Ed Goodwin SVP, IR
Christopher Paucek CEO
Cathy Graham CFO
Sarah Hindlian Macquarie
Brett Knoblauch Berenberg Capital
Ryan MacDonald Needham & Company
Jeff Meuler Robert W. Baird
Jeff Silber BMO Capital Markets
Corey Greendale First Analysis
Brad Zelnick Credit Suisse
George Tong Goldman Sachs
Call transcript
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Good day, ladies and gentlemen, and welcome to the 2U, Inc. 2019 Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded.

to host like Mr. today's now would introduce for your conference, I Goodwin, Investor Ed Relations. SVP, Mr. begin. may you Goodwin,

Ed Goodwin

Thank you, now, afternoon, release XXXX received Operator. Good copy for earnings second to a quarter conference quarter the XU's company's call. XXXX the By of you second have everyone, should earnings and results. welcome

our recorded we the not, call will this use post a have on Investor you information website, of section is available on Also, and our of. which you available webcast in Web Web announcements and If we copy make site, routinely to Relations of investor.Xu.com. site. The our be access encourage

announcement One we before begin.

Day XXXX. will an Investor on headquarters at We X, November host our

the share in We more day and the you details we in months, November. to will coming with spending look forward

Christopher Paucek, Graham, CEO, and are speakers and "Chip" Cathy Co-Founder CFO. Today's

and and are cause results The is described anticipated results to statements. to available materially forward-looking statements to we During make rather unknown statements market objectives on these on the current These future including company's results, of statements our could the are and and beliefs, events information outcome operations. financial in statements, and known the from subject uncertainties of forward-looking the regarding based forward-looking future that facts, and expectations risks but plans not currently and historical operating for conditions today's future us. based call, management are differ may actual by forward-looking these

XXXX, Trilogy, acquisition, the annual integrate well Risk the company. on expand, as for grow includes, and and section expected the This Form limited the not company's SEC, benefits XX, those ended in but is report the other December operations year ability Factor our contained with the to, of as to the filed risks and the combined XX-K manage, of successfully achieve of reports

policy this call as forward-looking information obligation to or no in results required on Except or in to statements publicly our reconciled XU's measures this our statements Non-GAAP to is directly than law, any call update update attached call to it financial guidance other most in this tables as financial release. today. actual the All the to communications. we made provided GAAP Also, comparable to not changes press of in expectations. is measures by undertake discussed are during our public conform

now I turn the would like over call Chip. to to

Christopher Paucek

Thanks, Ed.

online going the XX we've around deed would build of business are to online obvious years, past core education. infancy. it. online. in the ecosystem. and business the program, education The us We marketplace, its becoming market believe is more requires evolving. Today, calling education the it's over moat unique pushing online In are programs in company the adjust represents the We're reality important drive that of quality the online. higher thesis others scale schools Over in a and time. a forces XU similar that to to new schools all that it the Secular platform was most market built When the this competitive mainstreaming could we and campus characteristics online was started the company's a and

also due We from and to benefit our is new positioned uniquely one product to comprehensive that that XU believe is this set. size reality

career products across of they XU the OS the were in curriculum combination benefits scale even operating Programs dynamic. way than smaller has the overall model of come executional a our past. adjusting more this increased. in we're meets education students important dynamic and online. more become will that continuum Competition So against slightly for be mainstreaming this market the a model, as But schools of online of new XU's

in is the moderating us, the know and short-term pressure, our We're it. clients are do market our is the what the scale more challenging We secular but than about valuable XU's the market evolving how short-term, but creates to business of is changing, long-term favor. ever. going The dynamic importantly to in we're most some outlook drivers importance our for what

results. QX solid. were with start They Let's

Second you more give quarter XX% year. $XXX.X million, over up Cathy was last revenue detail will shortly.

guidance outlook market Our reflects given full-year our XXXX shifting moderated the dynamic.

to top line, the to midpoint. be $XXX.X we expect revenue On now of the million, XX% a growth million $XXX.X at

a Trilogy, financial Excluding the revenue impact business. of expected for expectations in of the implies this step rest the down

business. our gone revenue down expectations talk why Trilogy? Grad have first excluding Let's So about

were some options. trend education. I've year online few the high and it's The to mainstreaming online over talked there XXXX, overall this quality so the In evolving. issues conclusions much before, As the about client broader of mentioned about we're education program-specific online were masking coming past marketplace, we've of very

grown and more results we've size competition have the What options program form. state historically students. online schools business for As smaller online new enroll in offerings per then we now going in to most which us? expanded some are need steady does to are to since significantly. that expectations average this program, Today, We many There students shift expect. would a our more mean what

analysis disciplines an we believe believe with we overall its mainstreaming means to conclusion -- will is to different differences parts the of the of case and multitude offerings. a the This online go-forward is and saying see The of we're that on we've a guidance market. investors market, rates here funnel the multitude in want and regional evolving What note, program our trend we basis. continue will of different competition. one funnel, unpack lower a presumes the across structures, education past. about on Now in small reality is of tried more conversion many It's increasingly in that this

dominance. still impacts win circles win, decisions. brands Regional in enrollment they bias While of smaller

in run both back matter compete online Philadelphia students, simply Program has for locally it's somewhat options and that example, strength a student to quality have the didn't you For XXXX. they and need long but means in harder. more brand options in

expectations. we've reality outlook. this enrollment tempered our In changed the and we've of business light new in Grad So revenue our

at for regressing was programs we to from what expect state towards down what program-specific from the enrollment come issues. average mean, state largest steady expected. We steady of come some that the to program We've down previously we the accounted

However, for averages revenue it's we long-term. these programs does less exposure programs or XU. risk create to concentration fewer Fewer super-large expect to substantially prudent program think single outperform

shifting expectations our market per program We're the important going our but even forward, more becomes as scale evolves.

