Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Feb. 21, 2018 | Jun. 30, 2017 | |
Document and Entity Information | |||
Entity Registrant Name | 2U, Inc. | ||
Entity Central Index Key | 1,459,417 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 2,219,364,891 | ||
Entity Common Stock, Shares Outstanding | 52,715,791 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets | ||
Cash and cash equivalents | $ 223,370 | $ 168,730 |
Accounts receivable, net | 14,174 | 7,860 |
Prepaid expenses and other assets | 10,509 | 8,108 |
Total current assets | 248,053 | 184,698 |
Property and equipment, net | 49,055 | 15,596 |
Goodwill | 71,988 | |
Amortizable intangible assets, net | 90,761 | 34,131 |
Prepaid expenses and other assets, non-current | 22,205 | 9,895 |
Total assets | 482,062 | 244,320 |
Current liabilities | ||
Accounts payable and accrued expenses | 22,629 | 14,724 |
Accrued compensation and related benefits | 19,017 | 16,491 |
Deferred revenue | 7,024 | 3,137 |
Other current liabilities | 9,330 | 6,717 |
Total current liabilities | 58,000 | 41,069 |
Non-current lease-related liabilities | 22,573 | 7,620 |
Deferred government grant obligations | 3,500 | |
Deferred tax liabilities, net | 10,087 | |
Other non-current liabilities | 70 | 394 |
Total liabilities | 94,230 | 49,083 |
Commitments and contingencies (Note 6) | ||
Stockholders' equity | ||
Preferred stock, $0.001 par value, 5,000,000 shares authorized, none issued | ||
Common stock, $0.001 par value, 200,000,000 shares authorized, 52,505,856 shares issued and outstanding as of December 31, 2017; 47,151,635 shares issued and outstanding as of December 31, 2016 | 53 | 47 |
Additional paid-in capital | 588,289 | 371,455 |
Accumulated deficit | (205,836) | (176,265) |
Accumulated other comprehensive income | 5,326 | |
Total stockholders' equity | 387,832 | 195,237 |
Total liabilities and stockholders' equity | $ 482,062 | $ 244,320 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Consolidated Balance Sheets | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 52,505,856 | 47,151,635 |
Common stock, shares outstanding | 52,505,856 | 47,151,635 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Consolidated Statements of Operations and Comprehensive Loss | |||
Revenue | $ 286,752 | $ 205,864 | $ 150,194 |
Costs and expenses | |||
Curriculum and teaching | 6,609 | ||
Servicing and support | 50,767 | 40,982 | 32,047 |
Technology and content development | 45,926 | 33,283 | 27,211 |
Marketing and sales | 150,923 | 106,610 | 82,911 |
General and administrative | 62,665 | 46,021 | 34,123 |
Total costs and expenses | 316,890 | 226,896 | 176,292 |
Loss from operations | (30,138) | (21,032) | (26,098) |
Interest income | 371 | 383 | 167 |
Interest expense | (87) | (35) | (552) |
Other income (expense), net | (866) | (250) | |
Loss before income taxes | (30,720) | (20,684) | (26,733) |
Income tax benefit | 1,297 | ||
Net loss | $ (29,423) | $ (20,684) | $ (26,733) |
Net loss per share, basic and diluted (in dollars per share) | $ (0.60) | $ (0.44) | $ (0.63) |
Weighted-average shares of common stock outstanding, basic and diluted (in shares) | 49,062,611 | 46,609,751 | 42,420,356 |
Other comprehensive loss | |||
Foreign currency translation adjustments, net of tax of $0 for all periods presented | $ 5,326 | ||
Comprehensive loss | $ (24,097) | $ (20,684) | $ (26,733) |
Consolidated Statements of Ope5
Consolidated Statements of Operations and Comprehensive Loss (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Other comprehensive loss | |||
Foreign currency translation adjustments, tax | $ 0 | $ 0 | $ 0 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total |
Balance at Dec. 31, 2014 | $ 41 | $ 216,818 | $ (128,848) | $ 88,011 | |
Balance (in shares) at Dec. 31, 2014 | 40,735,069 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Exercise of stock options | $ 1 | 5,335 | 5,336 | ||
Exercise of stock options (in shares) | 1,141,731 | ||||
Issuance of common stock in connection with settlement of restricted stock units, net of withholdings | (436) | (436) | |||
Issuance of common stock in connection with settlement of restricted stock units, net of withholdings (in shares) | 248,088 | ||||
Issuance of common stock, net of issuance costs | $ 4 | 117,108 | 117,112 | ||
Issuance of common stock, net of issuance costs (in shares) | 3,625,000 | ||||
Issuance of common stock award | 750 | 750 | |||
Issuance of common stock award (in shares) | 26,567 | ||||
Stock-based compensation expense | 11,749 | 11,749 | |||
Net loss | (26,733) | (26,733) | |||
Balance at Dec. 31, 2015 | $ 46 | 351,324 | (155,581) | 195,789 | |
Balance (in shares) at Dec. 31, 2015 | 45,776,455 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Exercise of stock options | $ 1 | 4,858 | 4,859 | ||
Exercise of stock options (in shares) | 1,011,153 | ||||
Issuance of common stock in connection with settlement of restricted stock units, net of withholdings | (382) | (382) | |||
Issuance of common stock in connection with settlement of restricted stock units, net of withholdings (in shares) | 351,319 | ||||
Issuance of common stock award | (168) | (168) | |||
Issuance of common stock award (in shares) | 12,708 | ||||
Stock-based compensation expense | 15,823 | 15,823 | |||
Net loss | (20,684) | (20,684) | |||
Balance at Dec. 31, 2016 | $ 195,237 | ||||
Balance (in shares) at Dec. 31, 2016 | 47,151,635 | ||||
Balance at Dec. 30, 2016 | $ 47 | 371,455 | (176,265) | $ 195,237 | |
Balance (in shares) at Dec. 30, 2016 | 47,151,635 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Cumulative-effect of accounting change (Note 2) | 148 | (148) | |||
Balance at Dec. 31, 2016 | $ 195,237 | ||||
Balance (in shares) at Dec. 31, 2016 | 47,151,635 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net loss | $ (29,423) | ||||
Foreign currency translation adjustment | 5,326 | ||||
Balance at Dec. 31, 2017 | $ 53 | 588,289 | (205,836) | $ 5,326 | $ 387,832 |
Balance (in shares) at Dec. 31, 2017 | 52,505,856 | 52,505,856 | |||
Balance at Jan. 01, 2017 | $ 47 | 371,603 | (176,413) | $ 195,237 | |
