Ed Goodwin SVP, IR
Christopher Paucek Co-Founder & CEO
Paul Lalljie Chief Financial Officer
Bhavin Shah Credit Suisse
Ryan McDonald Needham & Company
Stephen Sheldon William Blair
Jeff Silber BMO Capital Markets
Jeff Meuler Robert W. Baird & Co.
George Tong Goldman Sachs
Call transcript
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Ladies and gentlemen, thank you for standing by, and welcome to the 2U, Inc. 2019 Fourth Quarter and Full Year Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions].

to Ed conference Goodwin, like speaker to now today, for SVP, would hand over the your I Investor Relations.

begin. may You

Ed Goodwin

Thank and everyone, and earnings Good XU's call. Operator. conference quarter XXXX full welcome fourth year you, to afternoon,

our On Lalljie, and our Chip Paul CEO the have call, we Paucek, CFO.

as call was of where Following the find you next Investor Paul's Relations This our will as Company issued our webcast close simultaneously well press take we and website been presentation. days market XX will on replay which after earnings can the the this Chip of under on questions. the be release, The remarks, has our our website for available webcast link. call

financial demand results, and to on our risks, statements made of offerings, student this other educational and uncertainties duty and forward-looking reflect them. operating no plans are Statements call and regarding this on subject university new made or call update These include today have matters. statements forward-looking Any to and we as assumptions. our analysis statements

forth described to factors and on Commission our XX-K December report the release year documents the the the and ended the for press including annual filed risk Exchange Form refer Securities we Please with in report such and may uncertainties set for and materially statements. XXXX cause differ on assumptions actual most XX, in recent information our those quarterly from that XX-Q Form on risks, results to

substitute measures isolation non-GAAP to of In addition should we during as considered XU's measures addition, in non-GAAP from financial are not which These be useful and or results. call, discuss will supplemental a performance. we believe GAAP as measures today's for in

and our in press measures additional our find can Relations our with these release non-GAAP Investor GAAP results reconciliations the of disclosures page comparable website. earnings You including on regarding

to over With it Chip. me hand that, let

Christopher Paucek

is with and happening. to XU to had launching us. starting Universities are more strong are momentum. We we tremendous what’s XXXX XXXX a Ed. with excited Thanks finish see

corner. is turning Our the degree business

is deliver sliding our business students course to record of short numbers and camp the enrolling our on in value new Our starting courses boot strategic is and business acquisition.

year we growth move and As really positive revenue we XXXX, is possible commitment maintaining through cash short all their headed, the delivering industry-leading of flow, I do and improvement operational are margin XU driving through like efficiency what’s due we day. continued only right students partners toward while our improve where will corporate realignment employees with hygiene. the free which our by of to unwavering every to and

performance discuss On is today’s call, XXXX and I’ll business where heading our in the XXXX. provide of an overview

walk you Our CFO, Lalljie Paul commentary. detail more will with then through results our and

revenue. with year year start revenue XXXX our without full to the crossed Let’s $XXX.X addition $X.X highlights XU notably billion Full performance. in and financial million, operational even XX% Trilogy. increased of of the

$XX.X reflecting On segment. the bottom-line, Credential loss EBITDA full totaled significant the year investment in million we made adjusted Alternative the

Through added a line, Trilogy our doubled staff we discipline and more our base. partner than acquisition, capabilities radically to the demand expanded meet and new product

said investment an positioning growth XU. long-term market important I the As and was of this in before,

in performed the Grad they how XXXX. year and segments our into strong. get Let’s finished

Our XXXX. segment base mature drove in programs profitability of

newer and enrollments Our programs are driving revenue scaling growth.

to the revenue strong managing investment cash full is and to demand optimize Looking profitability. we launch model for and university share our future, are flow cadence our growth,

in expecting revenue XXXX. double-digit increasing all are growth this we and and up profitability Add segment

mature looking scaling pipeline. programs, get program and a more future bit at Let’s our programs into detail

half have new on that its revenue XXXX. stabilizing before In trough. back lags largest But the new our and base enrollments, through of are enrollments headwinds believe of we the stabilizing mature still impact has given system flow revenue the are we to programs, XXXX in through the and should

the in margin at well in impact, our Despite earnings programs can mature margins XX%, our held very of see up slide presentation. cohort the XXXX as in base this you

Our recently years. over two will expect the launched revenue growth we are new next which drive enrollments scaling programs

at Last launched XX. year, in top bar year. in each are the had more top new of of find the XXX This last we one Take will presentation. a top XXX XXXX program programs five. enrollments, look list year, the in And XX programs by enrollments, from recently earnings you there than two our enrollments the which raising also had new

Again revenue lags enrollments.

