28, 2022 — 2U, Inc. (Nasdaq: TWOU)

Results for Second Quarter 2022 Compared to Second Quarter 2021

Non-GAAP Results for Second Quarter 2022 Compared to Second Quarter 2021

“We are taking significant action to accelerate 2U’s transition to a platform company under the edX brand and unify our product and marketing strategy to create the world’s leading free-to-degree online learning marketplace,” said 2U Co-Founder and CEO Christopher “Chip” Paucek. “Operating as one powerful brand and platform enables the company to pursue sustainable profitability, while building a stronger, more agile business that we believe will deliver greater value for learners, partners, and shareholders and drive the future of education for the long term.”

Paul Lalljie, 2U’s Chief Financial Officer, added, “In the second quarter we took important steps to align our organizational and cost structure to deliver sustained profitable growth and free cash flow. Our results for the quarter and our updated guidance reflect the shift in focus to more profitable growth resulting from the acceleration of our platform strategy. We expect that this plan will drive significant improvement to adjusted EBITDA for full-year 2022 and will generate positive free cash flow for full-year 2023.”

Discussion of Second Quarter 2022 Results

Revenue for the second quarter totaled $241.5 million, a 1.8% increase from $237.2 million in the second quarter of 2021. This increase includes $10.0 million from edX, acquired in the fourth quarter of 2021. Revenue from the Degree Program Segment decreased $3.1 million, or 2.1%, primarily due to a 1.9% decrease in average revenue per FCE enrollment, from $2,420 to $2,373. Revenue from the Alternative Credential Segment increased $7.4 million, or 8.1%, primarily due to the addition of edX offerings and a 1.2% increase in average revenue per FCE enrollment, from $3,843 to $3,891, partially offset by a decrease in FCE enrollments of 236, or 1.0%.

Costs and expenses for the second quarter totaled $289.4 million, a 5.5% increase from $274.3 million in the second quarter of 2021. This increase includes $17.1 million of operating expense related to edX. The remaining change was primarily driven by higher restructuring charges associated with the realignment plan, partially offset by lower personnel and personnel-related expense and marketing spend.

As of June 30, 2022, the company’s cash, cash equivalents, and restricted cash totaled $237.8 million, a decrease of $12.1 million from $249.9 million as of December 31, 2021. Cash provided by operations of $28.6 million for the six months ended June 30, 2022 was offset by cash used in investing activities of $35.2 million and cash used in financing activities of $3.0 million. Unlevered cash flow for the last twelve months ended June 30, 2022 was $11.5 million, a $45.6 million improvement compared to a negative unlevered cash flow of $34.1 million for the last twelve months ended March 31, 2022.