Our across increases provide builds our our overall clients. we leverage platform business as each competency

time. creates drives operators in believe across benefits are and Our scale the One we reality clinical leverage that or the platform, the Many do business, comment operational not struggle. opportunity, will space OS. competitors creates bigger important our In a we scale unit sees about economic XU XU and this smaller marketing have Grad single-program new other this seeing across without real placements problem. companies efficiencies

mature Our we alleviate pressures some expectations to of need margins compete our to strong. the more lowering remain expect a marketing efficient other By helping offerings. long-term, online cohort from spend education with the enrollment over

helps enrollments business. here. smaller drive steady can sustainable for state Scale We've seen properly that to we spend

we what are seeing business. Short in Course the So

courses one, to Short but which university. to the our than This unrelated time and factors. deal the the expectations brands, account is new expect expected, We after courses that number build for Course with even more two, moderation to takes more nicely, number these We'll a signed we've into normal. school business lead what professors with matching continue we're with work growing learning,

executional right. Just need get issues some we to

would public plan about but I to on complicated This residents guidance to technically by on this Before issue, talk I student of of prohibit receiving from the is Education. wanted and move regulatory some enrolled forward, out-of-state distance our recent education developments touch at federal issued aid institutions guidance California in funds. going to programs Department nonprofit a related

of that endorsed California felt has not the guidance. it Student be will impasse reflect current prudent uncertainty soon, While we're considering in Complaint Process optimistic yet that was the to broken our this Education Department we

of complexity Given remainder for and ranges. these out widened XXXX we've tempered expectations trends of the overall guidance our business, the our and increasing

back let's So about pull plan going the talk forward. and

First, our we control destiny.

we our growing to run cohorts we in profitably. can Grad have business that believe continue We

a the can long-term. Short growing we We business have over sustaining Course self be believe that while

some the business moderating If topics mange program cash new believe expenses, the cadence had our flow. our most operating free a by and we positive growth that for in-demand business the overall have bootcamp At world. of we bank. of We QX, adjusting forth we almost in offering million the end we in drive course $XXX will

performance the have add we how at this? we're will look So going are shift To First, our allow here at to moderate and velocity path but new XXXX we more a smaller continue the program we launches. is be of adjusting proactively a of our of time to what amount to flow. we as while free with cadence. to launch deliver our will what clear, launches cash doing do Grad program on to XXXX us We period to This rate. new early to support focus existing smaller programs, profitability optimizing and positive programs the program

you projects do outlook. a current yet are will for lot I'm our to Xth. have not the a day, in We this programs work and investor That seeing many have to there, some will progress. with fruits still efforts wait underway, we how even of of November ready as optimization on tell it's

cadence But new the in at to have bottom financially the strong, of our by the for our right and new years beyond of growth expect a we the perspective, sign incredibly to less strength if that sign business, steady will half But in solid recalibration But from And and now positioning the competitive students intend do give state we mid signings right what we we to cadence smaller probably that. expectations. and programs, XX put any remains currently substantially to Investor program be simply today, Grad We this few is remain growth operationally. to I XXXX the our our and Day. you cover business launch in the model the current additional reality enrollments. I do Grad impacts on that partners, operating of fewer new with announcements in rate scenario should to grow the shortly. and course, teens indicated no programs of high not will line XXXX project within This for updated both than than and thing the as for

and business efficiency the doing? its We're So what costs are else better on focusing overall. for we

We new These the put on bunch intentional, on flow. of one The projects here. path kids flowing clarity underway efforts, these efforts. clearly driving purpose. cash to Scale with the combined is free have and with path a us should helps we're

work our pipeline, deals. We're partnerships, we there, and is we're exciting. proud right lot the about still it here. when on Demand it's in a enrollments competition new but talked to Now, deals. comes winning I'm competition call, of on earlier to the for for winning laser-focused

much consisting of our It experience in Pharmacy an related a Rochester, to relevant first, through the two pharmacy the This lead discipline vertical; going seven New modes. is disciplines with John I'm where is few in built clinical anticipated widest announcements to for to complicated York. So, program, with XU announce advanced Fisher for Doctor which internal you, but of will continues still require into is entrance practice excited the College a we St. Fisher steps signed. XU. pharmacy characteristics, new rotations. John St. it's the clinical

means Second, for our broader a more first a that suite, education across online the of programs. asking solution now institutions ever of are set comprehensive institutional mainstreaming

scale career for demand awarded pan digital to RFP UNC Chapel curriculum of to I'm the a of curriculum across programs become able to entire continuum. announce competitive the career benefits due are collaborator XU we've university education to meet the been We the that continuum OS. to spanning exclusive and breadth proud Hills' offerings

than offerings the no We in fewer expect launching XX view XXXX. first with

degrees, and of by suite type to part This is very to more addition GetSmarter. if the In This will Trilogy competitors is arrangement for new graduate full-service comprehensive, offer fee-for-service power the and have smaller be model that couldn't includes we in a difficult sized for our acquiring programs. model happened institutional future. replicate, to become the hadn't

impact its at much will Day. this more have Investor on and We deal

give specifically acquisition Trilogy. the word credential on I and a alternative segment, Finally, or to want the two of

