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2U (TWOU)

Participants
Ken Goff Senior Vice President, Investor Relations
Chip Paucek Co-Founder & Chief Executive Officer
Paul Lalljie Chief Financial Officer
Ryan MacDonald Needham
Stephen Sheldon William Blair
Jeff Silber BMO Capital Markets
George Tong Goldman Sachs
Fred Havemeyer Macquarie
Call transcript
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Operator

Good day and thank you for standing by. Welcome to the 2U Third Quarter 2021 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] I would now like to hand the conference over to Mr. Ken Goff, Senior Vice President, Investor Relations. you. Thank ahead. go Please

Ken Goff

Co-Founder Good earnings and Goff, conference I'm Paucek, at operator. our Paul third CFO. Investor to quarter XU. our Chip by XXXX call. joined CEO; afternoon, you, and welcome Lalljie everyone, XU's Relations and Thank I'm Ken

Paul's we Chip questions. will and Following take prepared remarks,

be as we and file the call actual statements. Securities for described in them. the Commission, the release XX-K reflect press to report forth on made duty Exchange financial cause plans investor.Xu.com December the our replay results, press the our new documents These on and earnings in and subject to including a this Please including refer XX today and A webcast the regarding and XX, update differ release demand have offerings, impact webcast assumptions. XXXX, Investor made of call simultaneous our most set year slide our edX, our presentation, Our annual on Form of statements are for risk Any materially on has include date, Relations and closing to or those university with such this no to operating made matters. educational call of this pandemic, analysis recent XX-Q the information results the days. we assumptions other and uncertainties COVID-XX expected Statements forward-looking will of on may risks, student of continued factors website next and that ended for as statements earnings available as well acquisition forward-looking pending our from this call. statements Form and report quarterly risks, uncertainties the and

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

press additional on GAAP find Investor including me With page non-GAAP call Chip. with Relations can release let to over and regarding disclosures these website. measures, reconciliations earnings the that, our the hand comparable You our in results of

Chip Paucek

Ken. Thanks,

margins with undergrad I Court. from by against ago segment margin the final some the current online the million, great online our stages $XX into what thrilled in to a related MBA more that of institutions; an Supreme of option; close $XX.X top UC in with and look Massachusetts want the a strength start school Business students believe news XX credential earnings a edX credential to leading new new relevant Howard Irvine, offerings of acquisition. of demonstrate discussion alternative power growth on year to the Massachusetts I touch of the All million and of Business one driven and of deal the highlights last existing our Saïd high-demand segment of the and for call, that work; client grew Since HBCU social our School XX% we and at quarter. alternative Boot Revenue was wrap Herbert the announced the to MBA of results, our a computing the in create in Hispanic-serving Before programs, technical and Work grew schools; it, faster nation's results product for want to University, diversity sharing Degree the XX% and Oxford online exciting a degree an underlying topics, get revenue at necessary reflection in with partners, means deals last six a the with we're partnership of our month. of by all, normal XX%. an Partners report received Singapore, and new to track, a the business but with Attorney particularly while us approvals both come this expansion top School to University product licensure the from momentum our now some world's of who first one we a the extension General Masters over the affordable my we let new EBITDA me which for Netflix improvement market of advanced with Miami National of Pathways And of process, line up and nice growth adjusted the the Social in back we Camps of robust, year-over-year, moment, And I'll ranked year's model. We're quarter new University results. announcements. business. X% including of expect of The middle comps. and its strong edX I'm third

moment represents XU's pivotal to back transaction in The history. edX. Turning a

XX our and in with world's nearly For building you all of access student into online with complete most The defining education focus quality primary the outcomes. sector, operating led OPM edX the we've way marketplace, and and addition effectively will the years as platform educational on to the brand services. company offerings edX for a transform

edX XX consumer-facing of XU nearly offerings, to little top authority will a It's With has nearly X,XXX global reach. world's growing as deliver world as and a domain strong a truly impressive education from five newyorktimes.com. diverse world become MOOC one top and the of thousands site edX, free News with deeper, everything consumer US the list education most online to courses programs will whitehouse.gov of the X,XXX Learners ranked site a in undergrad the ranging the by learning that's edX.org companies. a graduate and a over starting as in universities free-to-degree top globally XX extensive opportunities and from and marketplace. have of high-quality dig we marketplaces. between. XXX and consumer-facing with degree Let's and will Together access in

