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2U (TWOU)

Participants
Chip Paucek CEO
Cathy Graham CFO
Ed Goodwin IR
Michael Nemeroff Credit Suisse
Michael Tarkan Compass Point
Sarah Hindlian Macquarie Group
Monika Garg KeyBanc Capital Markets
Kerry Rice Needham & Company
Brian Schwartz Oppenheimer
Corey Greendale First Analysis
Jeff Meuler Robert W. Baird
Jeff Silber BMO Capital Markets
Call transcript
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Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the 2U, Inc. 2017 Fourth Quarter Earnings Call. At this time, all participants are in a listen-only mode to prevent background noise. [Operator Instructions]We will conduct a question-and-answer session And now I would like to welcome your host, Mr. of President Vice Goodwin, Investor Relations. Ed

Ed Goodwin

of operator. Fourth Quarter you, By quarter you a and Good company's XXXX for Earnings afternoon, XU’s to now, copy received have welcome full and should earnings and fourth Call. release the everyone, Conference Thank the results. Full year XXXX Year

have not, available If copy you on our is a website, investor.Xu.com.

on our site. find want now of call during have deck. website. Paucek, be that we to CFO. accompanies Before encourage on our section some be will we make a the in can you of to access this webcast you Investor access Also, Investor of. Chip that post our we earnings to begin, routinely Cathy the which are and let the We’ll I I Today's speakers Relations referencing and Graham, information website, of we call, the our use call, encourage CEO which recorded available and Co-Founder; deck and slides The so you announcements

available call, we currently Factors to may the financial and for known as is the our those forward-looking statements our beliefs December report future Also, public financial to operations. risks management in company's our of information these the as of conform outcome or results future during measures limited objectives would based results most this reconciled of statements today's measures other to operating year in includes, forward-looking forward-looking expectations to unknown not events press any Non-GAAP historical this is financial information and to described Form the on for rather and statements, contained to policy other guidance undertake The law, on is actual are this This forward-looking in but it but by the annual All subject uncertainties these to the are statements forward-looking statements. These we anticipated turn not us. obligation from based SEC. results, Risk ended over expectations. risks plans publicly cause call provided in or the to, filed is made directly in conditions required comparable no to communications. I and that regarding section in with call market future our and materially including attached of to discussed than by company's facts update statements the update differ current are actual not results and XX, make the XU's the could statements During Chip. on and release. and changes on today. now like to the call XXXX, XX-K to reports tables GAAP call are Except

Chip Paucek

last and decade, Thanks, is a X, The at best really and old. be and of we're date is that the XU of certificate undergoing to public rare Delaware. completing of State is including April will Eddie. this momentum has in April transformation. on XXXX, company great stride. incorporation We’ve is our year large and a company life. very time? find market that deal its ever. just leading transformation, its XX in hitting filed a moment seeing But our X:XX operate the was What We that It’s this XU side, accomplished acceleration years XXth This in Xnd, p.m. quarter our just our stage that

You’ve mean heard it it's me we before, repeating say worth but because always it.

and We when just I XU why up like and a I students universities we great bit shouldn't by win, driven wins. and is Yes, simple Our moving fired XXXX, forward. When a win, financial where be? formula. I'm universities win, completed stand success a

Let's talk was the results about first. great. QX

the What overall? with for the XXXX. QX revenue $XXX.X XX% growth top $XX.X XXXX line, last growth XX% We about million, million, had year. XX% over quarter. over On revenue of

segment growth program Short XXXX, driven as in XX% GetSmarter to grew is our course core proving - the our remaining with by which rapidly a component graduate Course Our itself vision. segment,

new great Grad line, was shortly, last percentage in bottom XU and for creating the progress? our increased points detail our for great will XXXX. improvement On all of margin quarter, you in of cadence. XX GetSmarter $XX.X a We believe the adjusted refer announced to that Well, Course XX began a on slate year, to acceleration new in we through million and acquisition approximately meaningful of our What's year. our it programs $XX.X we've now programs More GetSmarter, of from the XX that, new but DGP We will this a for XX driving take we Graduate now segment, was top two become Division, in XXXX. quarter. an the the over million segment. launch moment. EBITDA and of which all year successfully Cathy we in more our programs, launched new contributor three performance. to Short as the completed On was XXXX Program a the of

give I'd the evident annual purpose margins driven so our list The additional share Given bit and year, too, including model that on those of enrollment. like cohort now. in by you of these to disclosure, power it’s a results XX our the business top end our we is

good what we on we where Investor we you. gave say cohort that talk exceeded actually cover we had our I'm in in that you of that At will a let's margins. Cathy At First, were. thrilled margins. to section. clarity we Day cohort of preview a October, our amount her gave time, XXXX

find the for moment, deck. in to turn let's can So our top list earnings a which you XX

the moment life was only public not place. where well time notice The list, about core the a believed top a in some by giving our is people XX. was in in programs. you'll Let’s understood, four business not There’s talk our started as why original first XX list company Why? growth thing and the earlier wrongly we this first our as driven

programs first vast XX. grow pleased programs Even I'm that through new. say all, So while clients have the that top that across of ago. new many confidence our steady we ranking, on programs XX that are the the newer to list, we - But several came you different have color of the tell you list product newer of our programs let this enrollments and programs achieving It approaching, the top Why? target we gain growing, useful. XXX we told - think Regardless, some do, that years were and were to disclose year. programs cases, seeing our list, the what and programs is Today, more in enrollment that growth more older on the less verticals. programs relative no true fundamentally, you and our the many the majority numbers of exceeding state some me the we're XXX innovations the list, our helped were unless list movement per the investors in longer marketing. student on on same story our importantly, Well, tell a continue can't than to give

grown science XXX target enrollments, the This all top were levels. XX our have means the number just enrollments. student at list, impressive, student What’s at hair that data new the each Berkeley, Berkeley programs XX to was more top on XXX above quality. First, seven enrollment a under new

most those our operating above in XXXX or that the steady quarters, state but total were running Let total, case. all Eight annual of brand were about were at programs had for years. new less the that in or even XX remember, That’d new. at of pretty programs than And put programs if XX our me only same in perspective. new launched enrollments. A so or half, for one oppressive, third target two around time, be two are of