Cape our critical for Town Today we First, had and UCT we're big ahead. XX-year courses what's deliver is course excited announced contract the short extension new universe. a a business short about with XU University of partner a to across win. the

which disciplines. of the other the evolving faster the meeting part we're as evolved particularly Trilogy now of pace STEM With subjects, needs workforce, a team, at in and

a overall year ways. Trilogy addition outlook Our increases business from this the of variety in of

next We expect Trilogy to substantially years. business expand over the core the few

career opportunity in for since with already acquisition, are XU who also to we've our We'll partners creates too but across wins the see there's Trilogy expanding this with business talk cover other competitive November great announced months, their more relationship In our much met press continuum. few of many the about as Trilogy You interested can in release, in number a here. we curriculum the lines.

efforts new to the and a upscale real This enters our One of Trilogy technical significant looking and the GetSmarter seeing creates XU combined channel. the to with their courses in enterprise impact already exciting companies year. attract to more today. demand Trilogy, next will selling across workforce development business. business related talent. line and proceeds XU is for expand opportunity our those enterprise a We're offerings short bootcamps

from accelerating short-term, remains moderating our trends. we're core and thesis will long-term differentially we legacy while our for benefit secular intact Overall, our business outlook

and scale CCCs. advantage, product of our platform, positioning Our as our breadth strong across line is to the XU competitive comprehensive due very

market We an financial needs size to change years next and program executional the making operational business. and and are the over adjusting couple to address new the dynamic of of meet the

We program still do will free it. grow for flow while and most win nicely importantly, cash students get we universities and cadence to

turn it over With that, Cathy. I'll to

Cathy Graham

Chip. Thanks,

let our for Before the results. to remainder review quick of me quarter view first do a of second XXXX, moving revised

Second to exceeded was second growth by in exclude quarter the revenue XX%. us Business same of prior adjustment required year-over-year. in quarter million, to XX.X% accounting combination million Revenue this XXX.X revenue. $XXX.X rules X.X people representing of million XXXX

Program XXX.X% course XXX.X% accounting be million Credentials revenue including quarter. continued for from was an full revenue the purchase $XX.X to year-over-year Graduate a was or the segment, million Trilogy quarter segment, increase to Program year-over-year segment equivalents. growth year-over-year growth. $XX.X growth the partial alternative Graduate our million And the revenue driven $XXX.X prior And revenue acquisition adjustment, in revenue In of by or In was or growth. XX.X% the

decline quarter changes. of per revenue per based revenue average largely FTE a FTE the is offset FTE. and year-over-year in showed the calendar For by mix a increase The second in decline academic XX.X%, X.X% program, on average

Credentials FTEs revenue was in priced Alternative but seeing product increase segment, and segment's reflects a XX% performance FTE. our addition partial of The of a Trilogy delivery This this are mix. of segment. a At somewhat book average XX.X% period the into into year-over-year higher rolling we of this per the impact longer result period in

once in period included. metrics see full is You of these bootcamp a expect should to further performance shift quarter in third the

loss expectations. loss $XX.X over benefit higher at the EBITDA the related earnings $XX from respectively of approximately tax net Looking our expectations million periods legacy pre-trilogy and at second adjusted performance pre million to second quarter At and all expected our from $XX performance also and business. in benefited Trilogy one-time business of measures, well our $XX improved we've skewed quarter in been loss adjusted versus than prior net expectations and by because better Trilogy. acquisition, loss were the in million pre-trilogy million our and acquisition both primarily than They

to loan $XXX and the has our cycle. the consistent first between a million Note on with facility receivables ended and that academic in $XXX.X and the reduction second entered book that the quarter sheet camp This quarter addition our Trilogy long-term quarters calendar receivables note the new perspective, cash of in quarter million the with million business. increased into receivables for our of $XX.X graduate balances. collection reflecting investments the Also reflects sequential we related despite debt are balances From based timing in relatively the balance acquisition. the term program we

expected and inclusive we're the our of forward, for bootcamp for third providing new XXXX looking results quarter full-year guidance business. Now

and to you've want what earlier. reiterate I on expand numbers, the to discussed turning Before

mainstreaming education of of is state to to much and more developed program have steady options, online average the smaller we expect students online As our continue see across business. sizes

business, become our variable the our we've environment and ultimate result the consider reducing launch that for our scale allowing we size cadence. slow-down the uncertainty. the program business variability rate fact a more evolving at are of on programs, graduate to in has As And allowing based updated which program expectations for XXXX a where and have higher for expectations we

earlier. our the we along courses, lines are also short For mentioned moderating expectations just

continuing as and $XXX.X Our by of revenues will moderated outlook Trilogy for between we we for the a and and recognize the of quarter now million to the full-year. that expect for and bootcamp expectations line million Trilogy now $XXX.X quarter $XXX the third $XXX.X our for purchase Adding part our the bootcamp not offset million guidance incorporates the We $XXX.X revenue legacy third $XXX.X million full-year to ranges product fully, the $XXX.X $XXX.X million respectively. accounting that have for are to these million million business. revenue between

Our of reconciliation expectations loss of to our expected loss EBITDA this suggest have earnings Trilogy measures result adjusted adjusted this, guidance loss as and our the to a that the strongly net of the to changes and guidance of the changed into our incorporation read you net understand now Because better business. I changes.