Balance (in shares) at Jan. 01, 2017 | 47,151,635 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Exercise of stock options | $ 1 | 6,614 | 6,615 | ||
Exercise of stock options (in shares) | 846,821 | ||||
Issuance of common stock in connection with settlement of restricted stock units, net of withholdings | $ 1 | (1,310) | (1,309) | ||
Issuance of common stock in connection with settlement of restricted stock units, net of withholdings (in shares) | 459,900 | ||||
Issuance of common stock, net of issuance costs | $ 4 | 189,452 | 189,456 | ||
Issuance of common stock, net of issuance costs (in shares) | 4,047,500 | ||||
Stock-based compensation expense | 21,930 | 21,930 | |||
Net loss | (29,423) | (29,423) | |||
Foreign currency translation adjustment | 5,326 | 5,326 | |||
Balance at Dec. 31, 2017 | $ 53 | $ 588,289 | $ (205,836) | $ 5,326 | $ 387,832 |
Balance (in shares) at Dec. 31, 2017 | 52,505,856 | 52,505,856 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities | |||
Net loss | $ (29,423) | $ (20,684) | $ (26,733) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 19,624 | 9,750 | 7,220 |
Stock-based compensation expense | 21,930 | 15,823 | 12,499 |
Charge related to execution of new lease agreement | 884 | ||
Changes in operating assets and liabilities: | |||
Increase in accounts receivable, net | (5,634) | (6,885) | (625) |
Decrease (increase) in prepaid expenses and other assets | 1,549 | (1,090) | (4,876) |
Increase (decrease) in accounts payable and accrued expenses | 3,504 | (2,459) | 2,366 |
Increase in accrued compensation and related benefits | 2,504 | 3,086 | 4,317 |
Increase in deferred revenue | 1,661 | 528 | 703 |
(Increase) decrease in payments to university clients | (13,239) | 2,234 | (3,664) |
Increase (decrease) in other liabilities, net | 4,763 | 4,907 | (1,608) |
Other | 867 | 250 | |
Net cash provided by (used in) operating activities | 8,106 | 5,210 | (9,267) |
Cash flows from investing activities | |||
Purchase of a business, net of cash acquired | (97,102) | ||
Purchases of property and equipment | (27,316) | (7,648) | (1,256) |
Additions of amortizable intangible assets | (23,823) | (16,728) | (12,358) |
Advances made to university clients | (1,950) | ||
Advances repaid by university clients | 817 | ||
Other | (142) | (2,331) | |
Net cash used in investing activities | (149,374) | (24,518) | (15,945) |
Cash flows from financing activities | |||
Proceeds from issuance of common stock, net of offering costs | 189,463 | 117,112 | |
Proceeds from exercise of stock options | 6,615 | 4,859 | 5,336 |
Proceeds from debt | 3,500 | ||
Payments on debt | (1,517) | ||
Tax withholding payments associated with settlement of restricted stock units | (1,309) | (378) | (436) |
Other | (172) | ||
Net cash provided by financing activities | 196,752 | 4,309 | 122,012 |
Effect of exchange rate changes on cash | (844) | ||
Net increase (decrease) in cash and cash equivalents | 54,640 | (14,999) | 96,800 |
Cash and cash equivalents, beginning of period | 168,730 | 183,729 | 86,929 |
Cash and cash equivalents, end of period | $ 223,370 | $ 168,730 | $ 183,729 |
Organization
Organization | 12 Months Ended |
Dec. 31, 2017 | |
Organization | |
Organization | 1. Organization 2U, Inc. (the "Company") is a leading education technology company that well-recognized nonprofit colleges and universities trust to bring them into the digital age. The Company's comprehensive platform provides the digital infrastructure universities need to attract, enroll, educate and support students at scale, while delivering high-quality outcomes. With the Company's platform, students can pursue their education anytime, anywhere, without quitting their jobs or moving; and university clients can improve educational outcomes, skills attainment and career prospects for a greater number of students. On July 1, 2017, the Company completed its acquisition of all of the outstanding equity interests of Get Educated International Proprietary Limited ("GetSmarter"), a leader in collaborating with universities to offer premium online short courses to working professionals. The acquisition will enable the Company to expand its total addressable market by offering short course certificates to students not seeking a full graduate degree and to provide a better product-market fit for international audiences. As a result of the acquisition of GetSmarter, the Company now manages its operations in two operating segments: the Graduate Program Segment and the Short Course Segment. See Note 3 for further information on the GetSmarter acquisition and Note 13 for further information on the Company's segments. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Significant Accounting Policies | |
Significant Accounting Policies | 2. Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries and have been prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP") and include the assets, liabilities, results of operations and cash flows of the Company. All significant intercompany accounts and transactions have been eliminated in consolidation. Reclassifications The Company has reclassified capitalized technology and content development, as well as other amortizable intangible assets, into amortizable intangible assets, net on the consolidated balance sheets and consolidated statements of cash flows. In addition, certain other prior period amounts in the consolidated balance sheets and consolidated statements of cash flows have been reclassified to conform to the current period's presentation. These reclassifications had no impact on total assets, total liabilities, cash flows from operating activities or cash flows from investing activities previously reported for any periods presented. Use of Estimates The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts reported herein. The Company bases its estimates and assumptions on historical experience and on various other factors that it believes to be reasonable under the circumstances. