[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company reported a net loss of $54.6 million, with total assets decreasing and significant 'Going Concern' uncertainty due to substantial debt [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $1.43 billion, cash increased to $124.7 million, and total liabilities rose to $1.26 billion as of March 31, 2024 Condensed Consolidated Balance Sheets (in thousands) | | March 31, 2024 (unaudited) | December 31, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $124,728 | $60,689 | | Accounts receivable, net | $67,235 | $115,944 | | Goodwill | $650,008 | $651,498 | | Total current assets | $259,390 | $251,464 | | **Total assets** | **$1,432,937** | **$1,459,683** | | **Liabilities and Stockholders' Equity** | | | | Total current liabilities | $284,765 | $259,339 | | Long-term debt | $898,416 | $896,514 | | **Total liabilities** | **$1,264,359** | **$1,240,638** | | **Total stockholders' equity** | **$168,578** | **$219,045** | | **Total liabilities and stockholders' equity** | **$1,432,937** | **$1,459,683** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Revenue decreased by 16.8% to $198.4 million, resulting in a net loss of $54.6 million and a widened operating loss for Q1 2024 Condensed Consolidated Statements of Operations (unaudited, in thousands) | | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | **Revenue** | **$198,377** | **$238,504** | | Total costs and expenses | $225,699 | $258,733 | | **Loss from operations** | **($27,322)** | **($20,229)** | | Interest expense | ($19,267) | ($17,957) | | Other (expense) income, net | ($8,404) | $607 | | **Net loss** | **($54,649)** | **($54,062)** | | **Net loss per share, basic and diluted** | **($0.65)** | **($0.68)** | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly improved to $72.2 million in Q1 2024, leading to a net increase in cash of $64.0 million for the period Condensed Consolidated Statements of Cash Flows (unaudited, in thousands) | | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | **$72,249** | **$27,478** | | Net cash used in investing activities | ($7,310) | ($11,808) | | Net cash used in financing activities | ($827) | ($89,463) | | **Net increase (decrease) in cash, cash equivalents and restricted cash** | **$64,039** | **($73,292)** | | Cash, cash equivalents and restricted cash, end of period | $137,438 | $109,286 | - The significant increase in cash from operating activities was largely due to a **$39.2 million** positive change in accounts receivable, which included proceeds from a receivables factoring transaction, compared to an **$11.5 million** use of cash in the prior year[27](index=27&type=chunk)[219](index=219&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail a critical 'Going Concern' warning due to debt and covenant risks, segment performance, and ongoing restructuring plans - The company has two reportable segments: the Degree Program Segment, which partners with universities for online degree programs, and the Alternative Credential Segment, which offers shorter, skills-based courses, boot camps, and executive education[33](index=33&type=chunk)[34](index=34&type=chunk) - **Going Concern Warning:** Substantial doubt exists about the company's ability to continue as a going concern due to the risk of its **$372.4 million** term loan maturity accelerating, a potential breach of its **$900 million** minimum Recurring Revenue covenant, and Nasdaq delisting risk[39](index=39&type=chunk)[40](index=40&type=chunk)[42](index=42&type=chunk) - In January 2024, the company entered into a receivables factoring agreement and sold **$82.1 million** of receivables for net proceeds of **$74.0 million**, recognizing an **$8.1 million** loss on the sale, which significantly improved operating cash flow[219](index=219&type=chunk)[220](index=220&type=chunk) - The company is involved in several legal proceedings, including a consumer class action related to USC Rossier rankings (dismissed), a lawsuit against the Department of Education regarding 'Third-Party Servicer' status, and a privacy class action related to the Video Privacy Protection Act[93](index=93&type=chunk)[99](index=99&type=chunk)[101](index=101&type=chunk) - The company is undergoing a 2022 Strategic Realignment Plan, expected to incur total charges of **$70-$75 million**, with **$58.5 million** incurred as of March 31, 2024, and also began a new performance improvement exercise