e-Literate

Present is Prologue

Tag: vertical

  • 2U Learning Platform Update: Removal of Moodle, addition of accessibility options

    2U has now been a public company for over a year, and that had what is easily the most successful education IPO in recent history. Shares have almost doubled from $13.00 at IPO to $25.50 last week. At the same time, there is a swirl of news around their new partner Yale and the Physician Assistant’s program – first the announcement of program from one of the elite of elite schools, second the news that accreditation approval for the new program is not going to be as easy as hoped.

    While both aspects are newsworthy, I’d like to dive deeper into their infrastructure and learning platforms. The company is far from complacent, as they continue to make significant changes. (more…)

  • Update on 2U: First full quarterly earnings and insight into model

    2U, the online service provider that went public in the spring, just released its financial report for the first full quarter of operations as a public company. The company beat estimates on total revenue and also lost less money than expected. Overall, it was a strong performance (see WSJ for basic summary or actual quarterly report for more details). The basics:

    • Revenue of $24.7 million for the quarter and $51.1 m for the past six months, which represents year-over-year increase of 32 and 35%;
    • EBITDA Losses of $7.1 m for the quarter and $10.9 m for the past six months, which represents year-over-year increase of -2% and 12%; and
    • Enrollment growth of 31 – 34% year-over-year.

    Per the WSJ coverage of the conference call:

    “I’m very pleased with our second quarter results, and that we have both the basis and the visibility to increase all of our guidance measures for 2014,” said Chip Paucek, 2U’s Chief Executive Officer and co-founder. “We’ve reached a turning point where, even with continued high investment for growth, our losses have stopped accelerating. At the midpoint of our new guidance range, we now expect our full year 2014 adjusted EBITDA loss to improve by 17% over 2013. Further, we’ve announced a schedule that meets our stated annual goal for new program launches through 2015.”

    The company went public in late March at $14 / share and is still at that range ($14.21 before the quarterly earnings release – it might go up tomorrow). As one of only three ed tech companies to have gone public in the US over the past five years, 2U remains worth watching both for its own news and as a bellwether of the IPO market for ed tech.

    Notes

    The financials provide more insight into the world of Online Service Providers (OSP, aka Online Program Management, School-as-a-Service, Online Enablers, the market with no name). On the conference call 2U’s CEO Chip Paucek reminded analysts that they typically invest (money spent – revenue) $4 – $9 million per program in the early years and do not start to break even until years 3 – 4. 2U might be on the high side of these numbers given their focus on small class sizes at big-name schools, but this helps explain why the OSP market typically focuses on long-term contracts of 10+ years. Without such a long-term revenue-sharing contract, it would difficult for an OSP to ever break even.

    (more…)