So how programs? expanded expanded Well, list we show from of XX we newer - the XX. you the to the do progress our

and is its cohort, only Simmons Syracuse of Our in offerings, are from including the the yes, were than to in programs XXXX things two each also while Not more less Enterprise. vertical. one, the moved those challenging as its shined. programs of XX there rank to ago, our Speech, Info XX, launched of NYU Science, we first years original analysis, three model cost the five into a collapsing of was some structure premise And behavioral Enterprise program, of terms normal a three

selection we offer can analysis at work now That’s You see the program our by there way. that at Dayton. behavioral also

our So verticals. large handful a only by driven of programs not in growth is

is an growth Our by of selection graduate programs. expanded driven

further regions, of build programs with in academic continue existing verticals, selectively we product marketing those using enter to different new We continue in businesses. And levels varying geographic to out to add verticals.

any will Management. his extend Vice first vision like be and here. one of program announced Europe, along across it. single So allow the forward always going believe pipeline have was Graduate the is to education, I'd thank talk as impact same of we partner clearly on International in Europe allow standing expected offer globe. mission or men, was the to can going pending XU, will in London a students UCL, the several to continues to Graduate which university to be an Masters in important has is pipeline. the again, our let's start a the UCL addresses now three might great digital Anthony partnership in about has a we to lines This to just UCL, expect TAM. will have have for flurry UCL activity But It online degree any to an the getting but bit university announcements I slotted what IGP attend. for to our pick this in with. worldwide be XXXX, first Smith, this is was next Pipeline Today as first Provost, approvals. Excellence started, step to university many. leader XXXX launch to further help and the for program, XXXX. a start we MBA with College them School of leadership Program, an and their their in history the This partnered trailblazer. University months. religion been you a After Programs of This combination over excellent. XU If our with of and and in first that women first of

to deal. multi-dimensional, and spend love the our few moments a about Let's bring It's what parties talking WeWork each the table. we

we've student Day, and First, across that the XU you license Investor school's Today back ton mobile-first includes rebrand proprietary months, existing announce our in really this Flatiron good, purpose-built, tracking It’s Last but and permanently, we We’ll Learn, learning and code. to a by will at a technology fundamental far our distance partners, the to to world into our be what I tuned. it's a and promised side. business, delivering will told was robust content for built kinds I the invest and tech. our interaction. learning integrating the particularly best code the Built year in allows it best of not when we up great to our class, platform in And allow tech programs campus seen. demo flexibility first now By services, we planned XXXX. the make delivery, that's the ahead platform our do and more faculty and to that of the did perpetual built stay deal experience. we live gives the coming in away is the of to best integrated impressive still as step data believe evolve proprietary learning I've we it's the on Learn. this us job blown in our best class. platform but of a on content. think to see But classes social backend tech in GitHub, all the online I so platform, of

will get distinct Center, world. online brings access operate showcase about in could On to being XU. will experience. a to the Every the Graduate our community them deal, you a put, that's WeWork super us our a expression in is for and partners something Think finally, WeWork free simply it. scholarships channel Work able to global of the physical own. their faculty. exciting. WeWork for the are new to a And of to normal learning course business on scholarships future an any do Program as know, pass XU fellowships of but deliver us none to But The rest of our in, the offer offer student in opportunity

the deal scale Cathy, is how benefits Learning our our example for plan it take Center comes powerful you. The As together, the with away. partners. more we'll of share a

Cathy Graham

Chip. Thanks,

full the growth respectively. Program In over with the each largely year performance an by period increase and year, revenue like Course revenue short million exceeded results future. XX% to full the again these year from the was speaks year in Graduate our to and coming quarter primarily While million XX% Program closed by revenue. year for some over driven by and for before fourth in revenue growth on to quarter Equivalent. periods be for the for prior year growth of color year, and XX% Graduate fourth of XX% the for the remainder give our Full continued segment, out I'd our growth. XXXX course financial for view delivering $XX.X year itself, quarter At We the XXXX $XXX.X you significant turning revenues

fourth showed XX%, line the expectations. year in over quarter, year with a of FCE our increase For

when can to around of but to the growth Graduate about that lower. revenue for over XXXX. year Program should growth growth, should those for of the is stands acceleration to it our rate year earlier expect Consider later in year, we expected be quarters XX% way with about that be quarters what reason second paving mark, to FCE the growth year be said XXXX. higher but reacceleration the a For annual expect If later we've the revenue, you occur wondering quarter you higher, in half the year rate in we this see XXXX will over anticipate XX%

to during driven same one X.X an the calculate deferred per to the percentage in revenue. the X% hold revenue quarter we revenue used increase to was experience quarter was a primarily pattern in the bad of additional lowered we Fourth in expect and XXXX. to percentage for of Program that and the was XXXX, due or increases past of this than In adjustment for FCEs. the universities, assumptions based year-end on our An FSE. on average The program changes fourth increase end to more debt, quarter. point made higher reserve more We growth course FCEs revenue, Short UK in Course year enhanced was FCEs in the that fourth quarter. impact increases and had true short resulted And point in as per revenue US the offered in programs due a did actual FCE, to the case, to Graduate due by one the new sequentially from we quarter's to FCE increase one FCE either third fourth $X,XXX, a average we remainder per percentage fact About XQ segment, made by effective corresponding of use than revenue than quarter. of average expected, over tuition of resulting This to XX% in scholarships increased X,XXX the half at in total. in increase we