in late 2023 involving further headcount reductions[107](index=107&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a 16.8% revenue decline to $198.4 million, highlighting significant liquidity risks and 'going concern' uncertainty due to substantial debt [Results of Operations](index=43&type=section&id=Results%20of%20Operations) Q1 2024 revenue fell 16.8% to $198.4 million, with both segments declining, leading to a wider operating loss despite decreased expenses Consolidated Operating Results Comparison (in thousands) | | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Period-to-Period Change (%) | | :--- | :--- | :--- | :--- | | **Revenue** | **$198,377** | **$238,504** | **(16.8)%** | | Degree Program Segment | $111,546 | $140,480 | (20.6)% | | Alternative Credential Segment | $86,831 | $98,024 | (11.4)% | | **Loss from operations** | **($27,322)** | **($20,229)** | **35.1%** | | **Net loss** | **($54,649)** | **($54,062)** | **1.1%** | - The decrease in Degree Program revenue was attributed to the wind-down of certain programs and a lower number of new student enrollments compared to the number of students graduating who had enrolled during the pandemic[262](index=262&type=chunk) - The decrease in Alternative Credential revenue was primarily due to a **$21.9 million** decline from boot camp offerings, driven by a **30%** decrease in FCE enrollments, especially in coding boot camps[263](index=263&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) The company faces substantial 'going concern' doubt due to significant debt, upcoming maturities, potential covenant breaches, and Nasdaq delisting risk - The company's ability to continue as a going concern is dependent on refinancing its debt or raising capital in the short term, as failure could lead to insufficient liquidity to meet debt obligations[287](index=287&type=chunk) - The Second Amended Credit Agreement requires **$900 million** in minimum Recurring Revenues, which the company expects to breach for the period ending **June 30, 2024**, potentially leading to debt acceleration[288](index=288&type=chunk) - The company received a Nasdaq notification for failing to meet the minimum **$1.00** bid price requirement, with potential delisting by **September 10, 2024**, which could trigger debt repurchase obligations for Convertible Notes[290](index=290&type=chunk) [Key Business and Financial Performance Metrics](index=54&type=section&id=Key%20Business%20and%20Financial%20Performance%20Metrics) Key metrics show Degree Program FCEs decreased 19.5% while Alternative Credential FCEs increased 13.5%, with Adjusted EBITDA falling to $17.3 million in Q1 2024 FCE Enrollments and Average Revenue per FCE | | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | **Degree Program Segment** | | | | FCE enrollments | 44,693 | 55,491 | | Average revenue per FCE enrollment ($) | $2,496 | $2,532 | | **Alternative Credential Segment** | | | | FCE enrollments | 24,955 | 21,990 | | Average revenue per FCE enrollment ($) | $3,260 | $4,193 | Adjusted EBITDA Reconciliation (in thousands) | | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net loss | $(54,649) | $(54,062) | | Total adjustments | $71,944 | $84,253 | | **Adjusted EBITDA** | **$17,295** | **$30,191** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=56&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rate fluctuations, with a 100 basis point increase raising annual interest expense by $4.2 million, and foreign currency exposure - The company is subject to interest rate risk on its **$415.3 million** of borrowings, where a hypothetical **1% (100 basis points)** increase would raise its 2024 interest expense by about **$4.2 million**[354](index=354&type=chunk) - The company has foreign currency exchange risk from operations in South Africa and the United Kingdom, recording a foreign currency translation loss of **$1.7 million** for Q1 2024[355](index=355&type=chunk)[356](index=356&type=chunk) [Item 4. Controls and Procedures](index=57&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2024[359](index=359&type=chunk) - No material changes were made to the company's internal control over financial reporting during the quarter ended March 31, 2024[360](index=360&type=chunk) [PART II. OTHER INFORMATION](index=56&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=56&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, including a privacy class action and a lawsuit against the Department of Education regarding 'Third-Party%20Servicer'%20status - The company is a defendant in a putative class action (Francis v. 2U, Inc. et al) alleging violations of the federal Video Privacy Protection Act related to sharing viewing information with Facebook, with a motion to dismiss pending[101](index=101&type=chunk) - The company has sued the Department of Education to challenge guidance that would classify it as a 'Third-Party Servicer,' which would subject it to stricter regulation, with litigation currently stayed pending new guidance[99](index=99&type=chunk) [Item 1A. Risk Factors](index=56&type=section&id=Item%201A.