the than end enroll edX we year with to reducing believe XU XU-powered a allow and us. plan edX.org we to numbers unmatched parties. edX's had the and other priority and expect content the and education leverage solidify will key from our new ultimately for similar have in on search channels. be transaction. drawn in edX data from survey achieve we've marketing of the only learners to at those nondegree in to be the to We which of production learners generate will benefits brand learned combined many while motivations Bringing career a our efficiently attract leading offerings online registered learners as to coming expertise And powered we as global platform programs. enroll for more that learners leads believe to free at rate the has higher of a to overlap high-intent degree is scale And a enroll and and in It direct and believe of marketing this use in pay MOOCs, for a drive learners from with of for larger will learners, spend amplify strategic know lower third we reach, even cost us who demographics, to capabilities, global XXX by that and platform in alone. are will We that more million quarter, degree CAC. further edX.org destination. and visits portfolio extend brand million leads XX We As a revenue replacement currently marketing effectively this CAC will and edX.org we new and driver learners this

lever than the marketplace global improvement new We marketing our networks of and tech-enabled capabilities scalable a It's like as company nurturing across to business. marketplace. having as as all for a an and a will nonprofit expect platform this choice more about partner about profitable education be is growth marrying the support, we in company XU's which engagement just that But placement lead complementary believe student driving universities. transformation powerful and to with set of becoming program-specific our margin well Core great position of career services. digital solidify and clinical

unlock As able able Micro we're We're learning price market. scale for degrees. It's excited together global and bullish more offerings effectively has unlocks and to pretty high-quality the brand be remarkable leveraging additional offer a for Bachelors massive similar our edX. its providing what for Masters kind non-org more to come what built, creating lower team Reaching impact that traditional and an a been amazing opportunities delivering lighter true value partners with bundle continue have online option the our on MOOCs, ahead. to and Micro example, We'll libraries content. of global while also and edX and and on a XU's lower or we'll degree impact. is That build of pathways cost be honored partners, to full-service a edX to ability organically nondegree course affordable to

let's more of and a in upskill stream provide structured our a we're of we partners, for and believe channel offerings through real about whether even the growth and partners combination is workforce. offerings. direct our Now expansive an sales and quality portfolio for their demand and self-paced with nontechnical relevant Together growth, from enterprise through expanding talk our mix structured now of of flexibility market. and reskill libraries with with channel breadth enterprise, to sales -- customers enterprises the exciting seeing We direct subscription or can enterprise whether revenue edX, traction our technical winning

speculation which of over Ed performed again, you growth. once our Before of several in and focused growth. expanding while on growth overall our grew and our discipline, margin attention with focus operational stayed line revenue XX% quarter profitable volatility on more to by EBITDA I expect, Faced We to underlying the our has bottom in performance. large market in the lead told the demonstrating and the landscape generation model, it strategy, we base strong a Much been paid the revenue continued talk on expenses, we last turn the strongly about profitable strength weeks. tech and to Paul, maintaining and near-term let's our

believe look changed future. we for for and only well COVID that will and we has are extremely demand positioned landscape training the we education the grow, finally that long-term online ahead, As and

Our over growth, on multiyear we've delivered focus marketing. just extends driving which beyond profitable a on period,

using to drive to throughout who created teams our a scale student XX% counselors data virtuous better using that profitability have of efficiency effect science we're the a This student drive has in and the many that a examples our on engagement will business. should allow system and example, people We construct One proprietary engagement, our focus impact. on them. calls scoring how our business need

First, a interactions. fewer, but more for more with it's better experience seamless the students, creating value-added prospective

that drives Second, to have team. what allowing team impactful it creates our which a better conversations, employee experience more is

a creates demonstrating continue more impact it We system-wide. the XXXX. and it's initiatives worked Overall, business. positively this we're like employee It this to staffing scale increased. operation. rolling Third, in and brilliantly believe much now increased are efficient Revenue and efficiency. per out piloted will We working,

have driving further margins on with believe additional Our to significant margin and leave few let improvement. have we impact edX. me a edX a you continued thoughts improve closing, long-term on will In

brand with combination life's accessible brand affordable to time learners but and of a become trusted to education, higher take solidify effectively will to this As now an around products a we it significantly to education which business, for and We pathways even set for fully and more results. take us edX one clear you more Paul helping through learning build under phenomenal the largest have platform, online the start. world, our further and we stronger to of education, the an our one a believe services, comprehensive a of create soon line will is realize And durable that and transformational marketplaces edX inspiring. most and edX, current roof journey. impact now, We're diverse will impact, think create in sustainable opportunity It global as choice company the business. And over connections the brand. will it's very into becoming with some time, build platform expense and flywheel off an effect will

Paul Lalljie

Thanks, Chip, and good afternoon, everyone.