scaling be XXXX a revenue through in programs tailwind newer beyond. So should enrollments and

order in with XXXX pipeline Our our in future growth flow we cadence robust. programs cash launch is to slowed for profitability, to programs. positive But optimize five

up We expect the cadence in back XXXX. to ramp

programs leverage our our Demand the licensure in for advantages fields. in love programs we Let we're be launching me competitive remains strong and which clear. XXXX

as We higher education market education, and and well entering in pharmacy of be two FIT our program undergraduate social up segment are offering, architecture. footprint expanding new the increasing opening the verticals, our The TAM. first as largest work, our will geographic meaningfully

Political of and six We Economics have to days degree two the our in School group London data announced of include and an from launching London degrees to and expand undergrad XXXX development science program University additional exciting ago. agreed Science The one here in XXXX.

allows The LSC's offer range degrees to the encompassing subject full expertise international finance including economics, of us expanded relations. and business, portfolio

and will pipeline from our savings. Looking on minimum ongoing the future, believe robust cost cadence to XXXX we double our our hygiene-related XXXX, for based

clients. full it The revenue to share the impact alternatives potential had by partners we're engaging fact across XU after demand and offering of that increasing for full of is spectrum the Our our has and model. models in model sought dialogue

for about a some One that attention. university note you very received public

asked expressed we in of their Business share School, public some to kindly they are if approved. their approval. clients’ recent you Kenan-Flagler and committed successes with We not could our talking Hill’s about We UNC Chapel programs without

this information nature about lots know, school received attention due program for you As and public the all the to investors' XU. appetite of of

to schools competitive this roaring world. enrollment challenged XXXX, and programs MBA@UNC one and a the a comprehensive for increasingly working program. due an couple flagship on to for saw with been we for increasingly decline nearly past business In is decade. it’s XU economy years us plan the began of environment a The of new energized given reinvigorate

on team reimagined our fellowships for in campus, to of game-changing a some experience students, placing technical some degree included adding Trilogy. and It the from courses student

quarters the While XXXX. enrollment after again in part, decline, growth late the XX%. January XX% stabilized best year-on-year And growth then program for this program seeing and first enrollment from of began XXXX, multiple showed cohort this

leadership. and to thrilled ever thank our best the am possibly run, Dean that been. relationship has GM Associate course Doug it's Melissa their with and Terren Mike I is been want home I Dean, the Shackelford; tell the Trilogy Hlavac; you a school our to for

let’s program. on we’ve expectations long-term segment. the of expectations touch our a economics work ton steady To our At point, for the this to finish grad, for typical our discussion the state done of updating

new still industry previous will from high much mid We at than expectation, enrollments to expect is per average the larger program our XXXs steady but state. in norms. that a bit down This

The current revised top enrollments will expect averages, average targeted of Even we us still at of for deliver XXX our gives XX our programs these the list portfolio margins new maturity. confidence here. at

cohort few here. multiple here XXXX. we’ve Our per confidence XX% cost supported program improvements years. is Scale margin mature the categories helps programs across for a past basis, On over seen in by the

investment This working The investment XXXX clear of balance business shift. towards still and is launch the that well. cadence to working the the shifts slowing return become maturity and of as accelerate will will crystal in from the grad cycle program

will margins programs a profitability there greater and we year cohort segment in year report reason believe the we year. than bucket. two the is in than will When year, bucket major next increase be XX four less XX This this

To delivered summarize, of strong programs our base in XXXX. mature margins

enrollments and scaling revenue newer driving are Our programs growth.

We The into our managing cadence with Grad and growth Business heads across planting XXXX new momentum. flags to important profitability. and verticals cash our regions optimize are and flow with we launches are

Alternative to We'll compared revenue XXXX, up segment. in Turning $XXX.X was Credential more the courses. with camps Trilogy. boot a million, moment, the short to but about due start addition to primarily talk let’s XXXX XXX% of

Revenue grew over last XX% year.

enrollment short We university courses in demand growing continue student our launched new portfolio student portfolio seen product. record progress we've across XX courses made courses. strong to We improving XXXX execution. XXX pipeline in experience our and tremendous course our We’ve the to for and

aligning focused this difference a six already I XX% you process proud new courses. we’ve of slotted courses. half In I What on specific with the XXXX, members XXXX, Nearly pleased months for planned that our tell second am slotted. we of to faculty for am is the team the makes. sales our turnaround. year entire of

and LSC, Most Yale, Oxford, most more beyond. are expansion XX in one partners. runway Cambridge. for with We some MIT, courses Longer saw XXXX of a its positioned Stanford these we of portfolio. in with world, significant new courses strong than and has university in term, recognizable including the we performance for Only the believe are those brands

boot Turning now to camps.