time, segment’s per courses average increasing to higher become continue You Short increase FCE an UK to over and Course revenue. US priced university as should see of majority expect this revenue

earnings period. year percentage looking $X.X measures. year more margin the $XXX,XXX, quarter income improved At points Now over year and the fourth improved million, four prior at by by net than our over corresponding

million, income GetSmarter over Africa six represented XXXX. improvement were with and quarter related currency adjusted million equity adjusted foreign transferring or amortization, of ups of basis, net facilities After funds $X.XX This net per percent and to loss book percentage decline net adjusted year net acquisition a only On to recognized related X% income For million year decline $X.X million the margin in by of over $X.X adjustments same depreciation year year of year XX.X%. share $X.X loss to the for These the income acquisition. a South year, $X.X point increases of a in result net respectively. - a full declines margin $XX.X fourth quarter was conjunction a over showed compensation net and our two full and tenths million a in step income, adjusted margin expense, absorbing but the million, dollar $X.X revenue. in of improved and only

dollar year, meaningful the we compensation companies based compensation year half said, That of headcount net expense stock our relative XXXX, or million net over the a Adjusted an loss on represented September $X.X the million seven of believe our EBITDA that second loss or was million, and net inclusion based million expense revenue. or in related but growth. X.X% in X% a saw For decline, that over of represented Even see and was point with This stock in X% due follow quarter related net year by of remained fourth year respectively. XXXX a in of loss of the This EBITDA high revenue, based year continue outstanding reasonable over of share to acquisition adjusted was related adjustment adjusted further our increases adjusted full after of margin also $XX.X net decline, point slight adjusted offering. expense adjusted adjusted improvement compensation to period. to we improvement the similar net million, $X.X very to adjustments in percentage one increases $XX.X net shares per margin improved EBITDA, prior we year XX% improvement surveyed. to percentage growth loss stock and revenue. a $X.XX of $X.X year revenue. adjusted year $XXX,XXX After $X.X Note loss million over

EBITDA of in adjusted adjusted a adjusted or improvement million, the over a For $X.X $XX.X margin EBITDA and adjustment X% full the further point percentage EBITDA, This represented prior in net year. a improvement two revenue. was after of million $XX.X year, million

did the time, As profitability is at EBITDA we allocated fully we've measure the at Program year measure used year full This XXXX. in profitability launch margins years. the cohort Graduate last prior segment provided this adjusted as for level we segment have same

Programs our updated XX%, the percentage than we're segments, higher we of have that match years more, year now made programs. XXXX. of for or that of disclosure. operating reporting has three or some terminology points group our four However, our most only up vintage margin a to four our group had from This profitable and largest nine smaller more two launch cohort, for small

So of remember moving significantly mature would number total that cohort new Further, this into now number are and launching in we number the it's the margins. per currently what we the year, the of on programs expect at for program end higher programs exceeds are annual of that this mature most an cohort, both basis.

that the are cost the at are rate being allocated of basis, a corporate on per faster Given are from program being which total cost portion than pulled the our this and away most fact at done expanding. a mature allocations our cost programs rate a allocations

As to years, this a is is this bit. margins for back the may pattern cohort several further, see possible expand likely that settling potentially before it continue even we for

operating vintage For the between three percentage that than the year, four points we seven allocated had for in the XX% XXXX. reported XXXX, and for programs XX% margin been for margin a of years, had fully higher

would And and is period had to in leaves the launches for the From segment two $XXX.X including the of balance based compared margin comfortable mix. loss represents increased launch scaling. year a programs negative revenue. three cohort, range programs is X% reported million business from in for in is investment including in the been of seeing loss two activity This GetSmarter, where programs the the launch that had This increase program this expansion combined these by we've our for program above a the and makes occurred contain an typically lifecycle negative no operating XXXX, million still margin of increasing of discussed the cash. particularly on this driven a our a margin between a with proceeds is XXXX, are now prior Additionally, prior cohort this use drive less, $XX.X losses the our timing And the expected purchase now two program with our our programs had net all loss in between positive programs we of net for year that influence and XX% margin of but exactly to level us predict for primarily year only the the would perspective, years, the Program therefore of program In And Graduate of our year and cash stock, we program XX%. of cohorts investment in balance these strategic prone $XXX.X cohorts cash strongly both operating for to had to costs corresponds we in of expect. percentage strongly of XXX%. the year. and that continuing annual allocated both to new period, wide in This we're where in which three launch cohorts, most years new ended points Remember quarter. that or generally where typical reflects you, for XXXX, vantage each, the true all of one million time XX here, all addition typical year, validates for of common validates fully the program and to economic our and during heaviest noticeable, XX sheet models across the third period where growth, What wise calendars. the sale very margins, decision. in across while we launch variability

fact the and are our most low sheet Our paid before receivables year completed courses million also clients have programs end. and in reflecting a year-end balance that has $XX.X balance,

you XXXX first our look we XXXX with and we've provided third expanding results, Now, specific year full on quarter at the gave quarter guidance. initial

X% forecasted context we of approximately early on provided rate comment were When Before you like on basing view our a in I move for further preliminary XXXX rate exchange monthly we or various XX.X. been fourth I'd either to forecasts steady pair, our international November, we slightly of to weakening a rate South the recent rate expectations This in had rand quarter. give guidance. Further, fact, of to desks, exchange mark US further all about had throughout the this of for African exchange average in however, our within XXXX. for And currency dollar, XXXX. movements projected currency this trading weakened numbers from