results quarter and adapt model third Our the to resilience our ability conditions. of changing reflect business our to market

year-over-year comparisons EBITDA totaled top the million, over the trailing nutshell, and results expense quarter. quarter against XX% the ago given with tougher revenue while grew We a XX% of segment of and the a quarter environment, million, especially well primarily we margin million. the as on to modest Operating a the bottom increase executing XX-month Third and million, on Alternative of XXXX, a Credentials of unlevered totaled year to remain In making quarter the are of X%. progress revenue Degree $XXX.X profitable X% free Adjusted XX% reported digital up good, support growth. was basis $XXX.X cash third goals, for are flow our quarter as an $XX.X to a especially use line. strong results to on focused $X.X the growth. strategic drive marketing These disciplined we for

quarter, position of a and As soon of sheet, position, followed our we by XXXX. game on expect be I'd then to discussion in the and we to the growth our acquisition terms like forward, a should marketing prospects the free start look I'll update changer, provide cash results our the and for with overall financial an remainder of the economics balance business. flow our close for cash edX of it outlook

look at closer revenue. a for Now

was from basis or up relatively of XX,XXX FCE. revenue course while XX% undergraduate revenue in per a on the Degree quarter growth. FCE of programs, totaled In an students FCE reflects quarter impacting and increased growth in the of X%. seasonality in flat. last undergraduate. both program third and scaling the same attend the revenue the increase Total Revenue compared represents small $XXX.X XX% count was seventh FCEs Revenue revenue straight revenue the reflect per mix classes, last of period grew year. a remained year. programs. the year-over-year our XX% percentage FCE up for summer per particular, per to FCE FCE Full licensure-based This particularly the quarter quarter Third XX% FCE million, equivalent while segment

we this seasonal in the offset in marketing earnings call, revenue about in the FCE. decline costs Alternative XX% business the the undergraduate driven cost a quarter. the for camp offset by as the on Alternative undergraduate at for will keep In X% Credential FCE reduced this lap revenue. hybrid the XX% spend the of XX% a segment. Simmons Revenue given per thinking segment trends This short trend continued of for expected saw last by in course quarter. Growth environment particular, in boot improvement much We partially by the third and in in grew a next in of program On and across improvement calendar. was talked beginning revenue effects revenue, an that a digital FCE, of by increase basis, in mind we in FCE of as third and about the third quarter's timing FCE in decline in elevated driven both we quarter a in academic significant and quarter in a of we response, the part demand last well lead. the the the the plan year-over-year marketing while segment, we latter gradual the per year, FCE launched in per the impact increase that segment in quarter Degree quarter, fourth which When revenue of per means launch program a the Credential XX%

As a spend return take marketing with and to advantage on increased this more environment to we we spend will favorable goal the result, of manage dynamically optimizing of continue investment. our

drive from that as forward focusing We what this of per on lead is have our year. As more and implemented Alternative that growing XX% important generate. is several XX% experienced input, soon single-digit XX% strategies improve Credentials year well on a convert continuously the we quarter more last quarter. channel end, and reminder, strategies how And edX's pulled we cost will to year growing in are stay-home we recent cost efficient believe enrollment adjust course processes. of demand of the a while we believe have that base indicators and per traffic introduced we conversion. short orders with digital pandemic despite have the an we The increase We camp the boot technology which effective quality per and lead cost segment, organic and And the cost leads verticals really massive per mix, positive consumer into matters efficiently. third grew which course, a is also to cost higher we enrollment, leads enrollment To function ability to in to our will in stabilization per only in this and the streamline low and business. automate in marketing mitigation Degree marketplace significant our increase result for impact have generate of of positive strong a user last lead

was million, increase to XX% marketing to now increased quarter and Turning million we Operating made revenue an growth. XX% expense estate the increase $XX.X manage by through G&A XX% the Of million This non-cash expense increase to expenses. Denver office drive or revenue. year. up we related to for footprint. our year-over-year sales to lease, $XXX.X driven $X.X million and last from totaled XX% of as real in costs and changes $X.X was continue our

G&A been this been past of operating a impact, the XX% Excluding quarter the have of better revenue, onetime would quarters. this that experiencing over we've leverage continuation

of next reduced a X%, Importantly, we to years, margin for from million, sublease net five Adjusted XXXX. $XX.X over the quarter the expect this almost of and division, EBITDA threefold primarily totaled savings the estate $X from real see up of and rent. income from third million quarter