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in those estimates. The Company evaluates its estimates and assumptions on an ongoing basis. Business Combinations The purchase price of an acquisition is allocated to the assets acquired, including intangible assets, and liabilities assumed, based on their respective fair values at the acquisition date. Acquisition-related costs are expensed as incurred. The excess of the cost of an acquired entity of the net of the amounts assigned to the assets acquired and liabilities assumed is recognized as goodwill. The net assets and results of operations of an acquired entity are included in the Company's consolidated financial statements from the acquisition date. Concentration of Credit Risk Financial instruments that subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. All of the Company's cash is held at financial institutions that management believes to be of high credit quality. The Company's bank accounts exceed federally insured limits at times. The Company has not experienced any losses on cash to date. To manage accounts receivable risk, the Company maintains an allowance for doubtful accounts, if needed. Cash and Cash Equivalents Cash and cash equivalents consist of bank checking accounts, money market accounts, investments in certificates of deposit that mature in less than three months and highly liquid marketable securities with maturities at the time of purchase of three months or less. Fair Value Measurements The carrying amounts of certain assets and liabilities, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and other current liabilities, approximate their respective fair values due to their short-term nature. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on the Company's principal or, in the absence of a principal, most advantageous, market for the specific asset or liability. U.S. GAAP provides for a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The fair value hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs when determining fair value. The three tiers are defined as follows: • Level 1 —Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; • Level 2 —Observable inputs, other than quoted prices in active markets, that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and • Level 3 —Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. Advances to University Clients The Company is contractually obligated to pay advances to certain of its university clients in order to fund start-up expenses of the program on behalf of the university client. Advances to university clients are stated at realizable value. Advances are repaid to the Company on terms as required in the respective agreements. The Company recognizes imputed interest income on these advance payments when there is a significant amount of imputed interest. Long-Lived Assets Property and Equipment Property and equipment is stated at cost less accumulated depreciation and amortization. Expenditures for major additions, construction and improvements are capitalized. Depreciation and amortization is expensed using the straight-line method over the estimated useful lives of the related assets, which range from three to five years for computer hardware and five to seven years for furniture and office equipment. Leasehold improvements are depreciated on a straight-line basis over the lesser of the remaining term of the leased facility or the estimated useful life of the improvement, which generally ranges from four to approximately 11 years. Useful lives of significant assets are periodically reviewed and adjusted prospectively to reflect the Company's current estimates of the respective assets' expected utility. Repair and maintenance costs are expensed as incurred. Amortizable Intangible Assets Acquired Intangible Assets. The Company capitalizes purchased intangible assets such as software, websites and domains and amortizes them on a straight-line basis over their estimated useful life. Historically, the Company has assessed the useful lives of these acquired intangible assets to be between three and ten years. Capitalized Technology. The Company capitalizes certain costs related to internal-use software, primarily consisting of direct labor associated with creating the software. Software development projects generally include three stages: the preliminary project stage (all costs are expensed as incurred), the application development stage (certain costs are capitalized and certain costs are expensed as incurred) and the post-implementation/operation stage (all costs are expensed as incurred). Costs capitalized in the application development stage include costs of designing the application, coding, integrating the Company's and the university's networks and systems, and the testing of the software. Capitalization of costs requires judgment in determining when a project has reached the application development stage and the period over which the Company expects to benefit from the use of that software. Once the software is placed in service, these costs are amortized on the straight-line method over the estimated useful life of the software, which is generally three years. Capitalized Content Development. The Company develops content on a course-by-course basis in conjunction with the faculty for each university client program. The university clients and their faculty generally provide course outlines in the form of the curriculum, required textbooks, case studies and other reading materials, as well as presentations that are typically used in the on-campus setting. The Company is then responsible for, and incurs all of the expenses related to, the conversion of the materials provided by each university client into a format suitable for delivery through our online learning platform. The content development costs that qualify for capitalization are third-party direct costs, such as videography, editing and other services associated with creating digital content. Additionally, the Company capitalizes internal payroll and payroll-related costs incurred to create and produce videos and other digital content utilized in the university clients' programs for delivery via Online Campus. Capitalization ends when content