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2U (TWOU)

Eliminating the back row in higher education is not just a metaphor-it's our mission. For more than a decade, 2U, Inc., a global leader in education technology, has been a trusted partner and brand steward of great universities. We build, deliver, and support more than 475 digital and in-person educational offerings, including undergraduate and graduate degrees, professional certificates, Trilogy-powered boot camps, and GetSmarter short courses. Together with our partners, 2U has positively transformed the lives of more than 275,000 students and lifelong learners.

Company profile

Ticker
TWOU
Exchange
Website
CEO
Christopher Paucek
Employees
Incorporated
Location
Fiscal year end
Former names
2tor, Inc.
SEC CIK
Subsidiaries
CritiqueIt, Inc. • edX LLC • 2U HK LLC • 2U Harkins Road LLC • 2U KEIH Holdco, LLC • 2U NYC, LLC • 2U GetSmarter, LLC • 2U GetSmarter (US), LLC • TESI Merger Sub, Inc. • Trilogy Education Services, LLC ...

TWOU stock data

Investment data

Data from SEC filings
Securities sold
Number of investors

Calendar

28 Jul 22
1 Oct 22
31 Dec 22
Quarter (USD) Jun 22 Mar 22 Dec 21 Sep 21
Revenue
Cost of revenue
Operating income
Operating margin
Net income
Net profit margin
Cash on hand
Change in cash
Diluted EPS
Annual (USD) Dec 21 Dec 20 Dec 19 Dec 18
Revenue
Cost of revenue
Operating income
Operating margin
Net income
Net profit margin
Cash on hand
Change in cash
Diluted EPS
Cash burn rate (est.) Burn method: Change in cash Burn method: Operating income Burn method: FCF (opex + capex)
Last Q Avg 4Q Last Q Avg 4Q Last Q Avg 4Q
Cash on hand (at last report) 237.79M 237.79M 237.79M 237.79M 237.79M 237.79M
Cash burn (monthly) (no burn) 61.13M 21.01M 26.46M (no burn) (no burn)
Cash used (since last report) n/a 187.02M 64.27M 80.94M n/a n/a
Cash remaining n/a 50.76M 173.52M 156.84M n/a n/a
Runway (months of cash) n/a 0.8 8.3 5.9 n/a n/a

Beta Read what these cash burn values mean

Date Owner Security Transaction Code Indirect 10b5-1 $Price #Shares $Value #Remaining
29 Aug 22 Chernis Mark Common Stock Option exercise Acquire M No No 5.75 25,000 143.75K 557,011
29 Aug 22 Chernis Mark Employee Stock Option Common Stock Option exercise Dispose M No No 5.75 25,000 143.75K 0
2 Aug 22 Harsha Mokkarala Common Stock Payment of exercise Dispose F No No 9.2 4,511 41.5K 216,099
1 Jul 22 Chernis Mark Common Stock Payment of exercise Dispose F No No 12.25 10,681 130.84K 532,011
1 Jul 22 Paucek Christopher J Common Stock Payment of exercise Dispose F No No 12.25 20,884 255.83K 985,304
75.3% owned by funds/institutions
13F holders Current Prev Q Change
Total holders 187 218 -14.2%
Opened positions 19 45 -57.8%
Closed positions 50 66 -24.2%
Increased positions 61 74 -17.6%
Reduced positions 66 69 -4.3%
13F shares Current Prev Q Change
Total value 4.75B 1.13B +321.4%
Total shares 79.89M 80.98M -1.3%
Total puts 1.27M 1.09M +15.7%
Total calls 989.2K 1.83M -45.9%
Total put/call ratio 1.3 0.6 +113.8%
Largest owners Shares Value Change
ARK Investment Management 9.59M $89.34M +4.3%
Vanguard 6.69M $70.1M -4.5%
BLK Blackrock 5.99M $62.76M -6.0%
Greenvale Capital 5.87M $61.51M +0.6%
CMTDF Sumitomo Mitsui Trust 5.6M $58.59M -2.4%
Nikko Asset Management Americas 5.6M $56.4M -2.4%
ArrowMark Colorado 5.25M $55.01M -4.7%
MS Morgan Stanley 4.09M $42.78M +50.1%
D. E. Shaw & Co. 1.9M $19.9M +34.5%
CS Credit Suisse 1.87M $19.54M -13.7%
Largest transactions Shares Bought/sold Change
MS Morgan Stanley 4.09M +1.36M +50.1%
Pictet Asset Management 14.47K -1.21M -98.8%
Cooper Creek Partners Management 765.2K +765.2K NEW
Balyasny Asset Management 773.41K +739.79K +2200.6%
Wellington Management 103.12K -670.09K -86.7%
D. E. Shaw & Co. 1.9M +488.09K +34.5%
ARK Investment Management 9.59M +399.6K +4.3%
BLK Blackrock 5.99M -381.86K -6.0%
Healthcare Of Ontario Pension Plan Trust Fund 784.5K +366.2K +87.5%
Vanguard 6.69M -318.13K -4.5%