We focus we performance line efficiency. the steps profitable operational continue the to driving growth on reflects taken drive to have bottom and strong

higher the by the points the to period impacted was loss X,XXX million driven the $XX.X the the Segment mentioned latter came million in Moving quarter. acquisition. in by quarter $XX.X expense, quarter Net segment the is the in end enrollment quarter, in driven term the lease for third quarter, quarter quarter. from in in of spend fourth quarter. acquisition. XX% increase the on quarter financing period in segment expense $X.X B count the of compared XX interest Denver I year. the totaled with earlier, drive to for This the Degree costs at year was Head third as edX of to number the up Margins the at as in million, same the ago for spend loss expected half to compared an Net for marketing percentage to last edX Credential $X.X same related million. from in This Alternative by totaled last segment the came at loan year the X,XXX associated XX% margins. the X% well particularly

Turning cash now to equivalents the of of net from the end June At totaled $XXX.X flow reflecting sheet statement. and capital. cash the down September $XXX.X balance quarter, million, the cash working million in the use quarter, and

quarter, receivable accounts Our $X $XX.X previous from the quarter. down $XX.X primarily revenue second million the $XX the balance at from million, driven end of million, by came down Deferred totaled in seasonality. million

operating in XX-month million. a $X.X of quarters, we This growth working million Unlevered cash of the with quarter This reflects trend a cash was reduced a on basis. $XXX.X primarily spent the of the expense by was use four cash and last $XX.X $X flat free balance trailing that less net capital reversal base. quarter use against driven than million. a flow capital flow of We a expenditures million over revenue saw the ended

original strength to additional context we're turn now amended guidance enter has have loan an term quarter. tallest our expect our new coming agreement some in quarter underlying the and loan shows clear, level. current next believe be our to we navigate addition discount and business closing to our The for model volatility And $XXX XXXX the of near-term the in a as long-term for take to conservative, an prospects term acquisition is the of business of quarter I'll of and edX the our conditions existing similar prospects across the near phase borrowings edX first environment. million. incremental where our expectations drivers we unchanged the terms operating and raise and X%. performance to thinking and our year The how expense As fiscal is model pandemic. are lower of we resilience We of issue the we the about to of the the fundamentally

will update estimated this a for closing based XXXX thought our so date, year we be XXXX call, As would picture normally in on to the it have points guidance full of so edX an that helpful clearer metrics. would starting do assumed we you

the a adjusted net of recognized expected we basis. $XXX revenue remainder range. for at on XX% represents midpoint EBITDA year, addition are a full $XX range $XX which from million, million to million X% least Adjusted million. to at $XXX of ranges. we revenue now the from edX the the is assumes of midpoint For $X the expect expecting to at to contribute incremental to XXXX, million of This revenue growth of EBITDA This of range of and guidance the margin the

Our of they stub dilution rates. contribution in accounting operation for such as run range edX's the reflective approximately not the assumptions assumes and The to edX EBITDA closing go-forward And XXXX. impacts. period of adjustments are $X million from including

We and provide EBITDA information on more we XXXX will when revenue guidance. our rates run provide

in to emphasize expect extremely capital from and and approximately to weighted approximately top shares. We grew average the let outstanding digital we the headwinds $XX me high line XX% that quarter comparisons. be conclude, year-over-year To shares with environment be million marketing XX.X million expenditures

is combined when in the line we quarter. top of with good Our the EBITDA $XX.X especially delivered million

strength, We a XXXX particularly of edX our with close momentum enter organization. a to expect from out position of XXXX with part and as

of of and We about opportunities all opportunities stakeholders. the those open of with that, for we'll delivering And for the on the are our call questions. to us excited forward ahead Operator? benefit look

Operator

MacDonald of line Your Instructions] with comes Ryan first the question Needham. [Operator from

Ryan MacDonald

questions, of that acquisition and of your start closed partners. offerings it's Paul color edX. to the to Chip thanks additional you close and both you the opportunity is for thanks large for really expand a on one to Clearly university my as the edX you the stack taking learners on once maybe and here approach for provide Hi, and here. opportunity

can can XU As come line as edX benefit you integrate acquisition, start of -- to we bottom to top both of talk the about the close XXXX? close start to quickly you those think think and synergies on you and will to some how start platform about that Thanks. from you into fiscal the the the