%20Risk%20Factors) The company outlines significant financial, operational, and regulatory risks, including 'going concern' uncertainty, substantial indebtedness, and potential changes to education regulations [Risks Related to Our Business Model](index=58&type=section&id=Risks%20Related%20to%20Our%20Business%20Model) The company faces risks from its evolving business model, including a history of net losses, dependence on student recruitment, and high upfront costs for new programs - The company has a history of significant net losses, including **$54.6 million** for Q1 2024, and may not achieve or maintain profitability in the future[371](index=371&type=chunk) - Financial performance is heavily dependent on recruiting students, which can be affected by negative perceptions of online learning, damage to university client reputations, and general economic conditions[372](index=372&type=chunk)[374](index=374&type=chunk)[376](index=376&type=chunk) - Launching new degree programs requires significant upfront costs, with an estimated average of approximately **three years** to recover the investment for a new program[380](index=380&type=chunk)[381](index=381&type=chunk) [Risks Related to Our Operations and Our Growth Strategy](index=62&type=section&id=Risks%20Related%20to%20Our%20Operations%20and%20Our%20Growth%20Strategy) Operational risks include heavy reliance on third-party advertising platforms, intense competition, security breaches, and execution risks from recent management changes and restructuring plans - Student acquisition efforts rely heavily on limited third-party advertising platforms, and Google's plan to phase out third-party cookies by the end of **Q2 2024** could negatively affect advertising effectiveness[394](index=394&type=chunk) - The company faces significant competition from established and emerging companies, potentially leading to pricing pressure and reduced market share[411](index=411&type=chunk) - Recent changes in senior management, including a new CEO appointment in **November 2023**, and organizational restructuring create inherent risks related to strategic planning and execution[421](index=421&type=chunk)[422](index=422&type=chunk) [Risks Related to Our Indebtedness and Capital Structure](index=71&type=section&id=Risks%20Related%20to%20Our%20Indebtedness%20and%20Capital%20Structure) The company's substantial $947.0 million debt poses significant risks, including restrictive covenants, potential breach of minimum recurring revenue, and Nasdaq delisting risk - As of March 31, 2024, the company has approximately **$947.0 million** of indebtedness, which could adversely affect its ability to fund operations and react to market changes[435](index=435&type=chunk) - The company must maintain **$900 million** in minimum Recurring Revenue under its credit agreement and expects to fail this covenant for the period ending **June 30, 2024**, potentially leading to a default and debt acceleration[441](index=441&type=chunk)[457](index=457&type=chunk) - The company received a Nasdaq delisting notice for its stock price falling below **$1.00**, and failure to regain compliance could trigger a 'fundamental change' allowing convertible note holders to demand repurchase for cash[459](index=459&type=chunk)[465](index=465&type=chunk) [Risks Related to Regulation of Our Business and That of Our University Clients](index=77&type=section&id=Risks%20Related%20to%20Regulation%20of%20Our%20Business%20and%20That%20of%20Our%20University%20Clients) The company's business model is highly exposed to regulatory risks, including potential changes to DOE's 'bundled services' guidance and 'Third-Party%20Servicer' definitions, and evolving data privacy laws - The company's tuition revenue-sharing model relies on a DOE 'bundled services rule' that is not