training Our That demand camp Trilogy and partners. its with growth. Trilogy a university acquisition across in technical has rapidly product’s student, XXXX boot portfolio boot XXX students demand Since XX fields. evolving a our camps us XX,XXX enables the market-driven of founding, of university industry has over rapid address enrolled to over fueled for

Last boot XXXX. piloted subject year alone, Trilogy in its And the off and we're sixth launched new XX camps FinTech. to races

boot Michigan Just existing will Two, roll announced launch online multiple out simple. is camps here to our coding. State The newest for this new University camp logos. partner, pretty that story boot a growth launch camps morning, boot we One, subjects. in

been hard at broadly is the across this. the allows partner subject portfolio run Our deployed current only that's us base. Coding to

three fact, than In have excellent launched subjects which seeing at been added ten fewer recently partners. most the are conversions

crucial And in non-degree camp of boot of now of the position. to university are and the is The products to XU is product line runway comprehensive here long-term universities. success the only provider we STEM There market. pole plenty is

all last long-term In stakeholders. of conclusion, was challenging. value for XXXX actions to took we deliver our year But

is XXX better. our significant We doubled added segment base than that business of a new and the grad market. a a portfolio We product product Our line offering. opens currently for client have over more turning of the

turned course relentless flow, with second free we margin on outcomes. We quality of XXXX corner wins, expects delivered a we to the the delivering into win. results positive and and the and while growth, over wins, half XU industry-leading university we driving focus XXXX. going the believe When improvement then maintain strong and student cash all towards

And over it Paul. to with that, I’ll hand

Paul Lalljie

afternoon good everyone. and Chip Thanks

million announcement, million, the business XX% for totaled in year, strong you The XX%. quarter $XXX.X a XX% $XXX.X grew seen grew and for Alternative was the we grad growth Revenue revenue strong Both quarter forma pro the XXXX. and a Alternative Credentials up up on to XX% close and had had Credentials business As business out basis. have fourth our year-over-year. grad to the

of in $XXX.X with year business. of the revenue million Adjusted a of million, loss was $XX.X EBITDA and for compared ended backlog third positive $X the million to cash We quarter the the million across a $XXX quarter. the

the across momentum and with XXXX compelling strong indicators. a business for set leading are We

Now for FCE a in a revenue in $XXX.X full closer look Revenue driven course equivalents increase segment or quarter, decrease for Grad came partially XX% year-over-year. business at This up in million in per FCE. the by at revenues. X% a the by offset was XX%

FCE of per was in a quarter, As decrease case was last the revenue due the to the of majority mix. shift

the on prior calls. from quarter Revenue segment been in which program have as grown has XX% our the would discussed facing graduate headwinds excluding largest we

the up For fourth FCE XX%. in revenue revenue which were was up $XX.X Trilogy. Alternative Credentials million, the from million segment XX%, includes totaled while FCEs $XX.X quarter, per

than Keep in short course. much higher is tuition camp boot a of mind that that

date. the increases expect to growth third quarter. versus for Short acquisition show So grew continue the FCE significant the see you with to revenue Trilogy revenue course until XX% per year-over-year sequential accelerating quarter we lap should

quarter million costs million, Let’s This $XXX.X totaling came XXXX. increase quarter the launching of expenses. offerings, operating includes to of marketing new up million with XX% $XX.X $XX related restructuring improving in look for technology expense and million costs to million and from loss of in million related of in fourth and stack. Trilogy, costs, Net $X.X the $X.X expenses at and $XX.X our from at scaling expense cost sales and

the board. basis, non-ordinary a Excluding by the charge cost excluding the from certain Trilogy, sequential X% in by we the course impairment We reduced for expense. On adjusted quarter, reduced cost quarter. third G&A XX% and sequentially when across X% operating in expense increased

as Marketing on and costs positive well sequential flow. basis, and down we demonstrate continue cash on profitability seasonal management towards some our sales to reflecting reduction These expense in new results our focus came cost free drive the as quarter spend, controlling XX% as initiatives. a fourth

$XX.X in million. XXXX million $X loss million the the net EBITDA items. to quarter million loss totaled stock-based after $XX.X as Adjusted acquired of totaled for bringing well certain quarter EBITDA adjusted $XX.X intangibles, as for non-ordinary in $XX.X compensation, course for million, adjusting amortization the Adjusted

Now the cash. was ended accounts in million. quarter. $XXX.X This and to reduction from driven by of receivables turning $XX.X equivalents, We $XX September the in million a increase cash up with year million

As metric we and certain call, we disclosures. less cash as flow measure defined activities, restructuring interest mentioned our This quarter free net payments, operating cash in on to debt. our cash a added third payments is capital excluding non-ordinary flow free unlevered cash payments expenditures, from