consolidated climate is range more denominated we little the a past strengthening can and for expenses expect, plan Rand a over achieved expectation rand, margin significantly effect you XXXX, revenue, more the evidence has XXXX. Note revenue if rates XXXX, is sustainable to had XX Course below to stays segment, cost given a However, the there's XX% That South November Rand the improving With current should guidance compared course performance. of converting XX, to December has initial or change political environment, change believe short expectations. short higher a a be that an have XX, the dollar rand the revenue business up, significant rate of the EBITDA you realization in XX.XX. most of in of from within told days, adjusted that of as dollar. our that eventual rate the levels the clear we Today, course XXXX, but Africa, rand majority to and over today at a operating to would said, earlier previously strengthened until exchange and This amount. in than a to the the here Rand denominated relative understand this dollar minority dollar we in assumption. Short a assumes and the more lot means produce Within we remainder of this for that into of we convert of rate exchange reticent closer our exchange unless of cost for notably, move we the will our

numbers. to now So the

million million year. the for imply XX.X% first million full quarter, the of and between revenue we're $XXX.X first On over quarter, $XX.X for the year year. the year these midpoints, million $XXX.X $XX.X ranges At and for growth topline, full for of expecting the and XX.X% their and

our be recognized approximately we the the in in our As now we've recognized dates first majority for second revenue preview, year XX% relates November since XX% you expectations visibility Greater with the increase. the rate some half of segment, timing full visibility in drivers and first expectations of revenue quarter timing later be the first smaller changes will year, that this that year, are this year, the the assumptions, into see, updated exchange from benefit course year, have now increase revenue pulling quarter. third revenue of into and Based enrollments time can in expectations short current some will approximately additional be We XXXX raised half the first along start the and including our course of first on we've to revenue the first in how for Short the quarter. significantly and primary in that of across quarter expect of second Course will half our - distributed forward.

acquired in new to programs, expect the XX dollar million of compensation both EBITDA increases years. stock over from stock measures, smaller rate XX and XX management of made expected a the has and $XX.X over by depreciation quarter, GetSmarter period between subsequent Looking earnings this million we of loss loss launch in year number strategic margin improvement are build compensation the our And still these previously, because and we effect the year. a increase Also we July slowing XXXX, our of and expect year will the will $XX the comparisons, expected between million do we GetSmarter two in of expense, graduate to and based purposely addition that for both as as phase, for pace EBITDA. throughout the in at plan, that which that and improvement meaningful year the of their unexpected measured XX at out. margin net the adjusted When at first in the over period X, not recent said decision year time, at expected investment which the that to increases we skew increase in based expect We looking remember remember a and million of At XXXy, programs be in offset on level. the in facilities XXXX, depreciation we’ve because year. pattern and same growth and net expenses then $XX.X adjusted $XXX.X full organic

expect million net and year. of first full and loss million million and an the for adjusted for the $X.X million We $X.X between $X.X between quarter, $X.X

We related of significant also and $XX.X at adjusted the XXXX. our across for In million and expect margin million EBITDA courses EBITDA of meaningful loss quarter, first million fair positive of between the in about measures million amount $XX adjusted for period and anticipate looking in for distributed and patterns, November, year, number the between we're $X.X earlier because that as measures, in XXXX impact and When told detail first of late expect year. impacted full earnings how the net you the comparisons a preview, year, halves the of still $XX.X second making scaling loss. short of we both in anticipating an these loss between year. launching mid graduate our launching over to gave and the period we operating both to adjusted in and from still and our new net is we're be two that programs loss because we remember a XXXX factors And we by facilities operating by investments and you factors, adjusted is and the the EBITDA impacted differences

Short acquisition, this and more unfold. made scaling that stage Course stages updates to the our remind distribution understand how XXXX our And into we release you of to segment. of our the on is integrating I Course quarters. with forward encourage on we which expectations, you a in in relatively months few early the I to early a want finally, now section have Now later visibility our believe what GetSmarter order read a earnings word as carefully still Short expectations, to our thinking help we've of segment, we some that will looking you last current remain should XXXX

The in outlook, our the at excited Graduate up ranges. on least student XXXX results significantly performance certainty their that new raising see top expectations around presentations for for revenue that in the or sensitive new very don't of time Short expect By full XXXX. and perform, that segments about we the early the and presentations their of courses revenue despite for immediately the revenue second Please note, to belief we're Short highly cautionary our these only previously, how Course financial But early have shaping first combined some the and to comfortable based fact give and enrollment, and Course are our said can margin quarter further real presentations. Chip? end in will and us margins. we've therefore assume remain come GetSmarter Course As acquisition reinforces year company. how Short that to Program both create definition, our value we of remain first results courses

Chip Paucek

chosen we Product them two and us passion at I and choose their word questions. want the Netflix. Chief in honored can becoming the our in have proof. to worlds both And that’s the most As of in join and here of emphasize life transform both compelling individuals, Obama, business the performance today our advisor cusp on Officer and we chosen few belief the on because XU values. education to Greg in their want better. caliber Valerie how partner a that, close the join who are to former that chosen, mission. of with to for to outcomes journey The I Jarrett, proven, in students power these for about model to board to for birthday, have Valerie have are their with open higher stand world's and the because Peters, seen our education so a higher the iconic months. live helping driven the senior education amazing company. ability note clear XXth the Greg they our changing be up built our purpose who And I'm of have President of has what trailblazers of respective programs we're XU past how excited of business, building people

Operator

with is And the Thank Michael you. question [Operator Instructions] Nemeroff of our first from Suisse. line Credit

Your open. line

Michael Nemeroff

graduate for questions. on since you've question many on probably guidance the on as US public. from How for for Thanks you FX consensus, domestic the in job your in out economics, the And for of QX movements. to Are and the XXXX? business? Is from And the from there that is vagaries coming an should a is bigger upside How Congrats overseas programs the going guys. can any in lot you any that the given degree and Nice quarter we programs, Chip, international much launch coming new GetSmarter? programs. from Thanks. that. a Thanks international about taking differences guidance maybe then flow Chip, the quarter. you how you the a Cathy, expect a metrics any And any, talked if of strongest FX? and above do quite from bit expect is deal programs. upside that specifically the of of comments, build much a about talk

Cathy Graham

Michael. Hey

the as have for better have more fact those there courses, well able think their much don't So start what might raising so I guidance made while latter more the we actually originally were in courses my section QX, the in that guidance a which - pulled first we our into of primary short earlier of in dates would of quarter, of what as the - expected. than - remarks some in I us I on cohorts echo that a were latter the half for getting said is for feel driver higher some segment that prepared the see a the revenue really give enroll quarter, which to to first is fourth basis, we

the driver. really primary was So that

it really exchange definitely As smaller change rates, our for And not was that any the huge piece in a factor of guidance. here.