I period. to while we particularly revenue the of to expect of that in make some the up of be over in growth be want mention Additionally, we have do structure, the portion expect not offset Program the do able remainder slowed entire expected decline year, revenue able our the the to over business even reduction to Graduate short cost time our to and

of and it we expectations, the the the measure that compared We loss the purposes $XXX.X loss the our and and respectively. full-year accounting-driven and $X.X which ranges of for for $XX.X full-year providing revenue of for revenue and benefit to between loss $XXX.X tax a for and measures. million million quarter in include flow million now quarter, acquisition-related exclude through purchase reflects of million our transaction now net third guidance the million booked $XX.X adjusted remember million for excluded this then expect $XX.X quarter, from ranges. between net These are thinking third These the costs loss of full-year. the In reductions adjusted second prior reduction

for full-year, intangibles our adjusted the guidance in million of $XX.X Further, now for between We and to expect exclude both $XX.X quarter, includes Trilogy loss for a adjusted related million net and from we on term both and into loss an million acquisition, the the that entered we the of quarter measure third acquisition, acquired third facility full-year. which step-up and the for $XX.X million expense net $XX.X loss loan amortization and ranges. between interest

We also $XX.X expect million and for for million the an and $XX between the and adjusted of million between million EBITDA full-year. loss $XX third $XX.X quarter,

And reinforce said want finally, something Chip I to earlier.

and While we cash are evolving are And while November. you about increasing continued to uncertainty, acknowledging this Chip? we aspects we an generation. believe to forward do of more getting path we growth, longer-term in plan, talking a other environment free to our and on to look

Christopher Paucek

This with our I'll then to it has but make close I certainly clear of note to to a want you're amazing. pushed you, XU us, all year team.

products super excellent exclusive Carolina, deal than Chapel built other for our with University for institution-wide positioned Hill. the success. of announced quality We're students. with We outcomes North ever high You've just first sustained long-term none

world. the changing are We

Let's get to Q&A.


comes question Macquarie. Instructions] Thank Sarah first you. Hindlian [Operator of Our from

with question. You your may proceed

Sarah Hindlian

what to loans and are All you graduate me business, shifts state I And students Chip impact could in very the who of the maybe could have distance well. California size right, then what follow-up happen, thank a was and as you're great, the core federal seeing you understand doing happen I help exactly learning. wondering for Cathy, for with much. just if

Christopher Paucek

Sarah. thanks, So,

that situation; put importantly given resolved So evolving certain But students' could not that we're California, certain minds. or fact uncertainty on one felt officially it is the resolved. will of it's it an into the some yet optimistic state we like, minds universities' get obviously more

we our like it we So felt in account had to for forecast.

why that that growth what in Grad understand trying overall, Sort is potential there's would of folks significant business see stopped some time. expect to would that to that growth we're to to the make up in of high clarity for built, in if launches the sure backing we've mid teens, continue and to we're which give already trying we business sort all we

the operational We time we're And is going Grad a there's there for for of one, business, for two, to better and do the end the right lot change about. company now us still the of appropriate schedule launch that course to launches. financial in drive, all business performance overall. number order excited we're think to not So the improvement number for velocity it's

Sarah Hindlian

great. And I a follow-up Thank Cathy. have Okay, you, for you.

which talking important towards give long Chip, early flow will doing sense free do a do a terms appreciate you is will us In is as too dynamics. new I you you'd a these shut there, some have sense think certain said, numbers, fairly see comment programs that positive investors I how it to or about cash be as of number of of your And driving out to if But you that you off journey take. programs. new to

flow breakeven? do we timing free cash think how the So of about

Cathy Graham


So are specific and our Sarah, of that to lot investor now, a in more this lot intention a this be working I think through about it's day. we right

we'd we will to really can plan lay time to appreciate that guys a you get -- us. into thought and being put some there that give out able So able you be to real for the

Sarah Hindlian

enough. okay, All fair you. that's Thank right,


of question Brett Thank you. And from Berenberg Capital. our comes next Knoblauch

You may with proceed question. your

Brett Knoblauch

guys, for Hi my taking thanks question.

quarter associated there or break do? plan you can is First, out guys not -- you that that Trilogy the is guys revenues with in were something the to

Cathy Graham

that. we're to do Yes, planning not

We credentials are segment and Program basis. alternate presenting our business on Graduate an

intend that out. So we don't to break

Brett Knoblauch

was then a And Boston degree is edX. second that's question, Okay, how on an just reading launching University article $XX,XXX about fine.

programs, something with to might expect being in structure is you universities? of offering your Now, with the change this

Christopher Paucek

-- are I'll offer -- just going go we to we well, are the is So continue here. question to

the to several the in continue will offer years. competitive over next programs We landscape

stop. won't a quite have programs We different points, few MBA price different that at

So continue we -- will

Brett Knoblauch

universities you're move seeing to not of only online is degree. question online online, these standpoint. but The like feel more move pricing a lot cheaper tuition move and I on

Christopher Paucek


Brett Knoblauch

of And that difficulty] end are higher [technical given market? your programs

Christopher Paucek

know, and You sustainable and campus exist to do off backs drive we long-term have the a of business, believe that quality doesn't that continue program. you to one the

So we and considered. it's important over will both do cost really that think time quality get

not of optimization exceptionally some with specifically, an will to we got in just question no cost. and working the to on that think the very about outlook on a on that in squarely didn't way. investors up we are call, this to good at But come we things particular the cost and the need, which have investor tuition we outlook problem on. we day. things this a is to new talk there's We talk to -- plan about is list outlook, the want those that funnel the Now, attack one detail call we've felt given that of working points in component, focus important we that variety On unpack were long of I clear; tow attack be and really whatever detail plans