has been fully developed by both the Company and the university client, at which time amortization of the capitalized content development costs begin. The capitalized costs are recorded on a course-by-course basis and included in capitalized content costs on the consolidated balance sheets. These costs are amortized using the straight-line method over the estimated useful life of the respective capitalized content program, which is generally five years. The estimated useful life corresponds with the planned curriculum refresh rate. This refresh rate is consistent with expected curriculum refresh rates as cited by program faculty members for similar on-campus programs. It is reasonably possible that developed content could be refreshed before the estimated useful lives are complete or be expensed immediately in the event that the development of a course is discontinued prior to launch. Evaluation of Long-Lived Assets The Company reviews long-lived assets, which consist of property and equipment, capitalized technology costs, capitalized content development costs and acquired finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. Recoverability of a long-lived asset is measured by a comparison of the carrying value of an asset or asset group to the future undiscounted net cash flows expected to be generated by that asset or asset group. If such assets are not recoverable, the impairment to be recognized is measured by the amount by which the carrying value of an asset exceeds the estimated fair value (discounted cash flow) of the asset or asset group. In order to assess the recoverability of the capitalized technology and content development costs, the costs are grouped by degree vertical, which is the lowest level of independent cash flows. The Company's impairment analysis is based upon cumulative results and forecasted performance. The actual results could vary from the Company's forecasts, especially in relation to recently launched programs. Non-Cash Long-Lived Asset Additions During the year ended December 31, 2017, the Company had capital asset additions of $62.3 million in property and equipment and capitalized technology and content development, of which $11.2 million consisted of non-cash capital expenditures, primarily related to landlord funded leasehold improvements. During the year ended December 31, 2016, the Company had capital asset additions of $30.8 million in property and equipment and capitalized technology and content development, of which $6.4 million consisted of non-cash capital expenditures, primarily related to landlord funded leasehold improvements. Goodwill Goodwill is the excess of purchase price over the fair value of identified net assets of the business acquired. The Company's goodwill balance was established in connection with the acquisition of GetSmarter in 2017. The Company will review goodwill at least annually, as of October 1, for possible impairment, beginning in 2018. Between annual tests, goodwill is reviewed for possible impairment if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value. The Company will test goodwill at the reporting unit level, which is an operating segment or one level below an operating segment. The Company initially will assess qualitative factors to determine if it is necessary to perform the two-step goodwill impairment review. The Company will review goodwill for impairment using the two-step process if it decides to bypass the qualitative assessment or determines that it is more likely than not that the fair value of a reporting unit is less than its carrying value based on a qualitative assessment. Upon the completion of the two-step process, the Company may be required to recognize an impairment based on the difference between the carrying value and the fair value of the goodwill recorded. Government Grants Government grants awarded to the Company in the form of forgivable loans are recorded as deferred government grant obligations within long-term liabilities on the consolidated balance sheets until all contingencies are resolved and the grant is determined to be realized. Income Taxes Income taxes are accounted for under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that are included in the financial statements. Under this method, the deferred tax assets and liabilities are determined based on the differences between the financial statement and tax bases of the assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on the deferred tax assets and liabilities is recognized in earnings in the period when the new rate is enacted. Deferred tax assets are subject to periodic recoverability assessments. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that more likely than not will be realized. The Company considers all positive and negative evidence relating to the realization of the deferred tax assets in assessing the need for a valuation allowance. The Company currently maintains a full valuation allowance against deferred tax assets in the U.S and certain entities in the foreign jurisdictions. The Company records a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. The Company accounts for uncertainty in income taxes using a two-step approach for evaluating tax positions. Step one, recognition, occurs when the Company concludes that a tax position, based solely on its technical merits, is more likely than not to be sustained upon examination. Step two, measurement, determines the amount of benefit that is more likely than not to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. De-recognition of a tax position that was previously recognized would occur if the Company subsequently determines that a tax position no longer meets the more likely than not threshold of being sustained. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the consolidated statements of operations and comprehensive loss. Revenue Recognition, Accounts Receivable and Allowance for Doubtful Accounts The Company recognizes revenue when all of the following conditions are met: (i) persuasive evidence of an arrangement exists, (ii) rendering of services is complete, (iii) fees are fixed or determinable and (iv) collection of fees is reasonably assured. Revenue for both of our segments is recognized ratably over the service period, which the Company defines as the first through the last day of the graduate program class or short course. The Company establishes a refund allowance, if necessary, for its share of tuition and fees ultimately uncollected either by its university clients within the Graduate Program Segment or by the Company within the Short Course Segment. Payments to university clients that are not for distinct goods or services are recognized as a reduction of revenue over the contractual term or the period to which they relate. The Graduate Program Segment derives revenue primarily from a contractually specified percentage of the amounts the Company's university clients receive from their students in the 2U-enabled graduate program for tuition and fees, less credit card fees and other specified charges that the Company has agreed to exclude in certain of our university client contracts. Most of our contracts with university clients within this segment have 10 to 15 year initial terms. The Short Course Segment derives revenue directly from students for the tuition and fees paid to enroll in and progress through our short courses. A contractually specified percentage of the gross proceeds from students is shared with the university clients, in the form of a royalty recognized within the Company's consolidated statements of operations and comprehensive loss as curriculum and teaching costs, for providing the content and certifying the course. Our university client contracts within this segment are typically shorter and less restrictive than our contracts within our Graduate Program Segment. The Company generally receives payments for revenue from graduate program university clients early in each academic term and from short course students, either in full upon registration of the course or in full before the end of the course based on a payment plan, prior to completion of the service period. The Company records these payments as deferred revenue until the services are delivered or until the obligations are otherwise met, at which time revenue is recognized. Deferred revenue as of a particular balance sheet date represents the excess of amounts billed or received as compared to amounts recognized in revenue in the consolidated statements of operations and comprehensive loss as of the end of the reporting period, and such amounts are reflected as a current liability on the Company's consolidated balance sheets. The Company generates substantially all of its revenue from multiple-deliverable contractual arrangements, and provide a combination of access to the platform of technology and technology-enabled services that support the complete lifecycle of a graduate program or short course, including attracting students, advising prospective students through the admissions application process, providing technical, success coaching and other support, facilitating accessibility to individuals with disabilities and in some cases, facilitating in-program field placements. The Company has determined that no individual deliverable has standalone value upon delivery and, therefore, the multiple deliverables within its arrangements do not qualify for treatment as separate units of accounting. Accordingly, the Company considers all deliverables to be a single unit of accounting and recognizes revenue from the entire arrangement over the term of the service period. The Company's accounts receivable are stated at net realizable value. The Company utilizes the allowance method to provide for doubtful accounts based on management's evaluation of the collectability of the amounts due. The estimate is based on historical collection experience and a review of the current status of accounts receivable. Historically, actual write-offs for uncollectible accounts have not significantly differed from estimates. As of December 31, 2017 and 2016, the allowance for doubtful accounts was $0.3 million and zero, respectively, and relates to amounts from the Short Course Segment. Marketing and Sales Costs The majority of the marketing and sales costs incurred by the Company are directly related to acquiring students for its university clients' programs, with lesser amounts related to the Company's own marketing and advertising efforts. For the years ended December 31, 2017, 2016 and 2015, costs related to the Company's own marketing and advertising efforts were not material. All such costs are expensed as incurred and reported in marketing and sales expense in the Company's consolidated statements of operations and comprehensive loss. As of December 31, 2017 and 2016, the Company had $11.7 million and $5.6 million, respectively, of accrued marketing costs included in accounts payable and accrued expenses on the consolidated balance sheets. Leases The Company leases all of its office facilities and enters into various other lease agreements in conducting its business. At the inception of each lease, the Company evaluates the lease agreement to determine whether the lease is an operating or capital lease. Additionally, many of the Company's lease agreements contain renewal options, tenant improvement allowances, rent holiday and/or rent escalation clauses. The Company defers tenant improvement allowances and amortizes such balances as a reduction of rent expense over the term of the lease. When rent holidays or rent escalations are included in a lease agreement, the Company records a deferred rent asset or liability in the consolidated financial statements, and records these items in rent expense evenly over the term of the lease. The Company is also required to make additional payments under operating lease terms for taxes, insurance and other operating expenses incurred during the operating lease period; such items are expensed as incurred. Rental deposits are included as other assets in the consolidated financial statements for lease agreements the require payments in advance or deposits held for security