Chip Paucek

add what is And we that feel with to GetSmarter. MichaelX, like I got smarter would I

how working. the team business together, we feel the is strongly how how integration coming that is and it's So about very going,

actively extremely going it's the on marketing side really involved more with and much We’re well. GetSmarter

for all, On significant moment the we think is first. company. our IGP, do I of the it's would say first a It

worldwide said, We've if way an of I that to a think this going long for has time of more university you be our that of of expansion that billion degree, think to education be now was $XX last. our it And the are great in We expanding and there education might combo very to this after. is - that of I aspect As going guys start sort graduate do the Europe. number pick US we higher very, that one told of we're been total TAM. sort immediate do We is Europe. large a of won't

We’re ready we’ll quickly but you should go, to not patience here. I think disclose expect how

mean part time. story that believe and a signed If a opportunity our Willetts jump might People we Willetts that see might of took do ago. couple the is a right of basis Lord continue. and Europe, We term. we joined you it you But that go remember, when we the David we big forward that not. into We will long right years the did immediately on us found that partner, - thought

of And program where sort a is activity. allow patience, So degree. DGP a of MBA building feel opportunity express larger our MPV MPV team team large. price of do we It’s a an in think have we that very - fits into but that the the particular This to us the strategy. a the nicely. £XX,XXX notion we to with should we're go It that opportunity is lots way after

about excited it. pretty we're So

Michael Nemeroff

Does model? in of in, the the way business there the DGPs deal, versus revenue real in the differences the the any from Any business it the IGP standpoint? Chip. difference change comes time the helpful, the Are length a closes? deal that way That’s the

Chip Paucek

because is you you to disclose don't if I you, it we know wasn’t, I the future just this IGP, well our answer one, this to would I is it different tell that, within While can not. every tell tell every point but something standard, one no. like and and can't future have when this I at it's DGP,

the it school's to So fabulous we're pretty in ’XX. launch and excited

Michael Nemeroff

Thanks Congrats. taking Great. my questions. for

Operator

Thank next line comes with of Michael you the Tarkan question Compass I'm Point. from

open. is line Your

Michael Tarkan

Thanks.

if for-profit other to build there far. trying just you guys anything, you trying seeing any a this the times, into on few you're of Just competitively, space. I to competitors out we’ve move ask activity so seen done wondering non-profit of have sort what some I’m kind

Chip Paucek

don't. I No.

the is really We amount of board, at People of And negative now to it's my this cash is employees think that venture that our invest market. get among call, and have that don't and It is company it is serve I folks before the a we're irrelevant. the in Number my don't proving on we now a space at million Berkeley is many our margins different cohort point, same large alignment for-profit that tough it. it's fantastic And and two, - this to the to goes Strayer better. Berkeley. largely very have, a we what a that believe what time. we right the makes we apply data ton the access is job but each better to we be we're DGP. the architecture. with accessibility keep there. companies and and breath. or making believe - of my very And the that sense WeWork, spent WeWork it $XXX deep through partners, around on with depth Learn both very we're of general like business things to pathways and that IPO raised it or spent getting that, our capital We team, building whether do just global with And bundle better, only

we twice very and we is, very business around mistakes real a from often with large we it. learned them thing important built make moat didn't the Now, and a

a super really of somebody to how with different So bunch the investment layer we enter it light for a be market. can't horizontal compete, a of across not activities. That’s model

MBA, we when do going to going big like it. we're be with we're So to just UCL careful, go thoughtful and but

Michael Tarkan

think there is how that revenue I mix. the maybe power picking perspective, about is at early we student do or? up, pricing is picking know up GetSmarter, a based per expected days, than from as FCE know it's - but a up just within in on better revenue Thanks. then follow But GetSmarter And then I And on the tracking that, is per US? least

Chip Paucek

given had our right XX%, So business, with track. we're to when feel is, the out that started getting we on thrilled how much theme around growth, obviously in were very mean own very that's But to clear. that guide. around level. that It’s - it's your you would and sort We discussed it's that really Day Investor XX.X% then sort in do still some And first be years. of we can so would and We strongly business, about is. there. DGP in how feel math think we we is we’ve our progressing. told GetSmarter the we're it going say, that And strongly call, actually and the see on theme of at evident you you told this just of quarter we're XX% I is just I our revenue fairly where future GetSmarter I accelerate would of showing going that it we core some

to things a give decade credit. most done We’re in, haven't we but GetSmarter

all great While a And and variety pipeline, the with in way. guys great we take the them way, courses. are course by by a the should you team great built universities ways, blockchain of the helping

is huge. the So opportunity

the We much is the which FCE XU is to portfolio delivering more own that that's UK prepared powerful. funnel after for there And selling, and a remarks, way it’s the moving script reasonable going average know client be in the within From courses, you're a lot want a I was her in But also in to cross It expect there GetSmarter. clear said additional mix its haven't as general. pretty for is cost US up. to Cathy is clients good a GetSmarter because of little. there, Berkeley done that sign GetSmarter to on now many very perspective,

really good So we about feel it.

Michael Tarkan

Thank you.

Operator

the from Thank next comes Sarah Hindlian question of the And line you. with Macquarie.