Unlevered flow higher million the million. the cash the driven is for expenditure was $XX.X used cash less operating from free months by This quarter, capital cash payments. a twelve of part interest end in by offset improvement $XX.X activities, negative third last an of lower in

I the As this will in With first last said I our XXXX. and metric year forward. turn be call, important quarter full going that, for quarter's guidance an will to

XX%. $XXX representing $XXX million from to We growth expect first XX% range quarter revenue to of to million,

$X to coming be between million $XX expected $XX with adjusted while $XX and million Adjusted EBITDA expected $XX is million between loss net loss million. net $XX between million is loss and million, be to and in

range For of $XX a revenue of million an expect XX%. expected EBITDA XX% XXXX, for year $XXX the to contribution representing to loss is from Adjusted year. the million, $X million to of to full million EBITDA growth $XXX to we from range

positive We expect starting quarter. the to be adjusted EBITDA third in

Net $XXX million expected loss to net and be expected million, adjusted loss $XXX $XX to while between is and be million million. $XX is between

expect $XX XXXX. compensation be As in million stock-based to note, we expense approximately

three This is for up XXXX from reasons.

our compensation of award, using stock prior issuing compared our we incentive stock-based options. equity higher First, practice for drives to are expense, performance-based awards long-term which

we our match participants a market higher we year-over-year. schedule number third, have of Second, vesting to and changed plan practice

our attract but that with and compensation confident awards, are helps and competitive a percentage of We compensation risk, is performance-based structure aligning us management employees. retain greater shareholders. at And favorably

In a in of we us Grad are let Last on to the top-end segment, team quarter, confidence engagement our the target far so provide having in how the some that our perspectives range. that and that, what changes me impact XXXX. positive realignment With relative have encouraged budget gives those by performing student been we FCEs can of revenue I believe we are discussed retention.

grad impact are in guidance of enrollment be could the programs, that corner, the an the larger believe turned segment we that enrollment our or experiencing any improves reflects some upside. declines. has still these flattens While If programs of

we a fully we new in nearly into planned said courses. slotted month Credentials for Chip segment, Alternative As the our short while are only year, the are

portfolio And get driving focused from Trilogy historical perspective, working continue profitability we will strengthening marketing programs. a and integrated improving self-serve across to on and we share, increasing the smarter acquisition options, efficiency by on and

conclude, improvement maintained XX% $X results strong in and XX positive of cash and XXXX. delivered Revenue months the for outcomes. last free grew to and an we million close EBITDA to So flow program student with quality we showed out

company some driving profitability launching excellent the flow. are towards and the positive We new year and free cash in programs

XXXX momentum have We for beyond. great and

call the to to I’d Chip. like that, hand with back And

Christopher Paucek

Thank you, Paul.

up about I overlooked core our of a of talk and our The one want to Before forth the something partners, independence we institutional gets Q&A, university business too the few of the OPMs minutes back for take to non-profit model. business about in in model. open hallmarks public that often it

model A of and independence few principles business is respect our sacred more university institutional the both and for shared central are to governance and our and things of partnerships. these to their success

give are aren’t as When just In me not academic program controls say campus-based our partners’ our their exercises those traditional online you degree. practice, words. governance over these and hear for that degree their saying they programs,

the all program and all admissions and admissions accreditation improving and degree financial decisions approval, prices. That curriculum, setting tuition paying making and includes, developing maintaining hiring, criteria, aid faculty, establishing managing seeking and

helped the themselves already partners of bring We’ve online. best our

and into by So surpass it programs. powered shouldn’t quality some XU delivered campus-based come degree surprise the to programs that outcomes and cases those comparable are of in

our XU’s – our what point XU wanted of XXXX, more about to the XX% many estimate Notably, to powered to I education only from business world-class national that university. of came out could I by power that up that think live students and something full company the comes eligible payments XU student tuition XX%. derived the in than harnessing of in potential great are its be on to about Title from revenue co-founded belief loans, And total to higher surprise I programs partners IV you. In average. diverse the we non-profit something online

more as As know to this a the education. model business a of the first-generation is the impact. funded college to able solution. are graduate of MBA our and telegram part who power XU The UNC thanks program, alarm proud I attend of needs world XU and George Washington the firsthand high that powered University, transformational is quality federally

And Q&A. to now, we are open


from Suisse. question of Our Instructions] Zelnick Credit with [Operator the first comes line Brad

line open. Your is

Bhavin Shah

Brad. Bhavin for Hi, on this is

to programs color Just on guys I provide closer just rate? to different I we you we said appreciate insight the for start, should XXXX. on graduate about congrats segments. quarter. a in start you the think should XQ growth good all and for you know growth information how or But think XQ but can more the have rate maybe, double-digits, provided

