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

SEC Filings

TWOU Quarterly Reports

2U, Inc.

CIK: 1459417 Ticker: TWOU

Exhibit 99.1

2U Reports Results for Third Quarter 2022

Completes Strategic Realignment

Expects to Reduce Annual Operating Expense by $70 Million

Increases 2022 Adjusted EBITDA Guidance

LANHAM, Md. — November 7, 2022 — 2U, Inc. (Nasdaq: TWOU), a leading online education platform company, today reported financial and operating results for the quarter ended September 30, 2022.

Results for Third Quarter 2022 compared to Third Quarter 2021

 

   

Revenue of $232.2 million was flat

 

   

Degree Program Segment revenue decreased 7% to $137.2 million

 

   

Alternative Credential Segment revenue increased 12% to $95.0 million

 

   

Net loss was $121.7 million, or $1.57 per share and includes non-cash impairment charges of $79.5 million

Non-GAAP Results for Third Quarter 2022 compared to Third Quarter 2021

 

   

Adjusted EBITDA increased $17.8 million to $32.5 million; adjusted EBITDA margin increased to 14% from 6%

 

   

Adjusted net loss improved $13.9 million to $3.5 million, or $0.05 per share

“We completed our strategic realignment and accelerated 2U’s transition to a platform company under the edX platform during the quarter,” said 2U Co-Founder and CEO Christopher “Chip” Paucek. “We realigned our organization around a single platform, streamlined our cost structure and implemented a new, more efficient marketing framework. We believe these structural changes will not only strengthen our bottom line, but also supercharge our ability to match millions of learners with accessible, best-in-class learning experiences from top institutions that help them advance their careers and transform their lives.”

Paul Lalljie, 2U’s Chief Financial Officer, added, “Our third quarter results demonstrate early returns from our platform strategy and execution of our Strategic Realignment Plan. We delivered record adjusted EBITDA of $32.5 million, a 121% increase versus the prior year driven by improvements from both segments. As a result, we are increasing our adjusted EBITDA outlook for 2022 and remain committed to delivering further profitability improvements and positive free cash flow in 2023.”

Discussion of Third Quarter 2022 Results

Revenue for the third quarter totaled $232.2 million, which was flat when compared with $232.4 million in the third quarter of 2021. Total revenue includes $9.3 million from legacy edX offerings. Revenue from the Degree Program Segment decreased $10.6 million, or 7.1%, due to a 5.9% decrease in average revenue per full course equivalent (FCE) enrollment and a decrease in FCE enrollments of 1.3%. Revenue from the Alternative Credential Segment increased $10.4 million, or 12.3%, primarily due to legacy edX offerings and an increase in FCE enrollments of 14.6%, partially offset by an 8.2% decrease in average revenue per FCE enrollment.

Costs and expenses for the third quarter totaled $336.5 million, a 22.0% increase from $275.9 million in the third quarter of 2021. This increase includes $79.5 million of non-cash impairment charges in our Alternative Credential Segment. The company determined that the recent decline in its market capitalization triggered an interim goodwill impairment review, which led to a non-cash write down of certain goodwill assets and indefinite-lived intangible assets. Of note, third quarter expense includes $17.0 million of operating expense related to edX, which was acquired in the fourth quarter of 2021, and a $6.2 million increase in restructuring costs. These increases were partially offset by a $26.5 million decrease in paid marketing costs in connection with the platform strategy and a $10.7 million decrease in personnel and personnel-related expenses primarily relating to the Strategic Realignment Plan.

As of September 30, 2022, the company’s cash, cash equivalents, and restricted cash totaled $185.2 million, a decrease of $64.8 million from $249.9 million as of December 31, 2021. Cash used in operations was $1.4 million, cash used in investing activities was $54.0 million and cash used in financing activities was $4.7 million. Unlevered free cash flow was a use of $1.3 million for the twelve months ended September 30, 2022 and compares with unlevered free cash flow of $11.5 million for the twelve months ended June 30, 2022.


The following information was filed by 2U, Inc. (TWOU) on Monday, November 7, 2022 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Inside 2U, Inc.'s 10-Q Quarterly Report:

Financial Statements, Disclosures and Schedules

Inside this 10-Q Quarterly Report

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Condensed Consolidated Balance Sheets
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Condensed Consolidated Statements Of Cash Flows
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Goodwill And Intangible Assets - Goodwill (Details)
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Goodwill And Intangible Assets - Narrative (Details)
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Receivables And Contract Liabilities - Change In Provision For Credit Losses For Other Receivables (Details)
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Restructuring Charges
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Restructuring Charges - Narrative (Details)
Restructuring Charges - Schedule Of Adjustments To The Accrued Restructuring Liability (Details)
Restructuring Charges - Schedule Of Restructuring Charges By Reportable Segment (Details)
Segment And Geographic Information
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Segment And Geographic Information - Reconciliation Of Net Loss To Total Segment Profitability (Details)
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Significant Accounting Policies
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Stockholders' Equity
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Stockholders' Equity - Common Stock And Stock-Based Compensation (Details)
Stockholders' Equity - Fair Value Assumptions (Details)
Stockholders' Equity - Restricted And Performance Restricted Stock Units (Details)
Stockholders' Equity - Stock Option Activity (Details)
Stockholders' Equity - Stock Option Narrative (Details)
Stockholders' Equity - Stock-Based Compensation Expense (Details)
Supplemental Cash Flow Information
Supplemental Cash Flow Information (Details)
Ticker: TWOU
CIK: 1459417
Form Type: 10-Q Quarterly Report
Accession Number: 0001459417-22-000026
Submitted to the SEC: Mon Nov 07 2022 4:57:04 PM EST
Accepted by the SEC: Mon Nov 07 2022
Period: Friday, September 30, 2022
Industry: Prepackaged Software

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