that are refundable, less any damages, at the end of the respective lease. Stock-Based Compensation The Company accounts for stock-based compensation awards based on the fair value of the award as of the grant date. For awards subject to service-based vesting conditions, the Company recognizes stock-based compensation expense on a straight-line basis over the awards' requisite service period. Effective April 1, 2017, expected volatility is based on the historical volatilities of the Company's common stock. Prior to January 1, 2017, the Company adjusted stock-based compensation expense for estimated forfeitures of stock-based awards. As described in the "Recent Accounting Pronouncements" section of this Note, beginning on January 1, 2017, the Company accounts for forfeitures (and the impact on stock-based compensation expense) as they occur. For awards subject to both performance and service-based vesting conditions, the Company recognizes stock-based compensation expense using an accelerated recognition method when it is probable that the performance condition will be achieved. Foreign Currency Translation For the portion of the Company's non-U.S. business where the local currency is the functional currency, operating results are translated into U.S. dollars using the average rate of exchange for the period, and assets and liabilities are converted at the closing rates on the period end date. Gains and losses on translation of these accounts are accumulated and reported as a separate component of stockholder's equity and comprehensive loss. For any transaction that is in a currency different from the entity's functional currency, the Company records a gain or loss based on the difference between the exchange rate at the transaction date and the exchange rate at the transaction settlement date (or rate at period end, if unsettled) as other income (expense), net in the consolidated statements of operations and comprehensive loss. Recent Accounting Pronouncements In January 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment , which eliminates step two from the goodwill impairment test and requires an entity to recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value, up to the amount of goodwill allocated to that reporting unit. The amendments in this ASU are effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company is evaluating the impact that this standard will have on its consolidated financial position or related disclosures. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business , which revises the definition of a business and provides new guidance in evaluating when a set of transferred assets and activities is a business. The amendments in this ASU are effective for fiscal years beginning after December 15, 2017, with early adoption permitted. The Company early adopted this ASU in the third quarter of 2017, in connection with the acquisition of GetSmarter. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash , a consensus of the FASB Emerging Issues Task Force. The ASU requires companies to explain the changes in the combined total of restricted and unrestricted cash balances in the statement of cash flows. The amendments in this ASU are effective for fiscal years beginning after December 15, 2017, with early adoption permitted. Adoption of the ASU is retrospective to each prior period presented. The Company early adopted this ASU in the second quarter of 2017. Adoption of this standard did not have a material impact on the presentation of prior periods. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments . The ASU addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice surrounding how certain transactions are classified in the statement of cash flows. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2017. The Company is currently evaluating the effect that this standard will have on its consolidated statements of cash flows and related disclosures. In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting . The ASU simplifies various aspects related to the accounting and presentation of share-based payments. The guidance also allows employers to withhold shares to satisfy minimum statutory withholding requirements up to the employees' maximum individual tax rate without causing the award to be classified as a liability. Additionally, the guidance stipulates that cash paid by an employer to a taxing authority when directly withholding shares for tax withholding purposes should be classified as a financing activity on the statement of cash flows, and allows companies to elect an accounting policy to either estimate the share-based award forfeitures (and expense) or account for forfeitures (and expense) as they occur. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016. The Company adopted this ASU on January 1, 2017. In connection with the adoption of this standard, the Company elected to no longer apply an estimated forfeiture rate and will instead account for forfeitures as they occur. Accordingly, the Company applied the modified retrospective adoption approach, which resulted in a $0.1 million cumulative-effect reduction to retained earnings with an offset to additional paid-in-capital. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) . The ASU introduces a model for lessees requiring most leases to be reported on the balance sheet. Lessor accounting remains substantially similar to current U.S. GAAP. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018. The Company is currently evaluating the effect that this ASU will have on its consolidated financial position and related disclosures, and believes that this standard may materially increase its other non-current assets and non-current liabilities on the consolidated balance sheets in order to record right-of-use assets and related liabilities for its existing operating leases. In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements— Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern . The ASU requires that an entity's management evaluate whether there are conditions or events that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued. The amendments in this ASU are effective for annual reporting periods ending after December 15, 2016. The Company adopted this ASU on January 1, 2017. Adoption of this standard did not have a material impact on the Company's financial reporting process. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) , which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In July 2015, the FASB deferred the mandatory effective date of this ASU by one year from January 1, 2017 to January 1, 2018. Early application is permitted, but not prior to the original effective date of January 1, 2017. Subsequently, the FASB has issued the following standards related to ASU No. 2014-09: ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations ; ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing ; ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients ; and ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers . The Company must adopt ASU No. 2016-08, ASU No. 2016-10, ASU No. 2016-12 and ASU No. 2016-20 with ASU No. 2014-09 (collectively, the "new revenue standard"). The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company has finalized its assessment of the new standard, and will adopt the new revenue standard effective January 1, 2018 using the modified retrospective method. As part of its assessment, the Company completed reviews of its contracts and evaluated its costs, particularly costs of obtaining contracts with its university clients and costs associated with content development. Certain of these contract and content costs will be capitalized under the new standard. However, the Company has concluded that, upon adoption, the new revenue standard will not have a material impact on the amount and timing of either its revenue or costs. |
Business Combination
Business Combination | 12 Months Ended |
Dec. 31, 2017 | |
Business Combination | |
Business Combination | 3. Business Combination On July 1, 2017, the Company, through a wholly owned subsidiary ("2U South Africa"), completed its acquisition of all of the outstanding equity interests of GetSmarter pursuant to a Share Sale Agreement, dated as of May 1, 2017 (the "Share Sale Agreement"), as amended by an addendum, dated as of June 29, 2017, for a net purchase price of $98.7 million in cash. In addition, 2U South Africa agreed to pay a potential earn-out payment of up to $20.0 million, subject to the achievement of certain financial milestones in calendar years 2017 and 2018. Under the terms of the Share Sale Agreement, the Company has issued restricted stock units for shares of its common stock, par value $0.001 per share, to certain employees and officers of GetSmarter. These awards are subject to the 2014 2U, Inc. Equity Incentive Plan and will vest over either a two- or four-year period. As a result of the transaction, GetSmarter became an indirect wholly owned subsidiary of the Company. The net assets and results of operations of GetSmarter are included in the Company's consolidated financial statements and in the newly established Short Course Segment as of July 1, 2017. The Company has completed its valuation of the assets acquired and liabilities assumed of GetSmarter. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the date of the acquisition: Estimated Average Purchase Price (in thousands) Cash and cash equivalents $ Current assets Property and equipment, net Amortizable intangible assets: Capitalized technology 3 Capitalized content development 4 University client relationships 9 Trade names and domain names 10 Goodwill Current liabilities ) Non-current liabilities ) ​ ​ ​ ​ ​ ​ ​ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2017, the completion of the purchase price allocation resulted primarily in a decrease of approximately $2 million in goodwill and an offsetting decrease in other current liabilities related to contingent consideration. While the overall value of acquired intangible assets did not materially change, their individual values were reallocated between the asset categories. The goodwill balance is primarily attributed to the assembled workforce, expanded market opportunities and cost and other operating synergies anticipated upon the integration of the operations of 2U and GetSmarter. The goodwill resulting from the acquisition is not expected to be tax deductible. The unaudited pro forma combined financial information below is presented for illustrative purposes and does not purport to represent what the results of operations would actually have been if the business combination occurred as of the dates indicated or what the results would be for any future periods. The following table presents the Company's unaudited pro forma combined revenue and pro forma combined net loss, for the years ended December 31, 2017 and 2016 as if the acquisition of GetSmarter had occurred on January 1, 2016: Year Ended 2017 2016 (in thousands) Pro forma revenue $ $ Pro forma net loss ) ) Pro forma net loss per share, basic and diluted $ ) $ ) |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2017 | |
Property and Equipment, Net | |
Property and Equipment, Net | 4. Property and Equipment, Net Property and equipment, net consisted of the following as of: December 31, December 31, (in thousands) Computer hardware $ $ Furniture and office equipment Leasehold improvements Leasehold improvements in process ​ ​ ​ ​ ​ ​ ​ ​ Total Accumulated depreciation and amortization ) ) ​ ​ ​ ​ ​ ​ ​ ​ Property and equipment, net $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation expense of property and equipment was $5.5 million, $1.7 million and $1.1 million for the years ended December 31, 2017, 2016 and 2015, respectively. |
Goodwill and Amortizable Intang
Goodwill and Amortizable Intangible Assets | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Amortizable Intangible Assets | |