codified and could be altered or removed, requiring a fundamental change to its business model[476](index=476&type=chunk)[477](index=477&type=chunk)[480](index=480&type=chunk) - The DOE is reviewing its 'Third-Party Servicer' (TPS) definition, and if the company is deemed a TPS, it would face increased regulatory burden and limited ability to contract with institutions[482](index=482&type=chunk)[485](index=485&type=chunk) - The company is subject to numerous evolving global data privacy laws (e.g., GDPR, CCPA) and educational privacy laws (FERPA), with non-compliance potentially leading to significant fines, litigation, and reputational damage[492](index=492&type=chunk)[500](index=500&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=89&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities, no use of public offering proceeds, and no equity security purchases during the period - There were no unregistered sales of equity securities or share repurchases during the quarter[544](index=544&type=chunk) [Item 3. Defaults Upon Senior Securities](index=89&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - None[545](index=545&type=chunk) [Item 4. Mine Safety Disclosures](index=89&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - None[546](index=546&type=chunk) [Item 5. Other Information](index=89&type=section&id=Item%205.%20Other%20Information) Andrew Hermalyn, President of the Degree Program Segment, adopted a Rule 10b5-1 trading plan for the sale of up to 50,851 shares - Andrew Hermalyn, President of the Degree Program Segment, adopted a Rule 10b5-1 trading plan on March 8, 2024, to sell up to **50,851 shares**[548](index=548&type=chunk) [Item 6. Exhibits](index=90&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files - The exhibits include certifications from the CEO and CFO as required by Sections 302 and 906 of the Sarbanes-Oxley Act[549](index=549&type=chunk)

First Quarter 2024 Financial and Operating Results The company reported a revenue decline and net loss in Q1 2024, while focusing on operational optimization and balance sheet strengthening [Management Commentary](index=1&type=section&id=Management%20Commentary) Management highlighted exceeding Q1 2024 expectations, emphasizing ongoing turnaround efforts to optimize operations and strengthen the balance sheet - The company is focusing on **optimizing its operating model, cost structure, and balance sheet** to capitalize on the **strong demand for workforce development driven by generative AI**[3](index=3&type=chunk) - Management is pursuing operating efficiencies by **reducing personnel expenses, rationalizing real estate, and lowering delivery costs** to support its turnaround and fix the balance sheet[3](index=3&type=chunk) - The company's cash position increased to **$137 million**, which management believes provides a strong foundation for its performance improvement initiatives[3](index=3&type=chunk)[6](index=6&type=chunk) [Q1 2024 Financial Highlights](index=1&type=section&id=Q1%202024%20Financial%20Highlights) Q1 2024 revenue decreased 17% to $198.4 million, resulting in a $54.6 million net loss and a 43% adjusted EBITDA decline, with cash increasing to $137.4 million Q1 2024 Key Financial Metrics (vs. Q1 2023, in millions) | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | **Revenue** | $198.4M | $238.5M | -17% | | **Net Loss** | $54.6M | $54.1M | +0.9% | | **Net Loss per Share** | $0.65 | $0.68 | -4.4% | | **Adjusted EBITDA** | $17.3M | $30.2M | -43% | | **Adjusted EBITDA Margin** | 9% | 13% | -4 p.p. | - Total costs and expenses decreased by **13%** to **$225.7 million**, primarily driven by a **$29.5 million** reduction in personnel-related expenses and a **$5.6 million** decrease in paid marketing costs[5](index=5&type=chunk) - As of March 31, 2024, cash, cash equivalents, and restricted cash totaled **$137.4 million**, an increase of **$64.0 million** from year-end 2023. This includes net proceeds of **$74.0 million** from a receivables transaction[6](index=6&type=chunk) - Total debt as of March 31, 2024, was **$906.4 million**, which includes **$40.0 million** in borrowings under the company's revolving credit facility[6](index=6&type=chunk) [Business Segment Performance](index=1&type=section&id=Business%20Segment%20Performance) Both segments saw revenue declines in Q1 2024, with Degree Programs down 21% to $111.5 million and Alternative Credentials down 11% to $86.8 million Q1 2024 Revenue