Financial report summary

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Competition
Pearson
Risks
  • Risks Related to COVID-19
  • Risks Related to Our Business Model
  • Risks Related to Our Operations and Our Growth Strategy
  • Risks Related to the edX Acquisition and the Combined Company
  • Risks Related to Our Indebtedness and Capital Structure
  • Risks Related to Regulation of Our Business and That of Our University Clients
  • Our business, results of operations, and financial condition have been, and could continue to be, affected by COVID-19.
  • Our limited operating history, and the evolving scope of our offerings, make it difficult to predict our future financial and operating results, and we may not achieve our expected financial and operating results in the future.
  • We have incurred significant net losses since inception and may not achieve or maintain profitability in the future.
  • Our financial performance depends heavily on our ability to recruit potential students for our offerings, and our ability to do so may be affected by circumstances beyond our control.
  • Our business depends heavily on the adoption by colleges and universities of online delivery of their educational offerings. If we fail to attract new university clients, or if new leadership at existing university clients does not have an interest in continuing or expanding online delivery of their educational offerings, our revenue growth and profitability may suffer.
  • The market for our offerings may be limited based on the types of nonprofit colleges and universities we target and due to exclusivity provisions in certain of our contracts with university clients. We have agreed to incur, and we may incur in the future, costs to terminate some or all of the exclusivity obligations in certain of our university client contracts.
  • To launch a new degree program, we generally incur significant expense in technology and content development, as well as in marketing and sales to identify and attract prospective students, and it may be several years, if ever, before we generate revenue from a new program sufficient to recover our costs.
  • If new offerings do not scale efficiently and in the time frames we expect, our reputation and our revenue will suffer.
  • Our financial performance depends heavily on student retention within our offerings, and factors influencing student retention may be out of our control.
  • The loss, or material underperformance, of any one of our offerings could harm our reputation, which could in turn affect our future revenue growth.
  • The recent, significant decline in the market price of our common stock could adversely affect our business, results of operations, and financial position.
  • Our student acquisition efforts depend in large part upon a limited number of third-party advertising platforms.
  • If internet search engines’ methodologies are modified, our search engine optimization capability in connection with our student recruiting efforts could be harmed.
  • If our security measures or those of our third-party service providers are breached or fail and result in unauthorized disclosure of data, we could lose clients, fail to attract new clients and be exposed to protracted and costly litigation.
  • Disruption to or failures of our platform could reduce university client and student satisfaction with our offerings and could harm our reputation.
  • We rely upon Amazon Web Services to host certain aspects of our platform and any disruption of or interference with our use of Amazon Web Services could impair our ability to deliver our platform to clients and students, resulting in client and student dissatisfaction, damage to our reputation, and harm to our business.
  • If the mobile solutions available to our students and clients are not effective, the use of our platform could decline.
  • If we fail to manage our growth effectively, the success of our business model will be compromised.
  • We may expand by acquiring or investing in other companies or technologies, which may divert our management’s attention, result in dilution to our shareholders and consume resources that are necessary to sustain our business.
  • We face competition from established and emerging companies, which could divert clients or students to our competitors, result in pricing pressure and significantly reduce our revenue.
  • If for-profit postsecondary institutions, which offer online education alternatives different from ours, or online program management providers perform poorly or continue to attract negative publicity, it could tarnish the reputation of online education as a whole, which could impair our ability to grow our business.
  • If we do not retain our senior management team and key employees, we may not be able to sustain our growth or achieve our business objectives.
  • We maintain offices outside of the United States, have international residents that apply to and enroll in our offerings and plan to expand our international business, which exposes us to risks inherent in international operations.
  • Our operations in South Africa expose us to risks that could have an adverse effect on our business.
  • We engage some individuals classified as independent contractors, not employees, and if U.S. or international regulatory authorities mandate that they be classified as employees, our business would be adversely impacted.
  • We rely on certain third-party providers of software and services integral to the operations of our business.
  • We have incurred substantial transaction and integration expenses related to the edX Acquisition and expect to incur additional integration expenses related to edX that could negatively impact our financial results and cash flows.
  • We do not control and may be unable to predict the future path of the Licensed edX Platform.
  • Despite current indebtedness levels and existing restrictive covenants, we may still incur additional indebtedness that could further exacerbate the risks associated with our substantial financial leverage.
  • To service our indebtedness, we will require a significant amount of cash, and our ability to generate cash depends on many factors beyond our control.
  • We may be unable to raise the funds necessary to repurchase the Notes for cash following a “fundamental change,” or to pay any cash amounts due upon conversion, and our other indebtedness may limit our ability to repurchase the Notes or pay cash upon their conversion.
  • Conversion of the Notes may dilute the ownership interest of existing stockholders or may otherwise depress the price of our common stock.
  • Provisions in the Notes, Indenture and in the Term Loan Agreement could delay or prevent an otherwise beneficial takeover of us.
  • The accounting method for convertible debt securities that may be settled in cash, such as the Notes, could have a material effect on our reported financial results.