Your line open. is

Sarah Hindlian

the you much congratulations Okay, and so on great. quarter. Thank

in with start So sign degree thinking some sell cross up to just maybe and what there? for nice one. had follow one Berkeley short Chip, questions How programs to There both they a there price And enrollments this per in opportunity like couple that on your you. I of maybe up graduate be first doing we other of you in questions around for looks you’re should became have was optimize I’ll improvement GetSmarter. about some course. clearly coursework.

So would the brings success really love to there. some to seeing hear and what where you're XU table,

Chip Paucek

in selling the I are early super opportunity out the cut in cross And is we what middle, you So but overall? where think it is, you days. asked

Sarah Hindlian

That’s right.

Chip Paucek

we more We We and have much long terms opportunity done real about very But we're the it's at do haven't carefully truly in of universe where - it excited it. thoughtfully. course short it of We're all. think more very of people to going to where one the there's take will a that within ton people will particularly universe, ton there's course. a than want term, take to want course than that of

got DGP you've directly of where at and a of definitely start guidance with this seen where should a selling really that's then GetSmarter, our there's run, the to set of have bridge We really and and of across have think we while into cybersecurity, think that part not see across that to opportunities or the cross IGP. that once place XU point, our GetSmarter, ’XX both it's notion Grad you're some clients ton the going overlapping, we room effectively like you Berkeley interesting

we there's opportunity - early a and it's really days. of think ton there that's So

Sarah Hindlian

That Where more the for a What a a move All bring little to move. solution was on LMS to about what the go did your from one more to decision just drove table hear Chip, bit also? right interesting does that - little to I’d question you pretty you. with in Learn.co. about quarter? love bit that

Chip Paucek

that important are of university architecture data it to really it. ton of programs amount to it the placement over building clients, I clients, are of apparatus, which several see, that last time about in like that would spend talked or of technology tech. easily things is things that sort a Park, us but more bunch the and allows accessibility, of our spent no have data our ever SaaS the tell to both lot apparatus of course bit which of on terms out architecture, security, Central tremendous of we is little what I critical marketing a a and be you quickly. would launch of a So and then investment the a years, one whether we've things

a demo world in when the the flexibility of And learning make management very to standpoint, be it's tech so I bones Doesn't last of to coding And agnostic. did say we going think a look, of the that argue will coding I we got thrilled so most investing we systems I content we're side. content when would that into do, has the Slack. like itself, because sort it from have Hotmail that learning And environment. year, it a were - to the more like knew bit GitHub would to of rigid in like you, the STEM best very quickly us from allows architecture. And be platform first, that little step sort in be something directly moving class. built It's that true forward, it part feel and ahead us built Learn, top of a just for of could keep on

today for be will with help might existing tap to that different system. difficult our us that us So with verticals

of it over a on So team we the bunch great work the about Also the start. with so far impressed to like. there integration extremely there's a things and off is

So we're pretty pleased about that.

Sarah Hindlian

much. it. awesome. you so Thank Oh, Appreciate

Operator

you. Thank

the comes Monika of from with KeyBanc. Our next line question Garg

Your line is open.

Monika Garg

about Hi. the higher growth DGP. and said XX% event, XX%, Thanks XXXX had you you my question. Cathy, to XX analyst to DGP at growth GetSmarter of And XXXX, for than taking talked XX.

assume could Given raised be growth XXXX, you ranges? ’XX, it your ’XX similar guidance is in significantly that still to the

Cathy Graham

Yes is. it

Monika Garg

XXX I which XXX as you their Then enterprises? courses to do could question to companies companies, Fortune think there on you. the Thank train enterprise short agreements with short workforce, wide enterprises, their Like Fortune at sign have courses Chip, you for could gives employees opportunities offer? a look access be you short courses.

Chip Paucek

to behind relevant. today, going think a And huge is both So focus, in we consumer. would the our of some the on. but direct and both short say course segments I is cases, there focused Grad our It's it's purchasing enterprise XU not largely marketing directly part

around you kind feel that what are grief, is. every an they it know all blockchain consulting I as If was out giving exactly the but our it, running I and example, like consultants take you really talking course firm blockchain all planet don't the of go because on about take should

So consumer the we at direct there. courses. IGP seeing and by this think in machine this GetSmarter is expertise learning, DGPs you're an very I there’s do And effectively point, our, strong or marketing point, play really that But At the is think growth in in world. both enterprise driven it's the applied machine our short is the we're learning applying to learning strong. business on machine sides, whether being

Monika Garg

you in you. Thank Got leading profitability the last growth could Is significantly also expectations. it. expectations revenue what And quarter just walked for is it your increasing better one, And one GetSmarter? to about GetSmarter? talk mainly to

Chip Paucek

our and business with see So ’XX. but core do is as a the that start is. is strong we're having we also in we a said ’XX where moment think And a in Cathy? acceleration the clearly to very business and core pleased we ago, GetSmarter off impact, will great

Cathy Graham

Yes.

perspective is biggest of courses in in a sustainable first amount we is infrastructure the some start the back perspective GetSmarter. up the we - driver what quarter we from we're around that definitely more doing a than that additional marketing first of standpoint, into investing said additional the any had quarter. is prepared profitability the we remarks, term addition tremendous primary get expected, I enrollments dates, and making first business, bringing that into into from both And improved earlier or the was as had So revenue revenue sure factor drive originally my revenue. From of that were now this of and long a new which quarter in step visibility

us of up point willing funds. to So margin we're not we because it's this be reinvesting think quite everybody's step in to for any best sort interest expectations at frankly, those

Monika Garg

Thank much. so you

Operator

Thank you.