Paul Lalljie

here. couple a is So, things. this Paul There of are

to the XXX. for is guidance Our which year XXX

longer As is less that XX% roughly XX%, our of can on The see is total year-over-year degree XX% a the basis. graduate you our business than range portion revenue. around of of is midpoint that. no It

from Alternative coming growth business. significant Credential have We our

extent, segment level, from some not it’s providing we perspective. to management our the portfolio at are but So, a guidance

based quarterly see. the capital opportunities we We on a are our that allocating a and on monthly basis,

For five XX launched XXXX, In we example, programs. programs. we're XXXX, launching in

for of now exists as here, of to the opportunity resources and focus quite us range. the sit So midpoint some will targeting are we guidance range top-end that the right we that to extent, we frankly, our where hit

particularly not guidance segment, or on growth particular grad we is are in the Alternative of focusing Credential any and segment, on one the be won’t a as it whole. a So, on but giving we segment portfolio – the not the

Christopher Paucek

Another see turning. thing excited we I add business we the would is grad about how are pretty that,

developments able about legacy to And so, about , talk can’t programs, we our specific talk without in was their mentioned MBA@UNC. pleased the know at programs did with and as it you discussed with of because be some program approval really get clients' lengths we approval. That we our to like

encouraging was at – incredibly story that of and about a we students the the game And stage the decade this are for it for school was just one delivering later. what

Bhavin Shah

seeing Appreciate helpful. the I new follow-up are just appreciate top that seen there the XX new be you any you and hey, see And underlying programs able of That’s of success? anything with the shows, new programs on there the some in you is Is have the in to that programs Is context. gave data programs the see nice that to common characteristics color these are there. that can kind two successful? that

Christopher Paucek

in We standpoint around field great partners. company – will fields, experiences I large We quality the do point our this the able we provide clinical of from with continue to mode opportunities. build high think to have a being at fairly big think that

we have a that is these verticals characteristics. that are bunch of There entered newly

psychology one program. have we So,

physician program. We have on assistant

we clearly expand lot winning. in us of So opportunities is there to a are verticals the for that

have road tend then really on that programs quite actually verticals, harder to we some a holding are to strong our it the business I And complexity you’ve programs. of to hoe bit. But in does say, the economy like of got a own other make a

in very we important. flags underpenetrated the where planting are is So, regions

Bhavin Shah

again. Congrats Thanks.


you. Thank

McDonald with line question from of Needham. Ryan next Our the comes

Your line is open.

Ryan McDonald

more Yes. are years. in – wanted guess, four than questions. or little the we cohort different that the down a talk it within about first, year-over-year three I I when at year if you look you taking greater seeing could double a to are guess the on for looking cohorts. dynamics basis, my we I to bit Thanks the if four

maybe you you guess, that the guess, I expected are issues sort with slightly in cohorts. drove see your of that We did throughout saw the those of of than dealt impact I less What outside kind year Thanks. profitability, profitability? less perhaps

Christopher Paucek

in the that I mean, than statement. want years, four actually greater we saw you So do expected greater profitability? Ryan, to correct just than

Ryan McDonald

in Just you like greater the comparing to XX% four years at that. versus think at year the are year-over-year than this XX% it’s I last in year it looks

Christopher Paucek

longer you target. Yes. But we – year, we’ve to – did always not our in that margins last expect mentioned think say expected of mid-XXs think the to to XXs we term. really as it’s as We be that expect important the

And some we know, talked as significant well programs. our about of that really you larger were in notable some decreases I think, had

were held only the the that long-term core stronger target. business our but we So fact model up, about excited it pretty was not than

Ryan McDonald

Got it. Got it.

then… And Okay.

Christopher Paucek

some had the cohorts. good also movement other We between

this we that will positive So, some you see moved well. total programs as by amount balance point, pretty deliver mature, impact business am cohorts very of shift to to over from encouraged the margin grad the strongly we time see other and a the continue can should of that as strong that the you that. feel in fashion at I the newer

Ryan McDonald

degrees And how the announcement it. new of the talk to in he that Thanks. degrees on there program. are t dynamics program? you I guess, you London undergrad launching seeing Can expansion multiple graduate an launching then, a the and University that of that additional for program about compares Got within what with and with switching to