  • The capped call transactions may affect the value of our common stock.
  • We might not be able to utilize a portion of our net operating loss carryforwards, which could adversely affect our profitability.
  • We may need additional capital in the future to pursue our business objectives. Additional capital may not be available on favorable terms, or at all, which could compromise our ability to grow our business.
  • Our business model relies on university client institutions complying with federal and state laws and regulations.
  • Our activities are subject to federal and state laws and regulations and other requirements.
  • Activities of the U.S. Congress or Department of Education could result in adverse legislation or regulatory actions or investigations.
  • Our business model, which depends on our ability to receive a share of tuition revenue as payment from our university clients, has been validated by a DOE “dear colleague” letter, but such validation is not codified by statute or regulation and may be subject to change.
  • If we or our subcontractors or agents violate the incentive compensation rule, we could be liable to our university clients for substantial fines, sanctions or other liabilities.
  • If we or our subcontractors or agents violate the misrepresentation rule, or similar federal and state regulatory requirements, we could face fines, sanctions and other liabilities.
  • If our university clients fail to maintain their state authorizations, or we or our university clients violate other state laws and regulations, students in their offerings could be adversely affected and we could lose our ability to operate in that state and provide services to these university clients.
  • If our university clients fail to maintain institutional or programmatic accreditation for their offerings, our revenue could be materially affected.
  • Our future growth could be impaired if our university clients fail to obtain timely approval from applicable regulatory agencies to offer new programs, make substantive changes to existing programs or expand their programs into or within certain states.
  • If more state agencies require specialized approval of our university clients’ offerings, our operating costs could increase significantly, approval times could lag, or we could be prohibited from operating in certain states.
  • Evolving regulations and legal obligations related to data privacy, data protection and information security and our actual or perceived failure to comply with such obligations, could have an adverse effect on our business.
  • We are required to comply with the Family Educational Rights and Privacy Act, or FERPA, and failure to do so could harm our reputation and negatively affect our business.
  • In our Alternative Credential Segment, we are subject to risks and compliance rules and regulations related to the third-party credit card payment processing platform integrated within our websites or otherwise used by our business.
  • We are subject to governmental export, import and sanctions controls that could impair our ability to compete in international markets and subject us to liability if we are not in full compliance with applicable laws.
  • We operate in an industry with extensive intellectual property litigation. Claims of infringement against us may hurt our business.
  • We may incur liability, or our reputation may be harmed, as a result of the activities of our university clients and students or the content in our online learning platforms.
  • Our failure to protect our intellectual property rights could diminish the value of our platform, weaken our competitive position and reduce our revenue.
  • The use of “open source” software in our platform could negatively affect our ability to offer our platform and subject us to possible litigation.
  • Individuals that appear in content hosted on our online learning platform may claim violation of their rights.
  • Our operating results have fluctuated in the past and may do so in the future, which could cause our stock price to decline.
  • The trading price of the shares of our common stock may be volatile, and purchasers of our common stock could incur substantial losses.
  • Provisions in our corporate charter documents and under Delaware law may prevent or frustrate attempts by our stockholders to change our management and hinder efforts to acquire a controlling interest in us, and the market price of our common stock may be lower as a result.
  • Our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware and the state and federal courts located within the State of Delaware are the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to choose the judicial forum for disputes with us or our directors, officers, stockholders, or employees and, in turn, discourage lawsuits against our directors, officers, or employees.
  • Concentration of ownership of our common stock among our existing executive officers, directors and large stockholders may prevent smaller stockholders from influencing significant corporate decisions.
  • Because we do not anticipate paying any cash dividends on our common stock in the foreseeable future, capital appreciation, if any, will be your sole source of gains and you may never receive a return on your investment.
  • Increased scrutiny and changing expectations from investors, customers, employees, and others regarding our environmental, social and governance practices and reporting could cause us to incur additional costs, devote additional resources and expose us to additional risks, which could adversely impact our reputation, customer acquisition and retention, access to capital and employee retention.
  • If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements on a timely basis could be impaired.
Management Discussion
  • Revenue. Revenue for the three months ended June 30, 2022 increased $4.3 million, or 1.8%, to $241.5 million as compared to $237.2 million in 2021. This increase includes $10.0 million from edX, acquired in the fourth quarter of 2021. Revenue from our 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 our Alternative Credential Segment increased $7.4 million, or 8.1%, primarily due to a $7.1 million increase in revenue from 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%

Content analysis

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Positive
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Constraining
Legalese
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Readability
H.S. sophomore Avg
New words: adequate, attrition, challenging, confidence, difficult, difficulty, environment, exit, footprint, headcount, macroeconomic, overhead, pertaining, preliminarily, rationalize, Realignment, reorient, restructuring, sustain, therewith, traffic, troubled, unexpected, vintage
Removed: greater