Chris Paucek

Ryan. problem no Yeah,

very are it. about we excited So

closer deal, it stunning. prepared look edX really historical is at the we gotten my syncs is publicly. serving since our we've about have signed said partners, that gotten remarks business people we've the and we've to the uncanny. you university platforms as overlap our there's And that compare it. that And them you excited behalf As overlap when other no people pretty pretty The more with I in on with the of is said that to served what question

we're this probably What's single stage than very a about backed at it season degree underappreciated has a do. more excited what video Game will content is of XU So Thrones. of

just that we're there's offer free prospect bigger basis to access a for to help partners that flywheel content the university the like learner because in to content And transfer amount business, that tremendous to overlap. overlap of from a of opportunity So our us more for confident creates highly learners. a across

the closed odds our of not expand But products together. operating impact portfolio. edX into and opportunities We reasonably the drive we will XU the significant come as across side XU quickly programs to of historically we been on a amount yet we're vice-versa. do of There's so were to XU interest what an what in marketplace together haven't, terms like obviously, having this

a attractive that, options currently cost the them or and or careers XX% examples think creating at MicroMasters help MicroBachelors further. both we help access that that of them program gain simultaneously of Master's new the standpoint in and might from Bachelor's credential to wildly future for their even gain people XX% to in difference are So will succeed

talk interested funnel the we in So is offer outcome immediately more creates it -- time we'll programs this The also detail provide of for to creates new about at a in the a downstream. services provide for that close. edX tech-enabled and us and the services we learner all good the the community

to looking people terms it terms the So of will we'll think, We including of we acquisition, -- efficiencies time which some in overlap over we to of in to do impact, do as what Paul, ton I base. but like we today. a And wants see -- I'll is we it did quickly. full drive. the hand direct take sitting know really is know the learner what diligence and like he will we see on see the we how here But of the whatever at it

Paul Lalljie

Yeah. of think Ryan, I mean, a couple things. I

Our marketing sales of sales the $XX $XX some time. that million the objective in start years' and is to to in We expect over we see million recognizing to -- and benefits that, line. said we expected two

-- how we'll objective annual soon do to would and some as can recognize we And for as have recognize doing objectives, in us those. our what the you timing us probably quickly outcomes can. resulted the Now, we strategic there as of believe to we we can on that's formula as on acquisition. basis, today, try for this But But we're be, the a in of do that's believe going an that we this is in winning that us. here that quickly this Because we can. we and as update sit we

Chip Paucek

the that would may integrating in of had before. what from think drive only the kind opportunity more XU new about particular you We're have directly audience of said. the high-quality in across and comment in Ryan is reverse learning want a one unified bit of And exactly kind cases you to place disciplines, make into it our offer in across where other what edX but that terms to programs looking we've outcomes I not may front center it can -- we we really to mean, and edX have the all both They will where becomes it's all discipline. may obvious never And future. not of it's is and really Google their person for for really other our ever be put edX and look I someone around. into first XU time activity the becomes Alphabet. way

you that edX entire center prepared about is the experience it brand company. in remarks, become think really the this So, could the for the said becoming and edX front and that reason we as does

Ryan MacDonald

That's Paul, color for some the side current market. the of and Chip. in in a Undergrad Chip, undergrad the about for of opportunity enrollments is wanted XU. seeing my relatively early follow-up then, we're And particularly helpful to dynamics I ask innings really you

the And And with opportunity programs so, that undergrad conversation be Thanks. for universities pipeline enrollment, partners in nice that for is the altering creating all online is a you? seeing students? your are university I'd seeing are this on-campus with the curious, challenges or here at for

Chip Paucek

we're transition is early there's a what massive a We've mean, campus-based still reported. experience high-quality news question online haven't. but you're to forgetting years, obviously the for businesses. And this to is XX over been are time, talking what think that, there's digital this I lot of what's in people related about been transformation most experience. been a might what in doing Yeah. very case from I was innings. talking people for a what about, fundamentals be no various purely And that And

thought When cadence over odds the to we this reported these about were space our the a people in opportunity excellent and like of all of our having more are what start year. seeing next results. undergraduate in in months. are to prior the at have as you do And of thinking sort what program we than So growth about XX double might overall. recently looking day, certainly There's really we more that opportunities programs of we back undergrad lot year, next we're as the did as excited

Ryan MacDonald

Chip. and Paul Thanks

Operator

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

Stephen Sheldon

just guess results. wanted last the about any And the fourth Congrats we you I differences think they share performed, few heading between had in seeing into businesses? And could how guys. continued edX first they've as their on anything guess grow? to I growth I about different what ask Hey quarters. been the in to quarter if

Paul Lalljie

points adopting the the through of had ASC Friday had -- of pieces continue converting to our of quarter it marketplace the a here the fundamentals, -- it that process strength There have. of the performance back and of on comparing frankly they continue on But things. more the that and couple of organization next mean, this points just results get And that into think we when to to when that it. the them business bore or strong. last -- conversion for-profit then I after indication break of first completed it just see we'll basis challenge into the we here. want how we a or to we a color the fourth go But is first because you be we Paul is have strength quarter have Stephen, it went XXX we apart don't we the think audit of for audit brand to us the this I profit they year I quite get so through they that in pieces which last quarter made the good core week. on basic numbers announcement. and are that to The to are some accounting standards parse to with extent I