Christopher Paucek

is the same model. So, it

deploy, best and than the across deploy to deliver and we a undergrad. to support our at the enter. business the scale comprehensive we’ve higher time XU It’s two better right to It's we nothing world. world-class with Our brands of in platform in find defines the what fabulous scale taken something build, last opportunity education program

thousands a market. than talking But reality really this you grad of venture larger tens big incredible it We the opportunity, been should brand. a a we’ve if is, an the were program. like company, internally about look at program. we when It’s It larger thinking a think brand of students. normal about like grad of be It’s

undergrad of size within given business all standpoint, know CapEx incredibly sort and fence You level. as got business at after that reasonably ring sort got a the is it’s you from you’ve

was that this they wanted our opportunity So, format. had to existing school an really work with program into bring an a that to

that we say, about just encouraging of convinced is, think experience LSC given will this great drive higher. confidence to the thing been. course been short And spectacular did. They the opportunity. retention how year, became other experience. short partner size We has course I experience be the would as this not retention able of a has on the been the But the It’s and a LSC side worldwide it with

So that surprised the LSC legacy a in a candidly and brand worldwide us. is brand clearly way that

London So, are really we School that of love the market. entering Economics, of with largest we part University the of and London the the

billion If U.S., graduate you $XX education is in the total. undergrad $XXX billion, think in is about,

So it’s bigger much much, market. just a

So, this we manner. initiative. in ton going about on overstate to a internally the are careful how them a do opportunity, to before And we high be get not launch whole excited and it our quality legs we is are of this hard but

you many interested that have are And, of undergrad. marketing, folks in

we’ve live got is great could interest page You find our and already consumers. from

So to I to you encourage people the and a become send prospect. website would


Thank you.

comes of William Stephen with question Sheldon Our line the next from Blair.

line Your is open.

Stephen Sheldon

thanks. Hi,

negotiating as talk leverage? you about since to And factors process program launch? does mid-XXXX? you which had and of choose, have what slowed little to programs and partners the the are made bit that on that main kind which launches you've are your you've what have thinking the program changes you effect Now can selective, a more become graduate that selection First, about

Christopher Paucek

capital, three, it and like The sort discipline does return all that are we get defined just it can winning quality, that a in are on financially almost you’ve want really we a of this three. what you think not about where We by reality that is way call underpenetrated is, got by. people winning on So, growth. in excited triangle, invested

did And continue and about what traction. the the university. do But we we verticals cadence. we we correct student in it to the for we’ve always expect where you what to selective are and that expand And run been are the slow does seeing

did about in think it a took bit early like can a it thing backstage. important we the at You break little venture was XXXX, we that most probably and

are up late a of that case, are do right the ample only not in back XXXX pitstop. we stage this we In And many opportunities, and to process. it’s not ramp slowing, the now expect but have,

portfolio as we’ve to of launch XXXX. up broader into and ramping in programs, idea we these efficient So, gotten more the that do how about cadence fueling the back efficiency a like

of XXXX we in a slotted So, have bunch meaningful for way. already programs a

So, I only the it’s XU, to think return students. important think and not the that the but university we, to the returns benefits to the about

Stephen Sheldon

XXXX? say Got EBITDA there. become will it. commentary quarter. to that the second on – just sure That’s of I the to a and then understood just in On helpful. wanted adjusted to make just for implications positive quarterly meant third that I remainder positive Is the EBITDA be over the

think what at we extend profitability does point? XXXX upon about you can absolute into and see as based that this Or beyond also XXXX comment

Paul Lalljie

So, a couple things. of

thereon the go meant that maintain comment say that heading we think from that forward crossover as to was I to out. actually point. And are hope we here

given for Of course, we XXXX. have guidance only

QX be normally our that of XXXX, quarter is just for going So is, biggest expense and and in bottom-line But perpetuity, quarter our that for will number. XXXX hope when CapEx forward largest crossover the we XXXX. now, QX to a into maintain we not

Stephen Sheldon

you. Thank Great.


Thank you.

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

line is open. Your

Jeff Silber

much. so Thanks

some in get on there? next that maybe tough program guess with the reaccelerating do the you’ll us comment examples how follow-up perpetuity. adjusted it step I hopes thinking you and to you of XXXX back give launch to EBITDA maintain that I the wanted last the about folks might guess, be year given most were Can Just to do. think

Paul Lalljie

things. of So, couple a

spend the XXXX. XXXX made the The in XXXX. that So, in for made on XX launches that is us launches based we we

we factored the in current going So into calendar our did year. for that number on we year, – launches then and Number that have have in period that, that we to one. the have that also are every is be calendar that calculation, launches of two, layered given top

launches XXXX compounding XXXX example, and in So, is the XXXX. launches year the XXXX, in In compounding our we XXXX, effect for XXXX. for going courses effect launches have to run-off fiscal that five we XXXX and are only had

the will marketing is that there particularly one on the contribute and technology So sales support right thing that curriculum line. line and and

that, third In we had of million of quarter $XX expenses we to talked as XXXX, we as the made adjustments addition earnings already call that exited about for. runrate

to to process process XXXX that with particularly Chernis, guided continued benefits XXXX. planning Chief into our QX, management – exit and see into expect for Officer, programs, cost he Mark into led As that XXXX the as we from we we by and XXXX Operating we XXXX continued and has

runrate have our to reduction expect We expenses. more in

Christopher Paucek

Yes, Jeff, there benefit I cadence our the is the slowing on bottom-line. to mean,