by Segment (vs. Q1 2023, in millions) | Segment | Q1 2024 Revenue | Q1 2023 Revenue | YoY Change | | :--- | :--- | :--- | :--- | | **Degree Program** | $111.5M | $140.5M | -21% | | **Alternative Credential** | $86.8M | $98.0M | -11% | | **Total Revenue** | $198.4M | $238.5M | -17% | - The decrease in Degree Program Segment revenue was primarily due to certain programs operating in 2023 that are no longer operating in 2024 due to portfolio management activities[4](index=4&type=chunk) - In the Alternative Credential Segment, a **$21.9 million** decrease in boot camp revenue (driven by a **30%** drop in FCE enrollments) was partially offset by an **$11.0 million** increase in executive education revenue (driven by a **32%** rise in FCE enrollments)[4](index=4&type=chunk) Financial Guidance The company provided its financial outlook for Q2 and the full year 2024, including revenue, net loss, and adjusted EBITDA projections [Full-Year 2024 Guidance](index=2&type=section&id=Full-Year%202024%20Guidance) The company reaffirmed its full-year 2024 revenue guidance of $805-$815 million and adjusted EBITDA of $120-$125 million, updating net loss to $98-$103 million Full-Year 2024 Guidance (in millions) | Metric | Guidance Range | | :--- | :--- | | **Revenue** | $805M - $815M | | **Net Loss** | $98M - $103M | | **Adjusted EBITDA** | $120M - $125M | - The guidance assumes no new portfolio management activities in 2024 and includes **$15 million** in revenue from 2023 portfolio management activities[8](index=8&type=chunk) - Anticipated capital expenditures for the full year are approximately **$45 million**[9](index=9&type=chunk) [Second Quarter 2024 Guidance](index=2&type=section&id=Second%20Quarter%202024%20Guidance) For Q2 2024, 2U projects revenue of $191-$194 million, a net loss of $32.5-$37.5 million, and adjusted EBITDA of $16-$18 million Second Quarter 2024 Guidance (in millions) | Metric | Guidance Range | | :--- | :--- | | **Revenue** | $191M - $194M | | **Net Loss** | $32.5M - $37.5M | | **Adjusted EBITDA** | $16M - $18M | Financial Statements The financial statements provide a detailed overview of the company's balance sheet, income statement, and cash flows for Q1 2024 [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2024, total assets were $1.43 billion and liabilities $1.26 billion, with cash increasing to $124.7 million and accounts receivable decreasing Selected Balance Sheet Items (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $124,728 | $60,689 | | Accounts receivable, net | $67,235 | $115,944 | | Goodwill | $650,008 | $651,498 | | **Total Assets** | **$1,432,937** | **$1,459,683** | | **Liabilities & Equity** | | | | Accounts payable and accrued expenses | $114,000 | $103,378 | | Long-term debt | $898,416 | $896,514 | | **Total Liabilities** | **$1,264,359** | **$1,240,638** | | **Total Stockholders' Equity** | **$168,578** | **$219,045** | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2024 revenue decreased to $198.4 million, widening the operating loss to $27.3 million and resulting in a net loss of $54.6 million, or $0.65 per share Q1 Statement of Operations Highlights (in thousands, except per share data) | Account | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | **Revenue** | **$198,377** | **$238,504** | | Total costs and expenses | $225,699 | $258,733 | | Loss from operations | $(27,322) | $(20,229) | | Interest expense | $(19,267) | $(17,957) | | **Net loss** | **$(54,649)** | **$(54,062)** | | **Net loss per share, basic and diluted** | **$(0.65)** | **$(0.68)** | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2024 operating cash flow significantly improved to $72.2 million, leading to a net cash increase of $64.0 million and ending cash balance of $137.4 million Q1 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $72,249 | $27,478 | | Net cash used in investing activities | $(7,310) | $(11,808) | | Net cash used in financing activities | $(827) | $(89,463) | | **Net increase (decrease) in cash** | **$64,039** | **$(73,292)** | | **Cash at end of period** | **$137,438** | **$109,286** | Non-GAAP Financial Measures This section provides reconciliations for non-GAAP financial measures, including Adjusted EBITDA and Adjusted Free Cash Flow [Reconciliation of Adjusted EBITDA](index=9&type=section&id=Reconciliation%20of%20Adjusted%20EBITDA) Q1 2024 adjusted EBITDA decreased to $17.3 million, resulting in a 9% margin, with key adjustments