Brett Knoblauch

in I'll it's selectivity the regulatory their question, to -- why jump Do with, success? you scaling you QX noted issue not guys think that's think [ph] I to the the playing due tempering last XXXX, do is queue. then concerns Okay, at AB you their university maybe back that or the program think

Christopher Paucek

noisy. a business. that parts particular complicated is various the now it And lived funnel so publicly, noisy. itself would The say are that to No, it's it's aspects of I And having I the funnel this the clear, I there would tell is of be admit in rate -- complicated. you mean

sort new overall one on some While certain program, question. to The It's like is particular it's did specific one and issue, a cost. us. program particular not issues this aspect we not sort it's it's your particular that program, driving last of reality particular one just bit a of is masking extrapolate have competitor, more not one reality for the of thing little not

a list at When more come we folks it's than longer pretty expanded listed programs, surveys to university once, decline of that our find single look universities we just it's dramatically hard a have since into from IPO'd. that's

us presume So going point outlook, this lot candidly not will that is conversion there more the we're lower presume a today. our competition flat And will going rates moment for at this a ultimately have to to that forward. competition, stay change be

have we to to normal. we address work a of while do continue it, this new us a that think on is this to So variety ways saying is

Brett Knoblauch

Okay, thank you.


MacDonald you. question from And Ryan our Needham. Thank of comes next

may proceed with question. You your

Ryan MacDonald

Chip question I for trying you, to program and first really the of the guess of up Hi, is and saying prepared just sort Chip, you launch in around Cathy. sync remarks. expected were cadence, what sort

versus partnerships a are really shift short up seeing You that you're still willing from cadence. program? to content a because university Is sign partners but mentioned that to grad university with sort partners a you're you, that demand for for full then more obviously or type moderating of the course the Trilogy

Christopher Paucek

a for well to is to and the target we launches. thought that big talking competition want spent we like. programs over in are very put this that sort about to -- but economics we that only at deals. velocity the an terms want year competition intentional in the institutional is out No, last the we What UNC change have program time a I of fair definitely our amount -- of don't them -- certainly there not that relevant get one, of there given And for announcement super continue of positioned that that RFP. not. it of an seen we RFPs after but one was is people that have get in the business, are a more confident that the competitive given chasing We increase number seen we feel

about retreat short this period, during selective to some of We because just to not courses. it's be, So we're need what launching.

that the think down do of slow on to we're the we've need on a serve if that anybody's got, what we power what have. bit operationally. And focus not we we And that. a little little was will aspects and we well internally need of more us improve And to money bit, certainly going

sustainability So the long-term the business. of drive we've got

university awesome, were it's the to the performance, Ryan, say different, thing I that And we're lot it's is that reasons. gotten attention top-XX the for Obviously our we a say, team able proud this one of of I Now, relationship a community our of and a of be is the happy bunch school. institutional That and relationship. from with would in very and university. our would suite very approach proud to flexible has is

you programs We be that of us lot. a it online. relationship We a boundaries things the tell There's just from down things in list just to how will -- outlook. was with new reality push of a great a that and think think a standpoint, what's long just is running reflect we that were. possible our of variety really level-set We for didn't exciting bit need like to time for to ton to in of this that do the to that what competition do student with quite a want of community dealing today we're sort a of

Ryan MacDonald

it. follow-up, clarify. but already I ad then the And to nauseam, Got just of a California quick know discussed sort just you've

that changes back-half talked -- UC quarter that program Davis these you about, experienced program potential first of delays the there additional delays of 'XX? Is call. for delay the to the the in regulatory With on because

Christopher Paucek

all the up clear, California nonprofits is affect distance students. be in offering are California program education that doesn't and schools, No, affects It California it's To unrelated. issue to that running. programs

important education putting discussed on my of from what, and I the is not in world the that's planet. as seat. servicing that because a anyone we being country It's So is is to other It that for through the or real-time. all online tricky, eight is in nonprofits largest very were are super tell issue could the California Whether was super it important it standpoint is you us to this guidance. careful consider

bias will will that. So standpoint regional impact universities them. of things more in to while students the of clearly of from focused while obviously and have California certainly -- be offer and students we're Schools in programs California California therefore more distance regional California California outside sort bias have included

sort had So account reflect into that that guidance. we in to of our and take

going optimistic take. are will get We know Now, just that's it how we resolved. that don't to long

Ryan MacDonald

clarification. that for thanks it, Got


Rishi with from Jaluria DA comes Thank you. Davidson. And our next question

your proceed may You with question.

Unidentified Analyst

for Hannah taking [Indiscernible] my you on questions. Rishi. for Thank

institutional was you what pipeline could is the looks I talk so far your what off, interest if like. just and and like current about wondering suite First

Christopher Paucek

that been opportunity that an most So, of time. client before. we is it's super to our the full we've one, important but never have have that in ever have fantastic lot deals offering we've for client of had we U.S. announce there the play. does to a extend is they are interesting for for we've first of done. associated It's component one of fee-for-service relationship exclusive to do working overall. that us be yet, programs, with Nothing the institutional part others we it We It are like some institution, large. part, suite the across And will now which serving component better think the a from that institutional that of reason the standpoint school with in is that

is non-trivial explaining outlook, So, our I but day certainly terms this a complicated understand in of is today

Unidentified Analyst

considering about wondering Okay, great. your talk normal if of of much you And Thank in lot you're outside new I the then was left you. a qualitatively, you feel do challenges risk could facing has this our how second, control.