You margin start to XXXX. We launched the many as that people we got in launched a time of think in probably mature little cross period. how that higher you – moves, just I bit a have number forget lot and that a programs, of XX balance in just programs XXXX

historic give very So, in on and means growth. four in a challenges year. the it to of for some those troughs enrollments new get the just back five impact lot It compare of launching has lot we in a more of that programs. programs, Could positive us we a had the of or you our our that day, – a through were some allows

means Paul see what some like on positive, way heard UNC the the And of MBA mention can for has, to the we if those those that segment. turn you might we programs, that,

So, working we – older we point we certainly we not thinking to as a as are programs can. make that where, every we are as them not good of at are day try to are not

were shows story achieve by And, pretty working what case. able UNC school, to the that we that amazing in together with particular it’s MBA that

So, that are to to all year of of improve would odds that continue programs than bucket. like being four the our I able in greater

Jeff Silber

All in some publicized and I great. right. And weeks a company issue, of shift That’s of couple regulatory to senators apologize I a space. was number there guess, ago, others to letter a this to your of from but, over a the

you if am to I to don’t I if I you opportunity business like and some that wondering the know that. would guess now. practices the OPNs. to respond they had were “questioning” publicly Thanks. do an of just

Christopher Paucek

Thank you, Jeff.

We to we heard at be the responding not story in case remarks, to our institutional we you the in philosophically. but close legally, and really process more what relevant senators like mentioned independence entire business, have could just of as are We the of to of XU, the our we our think say.

programs and they with are are These business partners their time. making the all opportunity day decisions along do drives and us. to our that their talk We drives every the the

of say the particular about business, we to of senators. the the regard the even states are two what in business We excited model have those power with to

if It’s So, has a board. XX% your pass for you their as Simmons kind opportunity folks that experience. that an the board In pass example, that’s of sorry, rate. discipline, pass a strong nursing, incredibly life-changing boards,

it if and it So, forgive ago, with and positive do about comfortable know, forgot a exactly month really transparency we I me very we our than are if – expect look, was. a go-forward that’s we six we – answers what months will did you dialogue was on I don’t anything more announced,

But are of for to great we how the of doing this, opportunity be a to quality. announced we and is and has this industry-leading before What framework – transparency think results space high are. that able people the what for rest we show all XU

questions. you which XX supporting partners and in every that of kinds total is our important, I what drive timed story different here plus morning is all even to great of students high well point the at partners. ultimately, quality given literally across, they more up do would for student now, So, some the wake and But disciplines do, outcomes this tell

come time. to this over more on So,

Jeff Silber

so much. you Thank Okay.


Thank you.

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

open. is line Your

Jeff Meuler

you. Thank Yes.

programs decision cash and sort XXXX of ten degree around in up year-to-year-to-year? of the, EBITDA five or to launch there positively advance stuck make XXXX, but or guess, I into in In we flow is to then that? to intention Like, any can management terms so, free read

measured beyond back Sort take pace we something that kind we is expect in of this of XXXX. a away improvement do you the could implicit that financial, it continued still is of XXXX? free Is flow improvement and or some dialing should then that cash five of show EBITDA there kind to improvement

Paul Lalljie

rates we there as the opportunity to Well, it runrate Number XXXX, gives our the get couple an not we work us of of the three programs and businesses a one, things. out cost each are just categories applied I on was process XXXX the launch. that XXXX of integrate exit to take we for into number have. one where in the expenses try think did into budget of We we

we us to is organization be the have most and at things same make courses to allows do our more time, is Launching try We to importantly, and consolidated that an five selective. nimble, sure next a objective basis year flexible, efficient. on

to that the on we sure invested same return the ensures that that prism make advantage we quality. sure into making of maintain of programs make and the sure which spoke us Chip – time, across program, quality where we making ability the have allows It verticals earlier sure sure and at we is we to capital the that evaluate we making go have have then have

All program because mature over of generate launch. programs be larger selective that to naturally cohort to to an time the at allows the these and in better things allow time and we us same us becomes and efficiently us capital, access the margins business have to that manage allow our

our demand. cadence, stopping We because have we are slowing not or don’t

is company a scalable, We an have demand become effort are efficient strong we doing go more this we and forward. and larger in to as

– company to XXXX. this addition bring exit doing into the timing we of exit us and as allows of to back to XXXX the cash get In XXXX that, free flow all

that on accretion cash a We flow confident exit us are to that XXXX. the in to highly path we XXXX will program on are allow