Company. line question & next Our Kerry from Rice the of comes with Needham

Your line open. is

Kerry Rice

small I answered, by XX been Interestingly, couple just surprised pathology? XX a that, in have thought questions such for think you or my would as the when a of here. Most the top you Maybe course. on but Speech maybe are launched Chip. the you pretty Thanks. NYU it top Because uptake one be maybe programs, programs

XX it's one maybe Cathy. the Now just Thank what you, second then ratio? LTV small and XXXX was for exiting is program. give number you. to us some backlog TCA Can And housekeeping you the

Chip Paucek

Gary. Thanks,

team. our selection is used wisely So algorithm program by being the really

you We’re capital. no, being to as choices I surprised. how our tell grading surgical And opportunity every single and to not we're deploy in would that

huge a Annapolis, was surgery, was there's speech pathologists. think find speech understand in effectively When quality deaf you old, have speech had - And are that in good I year son surprised ultimately one speech a to by and Henry had to pathologist. like he Maryland. hard use shortage it something until country really people to of was a my we he and - the had

great programs, a because of do of example demand, aspect. not to two it's the year degree, many placement clinical really difficult So a in

and was thought obvious not we it's well. it doing while the So it's largest vertical,

Of so And course surprises? have crystal don't we are a because there now, ball.

surprises, positive. not us, portfolio surprising general, anything, the So times if are are there is us surprising but not only to there it's in the

it. very feel about we So strongly

Cathy Graham

in end remind XX/XX at the our end. runs And program the all lower year in Kerry, the the are than for are the all just is because end at completed quarters, year or our preceding always backlog of of little year, There’s the of the courses of courses $XXX over almost was you very completed, I'll all is year. that it guys million. the backlog at that

have we’ve we're are that’s in There’s pretty And TCA So that of LTR decline which mid-course. backlog. anything X.X. earlier. in you XXXX, launches is guys of a to seasonal - heavily driving in that don't sort around And investing sort that’s you told

right we where actually expect. that’s would So

Kerry Rice

you. Thank

Operator

you. Thank

Our Brian comes from Oppenheimer. the next of question with Schwartz line

Your line is open.

Brian Schwartz

way you you international to quarter. thank end it's and for congratulations afternoon nice taking on the to for question again. GDP. One year questions, my I the wanted Good very on the is a and ask markets

you're market the can was one then That start or cadence with opening the of programs that is up those of per that Now capacity sign here And business I the change markets announcement US, international the to understanding if seems I of partners does or an inbound It situation here it The was Thanks. an kind the requires was new question markets question And outbound strategy. to the number just wanted more market more international, the today, you. second strategy of or strategy. to it on that's it go were the coming annum? go of wondering the the same if to in ask. all

Chip Paucek

Brian. Thanks,

outbound. say, would really I DDP strategy It’s inbound. mean our been I no. not has So

over think go no a somewhat data very think gotten the know. at big. different, have years outcome market will strategy go used opportunity different. is And I and these and to to find I be out what the vertical. important single every degree when the IGP of we it's The to are particularly We’re the specific very is programs. of mean good it's have We and advantage our surgical - in quite predicting new

new The vertical. us. is is case, for booming Now, it a vertical fortunately in not this MBA

Chief Brin, that flag that and seen Commission. you we great we Trade that Katie we European might recently experience start have amount international it's sort of So program, hired planted to first Officer first with do of that the former the in. have something our our Federal of think tremendous or a Privacy we

the that So that's about our of of all business. relevant long we do future term think to aspects also how we think super marketing

So Brian, science. do pathology different we have to learn is every data we than time and speech

to the there's to and vertical. get understanding lot get at we good a apparatus very need we it So of figure out, for build but launched, that once learning have we we one there

Brian Schwartz

follow the the make won’t proposition. on you Thank WeWork you. up one that, very And Chip, repeat question, announcement, then the

how and clear of pricing this you on retention on think you the was very the the in opportunities were enablement I vertical the ask What that other any the and expectation the partnership partnership you I or on that long side just bring side. Thanks. to the you this your have new aspects to take is going of onto enablement platform to want technology the wanted between announcement?

Chip Paucek

work It’s But moving one very short our programs. important the then you The will of will partner Well, much are think center. like migration longest is And and very The progress. super scholarships the term. the roll that people’s thing a can't That’s will take access, platform we because learning X,XXX it’s that Learn.co out in and each a roll global quickly, is multi-dimensional. from in the the different out the degrees. to up these gradually Masters platform. students alone non-trivial screw data to something

So for soon we our all it partner our that have and to can all they’d you, as and want is But question annual I partner possible. tell no meeting, they like it I do it thoughtfully there's as which leave symposium, tomorrow carefully. and

before I So to to it working out, to tell and on we're a plan you. roll tell I'm going them try

Brian Schwartz

answering very you Fair questions today. for my enough. Thank much

Operator

you. Thank

Our from is Corey the line First - Analysis. next Greendale question of

open/ is line Your

Corey Greendale

sounds way program, at international about on it to economics end Is Good to like circle London should beginning. that good Michael the back Chip, I But to just year. to quickly the the Nemeroff’s the question like have more I verity. afternoon. an it right? Congratulations - want want program. you’re just The talking MPV

Chip Paucek

certainly an a it program, it crossover. but is mean operate I will There Yes. vertical some be degree in international we is today. that £XX,XXX

cohort immediately different. seen of like that releases, the is in slightly DGP MPV not every our you've same Now, launch at And them initial has size. all probably that

And the to the and has some some region of that that with has to do marketing of do apparatus. with

has differently, it's discipline, that Some vertical of with more do itself. the but has that this to to act Cory, feel the MPV reasonable expect than They not. do

Corey Greendale

XX a was out the there say said, you as top have Did of new And good. Okay, five script. the that top XXX in lot you enrollments? the

Chip Paucek

top of more the or more. top - XXX the out have said than seven XX We

You in - it’s okay.

have which, particular bit figure I’ll that of on is so you which quite work done a out, in let one You exactly but.