Stephen Sheldon

with boost to get And efficiency. edX. marketing the per a over great that's some that a on from I helpful. cost you've guess marketing of But just few to enrollment efficiencies I the guess looking hear next lead been the offset side years, out Okay, able increased should

you efficiency you as room marketing top efficiency increase and to that? much do few the have how both potentially think next on enrollment in So, you improvements process the about could see I And of years? guess enrollment

Chip Paucek

prepared I cost has incredible been the Well, engagement and also to benefit. direct one say project remarks that about I the is that has to improvement seat see that guess pretty a related significant in talked would we

to things lead to for those directly. the edX And to its we're of historically is question for is one opportunity us the some one about excited provide the this services offer that partners. able been is edX answer university has students nurturing not One port of of we provide to

marketplace on you able being it's when nobody a level a the able first time, about marketplace to an them at about scale, what's of And where to a scale think we're variety marrying top and our we anywhere per in of of engine near different the program we'll for view. whole opportunities point so think you level overall our like Two, overall -- level happening, to like Sheldon, their ways. degree of that of if lives be change the best do really the folks is drive from offer to odds

So, by edX reality XU. you're efficiency largest And for year and LSE our program. That a us. of of -- It's can it's XXX those that program work And already that's other -- high around cost. from a is fascinating game-changer a talking a and this and of platform it's lower expanded been in worldwide at quality million about the just like program haven't in the world. enrollment overall is are kind to we had has past. of a visitors now worldwide it at we the We the programs price. that terms many to undergrad marketing both is for a parts has think from very that low world incredibly reach opportunity just offer

And so think of XU's that to transformational offer The and affordable of we pathways into both all certainly edX. reality XU was change is the quality. programs combination And extremely do is industry number what redefining it what and something is is are to opportunities this their going is people two the the life. for was high

story. bring So, together and I it's think those a you two quite

Stephen Sheldon

close. Thanks. Thank forward to it. Look you very Got much.

Operator

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

Jeff Silber

US grad performance the the and down I about trends? both a Degree drill much. wanted if the so for versus Maybe into about you know undergrad what's bit versus your US? to Alternative different Thank then outside also And business could happening Degree Credentials we talk in talk segments.

Paul Lalljie

here let join me then Chip start So, Jeff can in. off and

quarter the tends momentum of continue of is Degree period to things a that that said last that build in for time. the we momentum One once we business up

continuation year-over-year Degree it's we if a what or is of the growth. I it particularly overall momentum in year-over-year Simmons and LSE the bifurcate well business, in perform to here way continues And terms seeing think of growth. should the drivers we're whether that XX% is of led that, our businesses undergraduate

think on I third across an that environment, conversion. into the summer saw particularly we in a some have part we business the improve those quarter. digital into months environment -- did – got saw And environment the we that as marketing all impact in of As and on demand we get latter the

we of expect seen perform the particularly extrapolate we have equation, the to as Degree as So and recovery. to that we forward, go forward, continue business our side because well, we go do

same in the the XX%, business. we months the on what forward. of will going in across XX% XX%, we last However, the and increases those quarter, some XX%, impact business. results have per Camp XX% summer talked Boot When impact leads, on and board same degree increasing sit today see cost Boot reported we short for in Those the course, XX% around Camp short the corresponding numbers, course about

we've performance an So, translate of we and to with we have put improvement, strategies we in that expect for that place. forward, some especially the seen as into favorable go us marketing

shorter. the side the house, of is Alternative of terms the cycle In Credential marketing much

short we then forward. we in as to the we course we see to we expect see business year, go expect expect fourth And what performance forward, quarter. into we in better improvement So year-over-year as performance, particularly next get to see go as

Alternative perform if we as So Alternative go Credentials is, expect line the Degree bifurcate Credentials, forward. we bottom better we and the to business

know, we then platform marketing the Chip, environment. integrate space improvement a would add And to you in Alternative and of close Credential more in we shorter edX seen will period in into anything the favorable have trends in don't see edX We time. digital that? I particular, and if the as marketplace

Chip Paucek

physician right world network what and we've speech but covered the licensure, noted the in for So right? like moat we needs us, now And it's – is builds the reason we clinical placement – it's a new meaningful we and got the mean, I – And proprietary it. think Jeff, is assistance I think we do today, working. you that We a we see around that undergrad company way. more therapists. nurses that think in

a else, everyone the credentials when COVID hit, big Just shorter-term like got obviously boost.