Christopher Paucek

I'd not filled all And out about projects to having. are or our operate all funnel going on how experience, not successful. out ton we're components we this on of had our to way improve on that past call student talking the is outlook. when challenges the and we given but company. spend but tend are figure entrepreneurs to going the are of time our a public the often So challenges I'm that a to we've, periods company, we've just private variety This place as of the in with a a as say and is going

out we I People program the the the at us there and out top in our our look on there, would oriented of had at a certainly are is and that bunch newest sort of would do you our our up and are that what we're that we of to the from more seeing not tell put focused that point like to to funnel gave self-serve some data market that of a projects say, here that, was was fruit pull here operate here. that belief outlook be is I there is build new in we'd able expect needed way terms we helping ultimately what on students problem, just of happening there back positives, a of of look and bunch

we with more I strategically at and move today Grad difficult there anybody more that the market think really sale stop. become is question -- guessing And to going growth launching not great larger evolving one with this programs we to forward So, still is XU so we're and will no level now one has obvious. business, the you that's while compete else is slightly graduate that at graduate a has -- far. not potential sizes scaling would slower only schools are and program tell significantly than the that level,

felt our outlook. we to So reflect in like we needed that

Unidentified Analyst

Okay. Thank you.


And our from Jeff Meuler next you. question comes of Thank Baird.

your You question. may with proceed

Jeff Meuler

Thank Yes. you.

clear estimate well, we're issue. XXX% I the revenue, can I this back California X as looks are in just of calling you're think and year challenges So know that short revenue trend broadly material, the it's weaker understand execution of out guidance because an but Trilogy factors not Trilogy fairly then kind layering reduction if I and me the on enrollment out help course of competition the kind but for you

an factor. three just there missing? size is So, I'm those and What factors me help additional if can mean, you first, I no. up

Christopher Paucek

because is start in to know, mean, outlook, our we I point one which a the Jeff, are normal. believe of bit is this first-half last think at you change this that, you a you with we covered new I

think we're are do than and I Our first. feeling programs larger at individually others so

the relevant. feel think not They universe I the programs smaller that and other the aren't in two it, so, will are. certainly

have this company on better got financially, flow, of So we've I'll of we velocity pullback cadence serve yes, what free number to for path a to first, from get one. place would this the a and say, to standpoint of a of of second, sure the course cash business the the is and to make growth reset the our guided in today, I the and moment to that better sort serve us short but

our but obviously, course in it's forecast two, business; really, that our increased. has and really business complexity Strategically, think good ability has the short driven been operate the complexity both Number business. to for XU, we

I the think that's fairly obvious now, it so I call. might say as well on just

proven deal we But in things the course grad get the university business forever. side, has get than deal, we take the they of a expected when done. them, university the One Not to trickier that when on is aligning. be short we're

would course courses. then we when this them, to we the know, in to behind this case, And that a I rely You way. short caused then like in felt to that catch them. launch that faculty tell side really year. on substantial the In we a teach have way be calendar you, we get in up we underestimated And we to us wouldn't get on able

So the that of what a big short part was on business. happened course

then projections upon was from We estimate of we together be when thought want us of difficult for that able we call. this but about so and smart include is on improve far didn't outlook. we'd it's to like it And to here. we're to deliver prudent we put our California set a definitively to certainly it and talked -- changing course, That not one felt

Jeff Meuler

a competition Okay. newest in an question, help said, program. answer what's -- recent there or on look question happening just you And understand part happening have to of then, that trend you enrollment at so the to the me what's better

weakness So portfolio predominantly we're Have seen the Just programs a predominantly new that enrollment about? how ramping new and more that's across incremental the a broad is are decline? you broadening it slowly? of the talking the that is

Christopher Paucek

talked way and and the in to at what unpack institutional more outer get this is DGP talking you've as with what institutional the way, going looks we're I that a like detail have they've one feels pharmacy like heard obviously a help into student the a looks what announced that certainly, comes sort DGP. our long suite of could this gotten size, I more stuff so. Yes, you in brought of consider Investor If is Day. time, And competition does I we ton expensive. are you that And at on for things might the real-time. like the about about DGP, which always would Investor play, about we think by more not. we're there but of model me program, a mean, think say a way into we nothing Day, suite bands an will I the when about

said There's on I rare the frontier bringing people, you're so up university when for a that at student's on more when shows students just competition definition, more rim the a just is size, they're choices it's in XX outer last what start call once and more efficient And the reiterate, By them. at think I that surveys. difficult. more of earlier, that of you you're the to decline than is lot

number, reality continues, were the that it of pieces point questions our this to presuming different it real So Hence it. it's we a point, these improve, of why you're outlook. it a of at is, me we And is, asking the -- factors about large will out it's across able My it's way focusing change we're not is it business. enough the better is a than some And certainly we're operate and yes, bunch worth presuming on it. that do to forecast. if you

Jeff Meuler

competition specifically, on from focused quarter seeing preference more selectivity competition. what and one of and focus on much was Last funnel where Or what more seems there be self-service that the student Okay. And on issue. just last an has less bit it in me, for to please, this the are a seems call shifted narrative change? you like from

you. what are So you specifically conclusion? Thank leads to seeing funnel that the in that