Corey Greendale

fair Yes, you weeds. in going Is I any for Cathy, guidance? there clarification. eliminates - about of this the thank of that, then out to well, is sort XXX just but maybe impact question slightly enough one that was on the And .actually ask the the

Cathy Graham

potentially XXX, on from revenue from no is and but it said - be a largely that financials there's there cost XXX. on standpoint, our on But on we have positive side, some So the impact previously should revenue our immaterial. There nothing. is from impact

Corey Greendale

if one, is in taxpayer? long with the law, any the the us DCFs, when it’s a but or term I cash us before this change can guestimates a of you I the you And in running give far just in don’t’ but what weeds know Okay. taxpayer, it’s tax is become you’re realize long time for your those tax rate distance, a

Cathy Graham

A, long, will what of beyond But NOLs, for or future rates potentially on is - don't US, no. running of on impact that should know think Corey, our from we sort rate what time. is your you're a we at you all be of either at going our - size ability everything those. of unfortunately, have our the to and I relative beyond the be use and our impact ability will profitability horizon relative what and that no I of But Obviously tax what tell existing the items to it’s creation could in So if forward the backwards, your will rate, to that the our standpoint, the it's size tax use hopefully going there reassessed of international the NOLs, model. it very tax new point be them. XX% on our

little for difficult a us forecast. to it's So

Corey Greendale

Okay. I’ve numbers can we you next talk. of here time about what think XXXX on talk going up so we model got my a

Cathy Graham

it. You got

Corey Greendale

are there give on for you cash just cash sorry, any anything like is ops any can that kind of quick CapEx guidance XXXX? - flow or other one, flow, things or Cathy, from One there like

Cathy Graham

if that specific that have not you in think look because that. given for conjunction, we and what was then at CapEx I our take So guidance XXXX in

talk to So at for But expense. CapEx that back get get from there. don't you too reasonable and drop to I In a way tell a our about to - go the you And get should how this what then year. specific. XXXX, and in look said give and CapEx we ago I'll call then about to want our year

Corey Greendale

Okay. I you. appreciate Thank the help.

Operator

you. Thank

question from the line next Jeff of with comes Meuler Our Baird.

is line open. Your

Jeff Meuler

Yes.

state year been XXX per has XXX a there the study up So target for while.

today, programs guess, benefiting with been season which are and XXXX, like gives since things with the up you you the I Just probably target that? that MPV from disclosing what you and is UNC have that that and the potential coupled has from MBA confidence that upside have bias list data efficiencies. XXX right guess still XXX to or moving driven versus average I around

Chip Paucek

mean Well, a it I portfolio, is Jeff.

it's And portfolio not But list pretty also a good. top looks so the where point a the list, we're XX going good. the on number timing at we're darn looking increase yet. top clearly And that XX and to

Jeff Meuler

Okay. variation control of of about the that is? is business naturally your much your run how model? or guess of then just of that? are And terms I the from what of revenue look to quarter in Just in magnitude frequency as GetSmarter Versus the over outside time, quarter, because at you control course how are increased is thinking it guess I I whatever

Chip Paucek

up Well, that. partners, a across believe should I and their we they know sort portfolio options balanced courses university predictability, the we to they add be able of pursue course its and as GetSmarter of ramps individual think to

for disciplines. very finding is they Town across the courses key of might their a really sellers, the that's different be stable stable but portfolio, courses that of is those of like sort Their company the a strong individual - not also bunch have. whole Cape So the UCT highest just University big and portfolio goal

like we working courses the the frequency actively. pretty So they're on of is feel also running something

Cathy time, the in stabilizing we reason willing think be, there feel growth yet like the heavy So was capital exactly we more mode. which is company, able profitable we're it of go will over part and to to of how not because commit as on sort we're

Jeff Meuler

you, Chip. Thank Okay.

Operator

with of BMO Thank Jeff And last Markets. Silber line our the you. Capital question is from

is line open. Your

Jeff Silber

just much I’m so curious sneaking little may in for in be … I'm transit, and Thanks I here. bit a apologize. me so noisy

Chip Paucek

great. sound you No,

Jeff Silber

lot know Washington, going there's Good I in so to know. stuff a on. of Thanks much. down

of some I'm just reauthorization they're does Graduate to you're long if One of some know about more how of there the way you working potential any is Program the think the Education if Higher things business? talk capping Thanks. through, loans. impact that hearing it's go, that, a if it wondering go this I but on Act. the has might your been about

Chip Paucek

No problem, Jeff.

versus place thrilled ways what So lenders that go being any incredibly loan would what about if quality We be feel I programs like is is are particular. our incredibly legislation, say, to put students too. quality with in caps, private loan in would gets to high there's high on a like there caps has just talked business in

fostering getting and ways Berkeley, worried variety Rice there's - something about Emerson helping think be or across So could it. like we move horn little where grade of a innovation we're variety where places school you’re or like a online, not also there. that a there's a of there

I'm horns have like You coming. They what saying Jeff. there,

across we’ll universities like think this really administration in We that we were be the win. because past fostering to strong argue in would a quality innovation high we you I feel So administration. strong is

Jeff Silber

through great. at all? the Okay, Anything in Does that. of you I And reform, else then went terms Cathy, the impact some that impact. accelerated or of things tax tax rate, depreciation you like potential know besides

Cathy Graham

- it No, were XXXX, of and all it actually enable in at to period. doesn't. repatriation looked payments we it - during to us there none that we applied in this of like transition things

Jeff Silber

much questions. for Thanks so Okay, great. my taking

Chip Paucek

problem, No Jeff.

… everyone thanks So

Operator

Thank all you. those And are we the have. questions

Chip Paucek

Thank you.

with Douglas, a quick end thank delivered I'll shout XU Ryan to out the a UCL that deal. really you. So

should proud. be Your folks

no And that's I hey To you say my road. We’ll back row, the see dad, Edward Paucek. folks. Speaking of it, pops. folks, out on

Operator

today's This gentlemen, may a disconnect. you we And conference. Have all evening. in ladies program and for you participating and concludes the thank wonderful