the across for of example you were of a new next fastest-growing tough announced if in comps some meaningful and there Netflix look It's Enterprise the model couple really like enterprises. XU. think do what that's the replicable we means at overall company. So It's for the we Alt we've something working, is of part Cred, the Cred. things, of Jeff other in that are pathways an years. Alt it But that's

the that, for already called getting is B. wouldn't example anywhere training, where from them technology certain are Boot them offer technology in we B we one doing have courses see doing you get started of people a business them to C We're received form much short other point additional shorter tracks that from strengths. point Camp amount So B, A to training instead to to of that can point you're

need. in what You're further taking they them

this diversified a So at stage. pretty company

some think of the sense. much of we make from don't the read-throughs really the world, So rest just

Jeff Silber

my versus be of actually, if by And second international. helpful? know, would I can the US color question. question, have that you just talking was part right. really All about I Again, the I asked segment long

Chip Paucek

continues do School Jeff, London Economics of presence. it in terms well, and international favorable has a our a Degree of to business, has program

you If I acquisition, – the to XX% mean, I environment. it's of international we forward if edX look traffic their comes think that from

well go So us for a presents it we as forward, us. and opportunity for bodes huge

business presence. of business. the reported quarter the a in XX% did in we but terms a we – particularly Credential us decline our frankly, In that business, A Alternative decline course not third US, short short digital that as course the international saw And here. just has and quite impact marketing large our globally that environment

environment XXXX. expect we do and that see see going the into However, also and improve, in we starting improvement particularly that to fourth quarter with

Jeff Silber

so Thank you really helpful. All That's right. much.

Operator

with Josh Your Baer Morgan next line from question Stanley. comes of the

Unidentified Analyst

you Thank This is you for for guys. Josh. Hi, on time. Ben [ph]

think and that have you And school? as Do how a over rates follow-up the completion do choosing degrees question. as think wages across wages How to you work people far crash that. And quick make higher then – last a had trended short will long option having to higher courses? having just for? impact Just

Chip Paucek

a resignation. are succeed offer a retrained so the economy, that is interesting diversification about picking reskilling succeed. think overall up full education it's XU dynamics we And higher the upskilling that critical and many only more have quite and some trend a countercyclical. steam a products clearly What's or but employers critical time it people to is you getting great not global that puts traditional in is of of our And we because takes. So in about for now is to for interesting get is that

the You've in – things then got you've aspects employees other the got get we see to see for for in is tailwinds need their a what like pandemic nursing where the we of where ready And employers by do need business. pretty dire like and teaching.

we edX there. that opportunity. got it's you the the MicroMasters most Earth. is big to last like really think get company over and base be high-quality And – So five new this for to game years, degree part we programs of us over XXX today we with reason acquisition to Planet MicroBachelors and is the is have together, a think put you the programs platform that prospect of diversified changer the it already on want that comprehensive you’ve a worldwide marry and We've and education

In terms overall pretty of we holding retention, steady. have been

very you students is critical actually what the better of tell and is do finish XU, because that, rates If program you program up leaves I better sort know poorly. would takes we me that over substantially. business look driven number of that at don't in but graduation front somebody decade helping today succeed a quickly, to data, using retention very, I historically and their if and we've at programs exactly the

realize the to I that one for need share success is they us to shared students programs in people And that. graduate the the need revenue of of that's stay to well. aspects think model don't do think I underappreciated

not is the for driving at well rules of doing just So number all. squarely on focused XU. them Retention but we also one the that business kind world are the

feeling steady it. about pretty overall, So

Unidentified Analyst

that tracking? how partnership? be partnership how will And fit what into then its Got and [ph] – offerings And it. will Gill edX is then business

Chip Paucek

in an we're pretty degree Morehouse Gill out channel started partner Boot We've The see to retraining. a have Today hot of opportunity employees. Gill. we all a see from the for Camps Look undergraduate was great growth seen particular we're opportunity offering for Walmart roll with kinds and Target technical – excited perspective. as opportunity

So implemented. really – We days. and just got it's early

think we opportunity creates of next So couple for Gill the years. strong company the over

Unidentified Analyst

much. so you Thank Awesome.

Operator

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

George Tong

Hi, thanks. Good afternoon.

to So wanted your lead management dive deeper into strategy.

planning the it think next are over to the drive to the two growth call about lead in normalization you of approach acceleration costs, you As how the flow to investing further four lead quarters?