Christopher Paucek

factors. of trend. anymore. to on to what a tough. Jeff, is to call, allowed We it. going And we programs said to There's specific we're that we're not you been a Yes, issues saying really factors. lot That's lot There's And we mean it broader happen the the the of mask it's allow problem. that always some

were they but now those be changing very specific outlook. clear, issues large. program So vague, we're were the To

we bit and different at we of funnels we're them think dealing little noise were normal. that new get individual presume what just caught to that is point, are of certainly of very out the in the this and prudent pullback look So what but up it's really sort with, all complicated a

talk level for to strong at this some we believe up is on I the That just no we'll some point a enter about a economy, have, talk there a obviously coming that outlook in the community and presume was didn't we that notice like it and felt not the isn't that we call we economy really looking at is certainly today about certainly factor but and think didn't cost. I you and we're factor revised going is they Now we're to with to cost a good set tools better address improves. question,

Jeff Meuler

thank Okay, you.


you. Thank

Jeff Silber BMO Our Markets. of comes from next question Capital

You with question. your may proceed

Jeff Silber

Thanks so much.

changed of ago, for a past came Just things to three wanted question, changed three expectations over further months the worse get the the over you I little longer-term in, into months? Jeff's business, mean, three you did past what months. meaningfully kind the

Christopher Paucek

is of programs moment at new a sort in the bunch of and critical had mean of we're we year I year. where pretty later that a Yes, the

you we of lot have a half know, launches. back As

expected. And real we what started so we time, to really good what get data as wasn't about was happening it

the still now single all at felt where now versus data. that you together driving a this what really and it Jeff, it's particularly larger we issues they about size, of much the big, big program when point they we're as regressing we is is what's new were, with and how that like not couple I is were mean top delta not are as they're and like was the seeing You programs from that there specific put competitor it

better as and we have don't. course And some then, side, we we had for, had I we execution mentioned, related unfortunate, the were to thought be that we numbers short some fair on things that

course is a California. And that So then factor. talked of about we

Jeff Silber

question your schools full Okay. actually graduate order residents California those attending percentage look enrollment for California, can was of at what second on equivalent us roughly programs, outside an I magnitude; just if of give of course my And the you Thanks. are California?

Christopher Paucek

of into keep buy best clients student Jeff, get we considered numbers the started talking which school, not do school our raised per reason in do to we our as earnings I you we've this to outlook in it we it. a body in and our my student know, upon call our, bigger out that's body about the part problems. think We it's and much of can't have

Jeff Silber

Thanks. Okay.


Thank Schwartz our next comes question you. And from Brian Oppenheimer. of

You your with may proceed question.

Unidentified Analyst

I [indiscernible] how is the hear the curious in spoke to Grad the bootcamp Brian. you I'd the Chad Thanks bit on question. for a be for space. this Hi, taking about for view little business, the competition competitive landscape

it's differ competition that on-prem you do and of versus classroom whether so learning And digital or then think differentiating sort bootcamp how Thanks. about those offering.

Christopher Paucek

we sure be in strength impressed and partnering more by those of the partnerships. more a health of we done out will therefore universities companies and other Well, you since offering. responsive continue to way market of acquisition it's think in we the relationships, in university University tell needs. the to that I'm space I seek the continue partner job operate universities an in overall the each there a that is is competition super lot can sure exceptional a they're to with

bootcamp across becomes few So quite I do would a expect Trilogy's opportunities think a is geographic and out quite it competition platform we getting we increase to footprint impressive can roll other space.

serve and their and some that lot to institutional this and the in life a we ability that. building their both very will is suite advantage. different cycle, we Trilogy's that that and for in can ground online Online, variety of be market a kind expertise finally, real addictive say, would of feel it's to earlier a options Well, think I there programs like of is some

of opportunity our with exciting pretty partnership becomes Chapel three Hill Our a for all segments. product

Unidentified Analyst

That's you. helpful. Thank


our Thank you. comes from question next Analysis. Corey Greendale First And with

question. your with proceed may You

Corey Greendale

that three UNC besides quick a clarify question, the graduate the those just Hey, then programs, include other question could the good programs and real afternoon. quick I XX offerings longer be would XX Two that on wanted to questions, programs?

Christopher Paucek

is, Yes, it's, at least. The yes. answer

not say that different to we're And what DGPs going was. that DGP talk is quite relationship considered grad to Sorry. Day. we Investor think than look a you that going DGP? trying at would things to have I'm a about programs, Yes, because a bit

Corey Greendale

just your the the of there nomenclature? to I'm sure And getting question the you Is in change relative other Okay. any acquisition? what is, Trilogy make for to quick outlook at in lost not time discussed

Christopher Paucek

No, our time outlook the the for increased Trilogy acquisition. of since has

Corey Greendale

marketing happening some kind return in I concepts question therefore, in greater dollar and what's be people the competition. of of Therefore, the then hitting into decision, think spent diminishing there's of how you'll program, is tell incremental all just because investing is about Okay. of should point your the less marketing earlier, that? the a forgiven market longer you're on or that me operating And translating

Christopher Paucek

also are of should a outer successful our this more community, is profitability frustrating what and one smaller, we from that's Clearly, the this of drive We've now. of footprint, a say be can, today expected cash. sort to only some base a enrollment. that not business free more a operation to we here may be, strategic a students of was last build more steady November, we And because terms that and and standpoint, get reorienting spend strongly to think Yes, but prudent did from in That place doing What we're in I our state opposite. said rings expensive. the off is will it before, mistake. our that

Corey Greendale

is and invest it of on this bunch you'll Okay. hitting is less a of we programs program than of the the you'll million universities single have a market? Investor that getting in at invest you into Day, translates typically do into will but in differentiation were XU, them without the much before if quite all to And to right lot historically one but look last, $XX that your go into reasons, how great of kind this breakeven, There's the that at a million impacts whole up you with guessing I get think I'm know detail, you detail reasons $X front? model that

Christopher Paucek

and everybody we're say, also so else. would is answer yes, the Yes, far so I above

be reason You first, we're of seeing honest. know, this I to that's think the part

know, You if XXX with and to a program, launching different you're it's trying you're if program you're get the just students, a it's launching XXX, it different, says, story.