including stock-based compensation and performance initiative costs Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | **Net loss** | **$(54,649)** | **$(54,062)** | | Stock-based compensation expense | $5,324 | $14,563 | | Net interest expense | $18,690 | $17,592 | | Depreciation and amortization expense | $16,444 | $20,084 | | Other* | $9,880 | $962 | | **Adjusted EBITDA** | **$17,295** | **$30,191** | | **Adjusted EBITDA margin** | **9%** | **13%** | [Reconciliation of Adjusted EBITDA by Segment](index=10&type=section&id=Reconciliation%20of%20Adjusted%20EBITDA%20by%20Segment) In Q1 2024, Degree Program adjusted EBITDA was $32.0 million (29% margin), while Alternative Credential reported a $14.7 million loss (-17% margin) Adjusted EBITDA by Segment (in thousands) | Segment | Q1 2024 Adj. EBITDA | Q1 2023 Adj. EBITDA | Q1 2024 Margin | Q1 2023 Margin | | :--- | :--- | :--- | :--- | :--- | | **Degree Program** | $31,985 | $47,204 | 29% | 34% | | **Alternative Credential** | $(14,690) | $(17,013) | (17)% | (17)% | | **Consolidated** | **$17,295** | **$30,191** | **9%** | **13%** | [Reconciliation of Adjusted Free Cash Flow](index=11&type=section&id=Reconciliation%20of%20Adjusted%20Free%20Cash%20Flow) For the TTM ending March 31, 2024, adjusted free cash flow was $39.5 million, a positive shift, with adjusted unlevered free cash flow at $102.7 million Adjusted Free Cash Flow (TTM, in thousands) | Metric | TTM Ended Mar 31, 2024 | TTM Ended Dec 31, 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $41,340 | $(3,431) | | Adjusted free cash flow | $39,451 | $(15,759) | | Adjusted unlevered free cash flow | $102,719 | $45,435 | [Reconciliation of Guidance to Non-GAAP Measures](index=12&type=section&id=Reconciliation%20of%20Guidance%20to%20Non-GAAP%20Measures) The company provided Q2 and full-year 2024 guidance reconciliation, projecting a midpoint net loss of $100.5 million to reconcile to $122.5 million adjusted EBITDA for the full year Guidance Reconciliation (Midpoint, in millions) | Metric | Q2 2024 | FY 2024 | | :--- | :--- | :--- | | **Net loss** | **$(35.0)** | **$(100.5)** | | Stock-based compensation expense | $5.0 | $20.0 | | Amortization of acquired intangible assets | $8.0 | $32.5 | | Net interest expense | $16.0 | $70.0 | | Depreciation and amortization expense | $16.0 | $58.0 | | **Adjusted EBITDA** | **$17.0** | **$122.5** | Key Operating Metrics This section details key operating metrics, including Full Course Equivalent (FCE) enrollments and average revenue per FCE [Full Course Equivalent (FCE) Enrollments](index=13&type=section&id=Full%20Course%20Equivalent%20(FCE)%20Enrollments) Q1 2024 FCE enrollments declined 19% in Degree Programs but increased 13% in Alternative Credentials, while average revenue per FCE decreased in both segments [Degree Program Segment FCEs](index=13&type=section&id=Degree%20Program%20Segment%20FCEs) Degree Program FCE enrollments decreased 19% to 44,693 in Q1 2024, with average revenue per FCE slightly declining to $2,496 Degree Program Segment FCE Metrics | Metric | Q1 2024 | Q1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | FCE enrollments | 44,693 | 55,491 | -19.5% | | Average revenue per FCE | $2,496 | $2,532 | -1.4% | [Alternative Credential Segment FCEs](index=13&type=section&id=Alternative%20Credential%20Segment%20FCEs) Alternative Credential FCE enrollments increased 13.5% to 24,955 in Q1 2024, but average revenue per FCE sharply declined 22% to $3,260 Alternative Credential Segment FCE Metrics | Metric | Q1 2024 | Q1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | FCE enrollments | 24,955 | 21,990 | +13.5% | | Average revenue per FCE | $3,260 | $4,193 | -22.3% | Supplementary Information This section provides general company information, conference call details, and important forward-looking statements [About 2U, Inc.](index=3&type=section&id=About%202U%2C%20Inc.) 2U, Inc. operates the global edX online learning platform, partnering with 260 institutions to serve over 86 million learners worldwide - 2U operates the global online learning platform edX, connecting over **86 million** people with learning opportunities from **260 partners**[15](index=15&type=chunk) [Conference Call Information](index=3&type=section&id=Conference%20Call%20Information) The Q1 2024 financial results conference call was scheduled for Thursday, May 2, 2024, at 4:30 p.m. ET - The Q1 2024 earnings conference call was held on May 2, 2024, at 