Chip Paucek

we've but marry a through than to rest on Well overstate that of space and is capability do opportunity George, side is unmatched our have perspective. incredibly large organic in of we've quite bit converting I in think per – how to base folks the of scale bunch an I edX we really that highly we then, channels. marketing end on relevant not. said opportunities higher have mean, seen to a proven said, And the paid just a an there to the hard large diligence at program I is XU from the know at an ourselves today operating other of most marketing we'll as up that actually I now you rates level. are a

point of that think changer a from So game it's XU we for view.

George Tong

little we grad you've growth what opportunity built? as you and your the or the for either from Got that's degree it. separately where undergrad a incremental And looked opportunity to business, already program talk about international bit can see potential at domestic you then,

Chip Paucek

programs we of like the see us. of do undergraduate ahead We pipeline that

comments we're demand we double we're launching as high-quality noted for And looking footprint. program and that story. cash of do for them at more We've much this the lower part did with significant a better in There's online and the offerings undergrad goes very gotten perspective, undergrad’s worldwide affordable I at efficiency well. As that think than what from earlier, past -- greater year. a we

undergrad quite that. space commentary and So I of about the enrollment not bit overall know there's in been a seeing we're certainly

George Tong

helpful. Thank Very it. Got you.

Operator

from question Havemeyer Macquarie. is next Your Fred with

Fred Havemeyer

ask to navigating the environment, about actually as while Hi. I revenue Thank where, a higher marketing the slower looks to you're that's some high see average like about, higher are segment, FCE wanted have this credential quarter. the the were climbed cost in per Ed on FCEs it offerings People you. instead. from talking to interesting their And others more been competition of to wages. spending something when tech alternative

in this the there anything the are are driving what of think is call trend? out dynamics of that programs mix here? So to terms you And

Paul Lalljie

is I the per driving foremost, FCE. mix revenue what's Fred, So, first mean, and

business the the Camp we Camp As rise the higher FCE. revenue course you enrollment had know giving short enrollment more has course to the that the quarter, of per in we had much and higher revenue Boot Boot than short of

portfolio. And the mix. I that caution we flips going We said changes. mix expect one should and on noise should as number we'll into thing that we've And the So we is bottom expect line number. volatility have in that equation, opportunity as that its is a of of we've forward, a opportunity. If side managed spend business in times, better the because will number, a the that

try in have But manage to same forward. picture it's FCE. the we I So overall that time, are an to we the fortunate go revenue increase we at think as per

Fred Havemeyer

would portfolio any with play data. you're be this of IT-focused Thank you're specifically as of you've graduate that a either was technical or looking some horses computer enrollment showing It resignation out, leads is out to sort seeing called or say more mix you. job that there within ongoing looking in areas? the of with into wondering, upscale trend Of generally, then, data more you terms and was want enrollment growth. for course, like seeing you. or science within rescale But I that to does any great your of don't perhaps sense. the any dead And seekers Chip significant that respect of actually seeing? beat are make to degrees And perhaps and I technical on were then, like question

Chip Paucek

all. substantial talked affordable at really those the another in opportunity disciplines edX we about haven't that degrees will think We be

we programs. strongly our in believe of to Degree continue terms the In business, licensure

Degree think pretty others MBAs like at look it's showing. than We have at if our deliver size. business, Our feel might our what we it's better year going be calendar impressive you clearly done to this

managing a overall great So it's very us, doing Lee about Ebony it business for excited to a we're means year. job what credit next and team overall her one that that for and

There's have We big on certainly growth close. a good XX% business that's one the no else of really a read-through. in base. platform

in side. say, would Degree [Audio on the leaning gap] we're I So

Operator

Your next question comes Thill. Brett from the line of

Unidentified Analyst

landscape. in Hi. side one taking some they’ll consumer that Thanks how This question. weeks. the the the maybe is Can in, join next on thinking and two then David mean edX, of opportunity in having about you’re hopefully you the on competitive fit weeks how I the for that, And Brent. other from side? discuss the the guess public in portfolio think you for space the on versus couple differentiated Thanks enterprise second maybe I

Chip Paucek

options quite in of are investing XX group together two that us in and university what It's to coming offering of the of combination edX universities a really the the excited enterprise education would platform. online world I degree really There top by most comprehensive table. unmatched an really an set. is XU the the in one are according but about. that the to US brings partners the create we of very say portfolio free days impressive it's about business is XX new to News, offering that excited about far and early to

more coming and So on forward the going we're this together getting pretty really XU. world and bullish to done representing than edX

Unidentified Analyst

Thanks, guys. it. Got

Operator

questions. you time this At gentlemen, no and Thank conference call. does participating. there today's Ladies this are for further conclude

You disconnect. may now