Jeff Meuler

question of a on Okay. in And you efficiency. terms broader maybe what are just marketing then, experiencing

get we spend deals and a guess ago back but stuffed then question, year-and-a-half you out size it I average year, programs. dialed talking – and marketing a smaller probably So you about are

then, the integrating. and have lines acquisitions business guess, which various you you So, are I and

of Or more efficiency? take the in the terms cetera. of what out you budget So, are programs, to at of marketing seasoned increased? terms experiencing back of now marketing dialed just, what kind Have you Thanks. efficiency you things et looking some in stable

Christopher Paucek

Yes. understand why question. we’ve XXXX, are that really the are strong talked We would over you – and benefits reasonable has some I that the some confident say, given marketing getting a stable question, cost Jeff, we across I categories. are feel asking the things challenges very about looking scale of been clearly,

on going team the And CMO, now are standpoint marketing Jennifer if across like you by excited using look funnel on benefit a of about Ogden-Reese that we our from our vertical now, more are by building of share. by senior what improvements entering the basis, the look are verticals including that amount in work Separately, AI, efficiency. self-serve or many programs of from of new marketing pretty they the drive to using using we we options, the

So, there standpoint. we it – is that headwind a feel the had from we like still revenue from

is you hearing us actually like retention to starting mention benefits than are is important and student side movement we engagement we student number. the that Paul that improves it that think we But student really happier makes the already the because see there together, retention the of what on enrollment and team heard on most paying is nothing

outcome drives the it our business also and Because model. drives student

we the it’s call right have of about we seeing with to things of are And about. some are nice excited that now. So, pretty all a you excited

Jeff Meuler

Thanks, Chip.


Thank you.

Our Sachs. George Goldman Tong of next from line with question comes the

Your line is open.

George Tong

Good thanks. Hi afternoon.

of So the XX? number? about think growth you the off in is do five the of of XXXX. the target internally launches? pace reaccelerate How degree is a percentage new from your course rate XX, algorithms it new to prior the year course XX, about for graduate really launches blueprint growth it that really plan program? Or of ten You to the the in way XXXX you your it Is determines

Christopher Paucek

overall overall regard quality And we it of XXXX what pretty driving moment about for we then, thought flow said about think XU. and to are The have the before, you meaningful. pace balance on capital, in being talked the Paul free George, very the expect growth. to and with a thoughtful what I about return we and think, cash sort ago what is about I

Paul Lalljie

time And curves revenue and piece the on positive George, one. of number been us, Yes, now, us. of for important a size, for are top-line. for a a of two, flow the becoming business we’ve million it’s $XXX third Number long capital-intensive the we company is is, operating cash with J series

that earlier, free year us that ROIC the as XXXX. is this crossover the that the fiscal to go and prism just we I the gets there something of Chip balance I through and cash quality So, with we in it spoke and growth, flow think

George Tong

launches helpful. launches, role gears margin to That’s it. margin internal a of help program that Besides key of the EBITDA you are expansion? Obviously, And your EBITDA mix drive program other Got there pace then, pace the margins. new that have switching in plays initiatives or new that the could performance. levers and

Paul Lalljie

are there internally. Yes, several initiatives

on how basis. when it If think assets, you we think more and the efficiently, of it’s organization and in either is acquisition back integration how of whether of geographic do a the a that operational we whether having procurement office, acquired the do centralized a we consolidated or efficiencies, on the Trilogy basis

the the forward. perspective techniques as at manage efficiently with and we look use the also it go more of of we management also technology organization the can from with We use how of

details I the broad am mean, through normal that would into you not spectrum. are, go So, a get of each to an of I what but in these has rapidly. activities programs it’s it’s breadth organization going grown a of that

we become grow do organization on focus do we the When top-line that you now on rapidly, What and well grows. scale to is consolidate, can efficient, the to way so that. going is your its need forward

Christopher Paucek

– what are I hear it you say can comments. we George, our in also, would And

You can see results. in the

to top. But, have improving on the not like that focused just definitely bottom-line, market-leading growth. the I are reemphasize We we do would

some the obvious we've everyone and camp both growth The is the This are incredible business of moves results and bit these the are business for a important for future strategic more of it boot sort the the business story and across course driving real university hope still now to an they rationale is made. XU. I to of short

course It’s pretty short an as on incredible in six example. months just see we’ve to what done side the

lead still the that and we balancing let's forget but profitability, So, here. not market growth we are

George Tong

Got helpful. it. you. Very Thank


Paucek gentlemen, closing Ladies I in for you. the the like to remarks. to now turn of time, over interest call Thank Chip and would

Christopher Paucek

Thank everybody. We appreciate. you

on you We out Take road. see the will care.