4:30 p.m. ET[14](index=14&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section cautions that forward-looking statements are subject to risks including market trends, competition, regulatory changes, debt management, and strategy execution - The report contains forward-looking statements regarding future business expectations, financial position, and strategy, which are subject to significant risks and uncertainties[16](index=16&type=chunk) - Key risks include market trends, competition, regulatory compliance, **ability to service substantial indebtedness**, and **successful execution of growth strategies and performance improvement initiatives**[16](index=16&type=chunk)[18](index=18&type=chunk)

LANHAM, Md., May 2, 2024 /PRNewswire/ -- 2U, Inc. (Nasdaq: TWOU), a leading online education platform company, today reported financial and operating results for the quarter ended March 31, 2024. "With our leading position in the education industry, 2U has a significant opportunity to respond to and support the current technology moment, where advances in generative AI are driving strong demand for workforce development," said Paul Lalljie, Chief Executive Officer of 2U. "In order to make the most of this o ...

2U's global online learning platform recognized for AI innovations spanning online education programs, technology, and enterprise learning solutionsLANHAM, Md., March 19, 2024 /PRNewswire/ -- edX, the global online learning platform from 2U, Inc. (Nasdaq: TWOU), has once again been included on Fast Company's annual list of the World's Most Innovative Companies. This list recognizes companies that are transforming business, shaping society, and paving the way for the innovations of tomorrow. For 2024, edX is ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-36376 2U, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) (I.R.S. Em ...

Chip Paucek, co-founder and former CEO of 2U, appears at the company's headquarters in Lanham, Maryland on Nov. 17, 2021. The company's chief financial officer, Paul Lalljie, replaced Paucek as CEO in November 2023.When 2U went public a decade ago, the company was out to prove it could make a splash in the notoriously difficult $550 billion U.S. higher education market.For a while, it was on to something. The stock price ballooned from $13 at 2U's 2014 IPO to a high of $98.58 four years later as demand incr ...

Operator Where did we drop? Thanks, Paul, and good afternoon, everyone. Before walking through the results, I'd like to say how honored I am to step into Paul's shoes to lead the world-class finance team that he built and to work with Paul and the entire team even more closely on making 2U the resilient and sustainable company that we know it can be. Alt Cred revenue in the fourth quarter was impacted by similar factors to those we experienced in the third quarter, continued softness in boot camps, particul ...

LANHAM, Md., Feb. 12, 2024 /PRNewswire/ -- 2U, Inc. (Nasdaq: TWOU), a leading online education platform company, today reported financial and operating results for the quarter and full-year ended December 31, 2023. "I am proud to lead 2U through the next chapter of its journey," said Paul Lalljie, Chief Executive Officer of 2U. "We finished the year with strong performance, particularly in our executive education business, and a new organizational structure designed to enhance transparency and alignment acr ...

LANHAM, Md., Feb. 1, 2024 /PRNewswire/ -- 2U, Inc. (Nasdaq: TWOU) announced today that it will report its fourth quarter and full year 2023 financial and operational results on Monday, February 12, 2024. Paul Lalljie, Chief Executive Officer, and Matthew Norden, Chief Financial Officer, will hold an audio webcast and conference call at 4:30 p.m. ET to discuss the results. To pre-register, click here. To access the live webcast, visit investor.2u.com. To participate in the conference call by telephone from t ...

New partnership also includes more than 15 online professional certificate programs in technology, business management, healthcare, and sustainability GUILDFORD, England and LANHAM, Md., Feb. 1, 2024 /PRNewswire/ -- 2U, Inc. (Nasdaq: TWOU), the company behind global online learning platform edX, today announced a new partnership with the University of Surrey to launch and support the delivery of online master's degrees and online professional certificate programs. An initial five online degree programs will ...