Corey Greendale

Great. Well, All thanks. right.


Thank you.

from Brad Credit comes question of Zelnick next Suisse. Our

with proceed your may You question.

Brad Zelnick

closer so for the mission, you fitting expectations you're a loved for Great. online time much recalibrating in follow-up of education. and But to XX% backdrop XX%. down is amount we've change this got dramatic clear you visionary now business against entertaining and one market, always use for Are me point? for alternatives you're seeing to I've Thank your a chip in the third or Chip, strategic in. the earlier with at the Cathy. you are stock from in board this software over the year up

Christopher Paucek

on you the overall, standpoint, ability to on going is the that on and against tell I not focused very business I'm of our to our that supportive focused comment can strategy, board from it. execute very long-term sort and

Brad Zelnick

to grant you expecting employees you to are for the given move dramatic might just stock? equity need Cathy, to Okay. additional in the retention, And encourage

Cathy Graham

need look we think through. an need I plan, -- you which through to at working that we entire are

Christopher Paucek

considering about thinking to we and long-term delivered appropriate. also future -- motivated we against free I XX with mean, understand this that to be this the skeptic thought about not say Brad, super right this a understand we're whole just I being in the do that going that think people will about I like win. board now to way very the would it now so team sort that, and I of why for I've is of years letting to keep driving under notion to and things the think we're team opportunity was add thinking I difficult gun. my motivated has Yes, got cash

Brad Zelnick

taking for Excellent. Thanks questions. the


Sachs. you. And George Thank Tong our next of Goldman from comes question

You may proceed question. with your

George Tong

think what grad be you afternoon. to outer growth, I guided obviously, segment, can your that initially even your you Hi, you're that essentially stop had to of launches, launches, stopped With half see you you roughly to degree mentioned the you all years. if thanks. going mid not high Good respect all you'd to in teens mentioned

question that what essentially time? is, for are guidance, guidance to evolving you see respect program your And the growth? with grad how So then XXXX, would for your you incorporating full-year over degree

Christopher Paucek

to So George November that give of hold going year's next normal we growth period to this off estimate I at an rate. we're think point our until

end still give We some going to built is are to obviously, And that not in clarity launches. the trying growth system. all we're

George Tong

Got it.

margins, to respect better that growth. with then a strike Okay, flows going profitability, said basically cash you're between you balance and to

Trilogy margins how So the for exclude say initial underlying if the EBITDA compares your before? you in would full-year business, guidance with you your

Cathy Graham

we pre-trilogy that we George, into was we not So, to to the we this to -- revenue of in able the what have all offset to some. said revenue offset able did expect built be business be that current that but would guidance revisions

infer lower short-term to somewhat that So as expect lower. a go by be slightly we our this that, we through in you can transition, margins period

George Tong

you. thank it, Got


next And question from Arvind comes you. of Thank our KeyBanc. Ramnani

with may proceed question. your You

Unidentified Analyst

Brian appreciate you question. on my is Hi, taking going this Arvind. I for

short more the to the trying associated understand you're quick, little a real Just with course bit dynamics business.

you and materially of guess sort schools. into? you. does said synergies this into? with courses repositioning sell You in short this who courses revision reflect Does you may less Thank kind strategically, cannot I versa? this vice As who you work imply the DGP the that from of what it offering you see impact sell are can and that what And

Christopher Paucek

time about this course standpoint we point perfect clarity we So, what about short which to do thinking and from believe the to have definitely tell might as the impact. of really of greatest have believe ones quite that capital business short whether not current there working we that that are spending Trilogy deploy We are or at which a course partners that are you will the do opportunity. ones excited I and some will work, there's that are won't partners bunch well,

I schools. estimating big And the versus slowing thing will the that as a what for I quite not launched making take faculty done. are place course. driving learning deals few sure I courses -- there how we And get we're appropriately universities we how getting that to want tell with that long it with learning little the down is bit. emphasis us think will under we're the to deliver, actually the alignment that you, by from -- the think I a to the on think evidenced member partner

launch, which standpoint we a there's from so might do I courses And that think little short excited aperture the bit business -- widening, a we're course the execution Clearly of about this of obviously lot the disappointing, our some to issues a a future. is added still huge business there. a outlook going we that rapidly of work think but part in that that's way growing of

it. So strategy we're less the on no behind bullish

Unidentified Analyst

Great, thank you.


At not any Paucek And I'm you. back showing Thank I not remarks. like would to for questions. further Chip time, any call to over this the turn further

Christopher Paucek

on Okay. the very We forward look much. you road. seeing Thank out to you


day. and thank gentlemen, you all you conference. wonderful in does for Ladies today's conclude participating today's may have and This program disconnect. Everyone a