Goodwill and Amortizable Intangible Assets | 5. Goodwill and Amortizable Intangible Assets As a result of the acquisition of GetSmarter, the Company recorded goodwill of $68.2 million within its Short Course Segment as of July 1, 2017. As of December 31, 2017, goodwill was $72.0 million. The difference between the date of acquisition and year end was $3.8 million, due to changes in foreign currency. Amortizable intangible assets consisted of the following as of: December 31, 2017 December 31, 2016 Estimated Gross Accumulated Net Gross Accumulated Net (in thousands) Capitalized technology 3 $ $ ) $ $ $ ) $ Capitalized content development 4 ) ) University client relationships 9 ) — — — Trade names and domain names 10 ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total amortizable intangible assets, net $ $ ) $ $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Included in the amounts presented above are $15.6 million and $8.7 million of in process capitalized technology and content development as of December 31, 2017 and December 31, 2016, respectively. The Company recorded amortization expense related to amortizable intangible assets of $14.0 million, $8.0 million and $6.1 million for the years ended December 31, 2017, 2016 and 2015, respectively. As of December 31, 2017, the estimated future amortization expense for amortizable intangible assets placed in service is as follows (in thousands): 2018 $ 2019 2020 2021 2022 Thereafter ​ ​ ​ ​ ​ Total $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ On January 19, 2018, the Company entered into an agreement to purchase a perpetual source code license and services of $14.5 million for the Learn.co platform from Flatiron School, Inc., a wholly owned subsidiary of WeWork Companies, Inc. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies | |
Commitments and Contingencies | 6. Commitments and Contingencies Legal Contingencies From time to time, the Company may become involved in legal proceedings or other contingencies in the ordinary course of its business. The Company is not presently involved in any legal proceeding or other contingency that, if determined adversely to it, would individually or in the aggregate have a material adverse effect on its business, operating results, financial condition or cash flows. Accordingly, the Company does not believe that there is a reasonable possibility that a material loss exceeding amounts already recognized may have been incurred as of the date of the balance sheets presented herein. Marketing and Sales Commitments Certain of the agreements entered into between the Company and its university clients require the Company to commit to meet certain staffing and spending investment thresholds related to marketing and sales activities. In addition, certain of the agreements require the Company to invest up to agreed upon levels in marketing the programs to achieve specified program performance. The Company believes it is currently in compliance with all such commitments. Future Minimum Payments to University Clients The Company is contractually obligated to make payments to certain of its university clients in exchange for contract extensions and various marketing and other rights. Currently, the future minimum payments to the Company's university clients in exchange for contract extensions and various marketing and other rights were as follows (in thousands): 2018 $ 2019 2020 2021 2022 Thereafter ​ ​ ​ ​ ​ Total future minimum payments to university clients $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Contingent Payments to University Clients The Company has entered into specific program agreements under which it would be obligated to make future minimum program payments to a university client in the event that certain program metrics, partially associated with programs not yet launched, are not achieved. Due to the dependency of these calculations on future program launches, the amounts of any associated contingent payments cannot be reasonably estimated at this time. As the Company cannot reasonably estimate the amounts of the contingent payments, the Company has excluded such payments from the table above. |
Operating Leases
Operating Leases | 12 Months Ended |
Dec. 31, 2017 | |
Operating Leases | |
Operating Leases | 7. Operating Leases In February 2017, the Company signed a lease for new office space in Brooklyn, New York, and began occupying the space in December 2017. The lease covers three floors totaling approximately 80,000 square feet, requires total future minimum lease payments of approximately $52.5 million and will expire approximately 12 years after the July 1, 2017 lease commencement date. Related to this lease, the Company could be eligible for certain state and local incentives that are dependent on construction build, employment levels, the Company's taxable income and other factors. The Company is in the process of applying for such eligibility, but is not currently able to assess the potential benefit these incentives may yield over the lease term. The Company leases office facilities under non-cancelable operating leases in Maryland, New York, California, Colorado, North Carolina, Virginia, Hong Kong, South Africa and the United Kingdom. The Company also leases office equipment under non-cancelable leases. As of December 31, 2017, the future minimum lease payments were as follows (in thousands): 2018 $ 2019 2020 2021 2022 Thereafter ​ ​ ​ ​ ​ Total future minimum lease payments $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The future minimum lease payments due under non-cancelable operating lease arrangements contain fixed rent increases over the term of the lease. Rent expense on these operating leases is recognized over the term of the lease on a straight-line basis. The excess of rent expense over actual lease payments is reported in non-current liabilities in the accompanying consolidated balance sheets. The deferred rent liability related to these leases totaled $6.5 million and $2.5 million as of December 31, 2017 and 2016, respectively. The Company does not have any subleases as of December 31, 2017. Total rent expense from non-cancelable operating lease agreements (net of sublease income of zero, $0.3 million and $0.3 million) was $8.5 million, $5.8 million and $3.5 million for the years ended December 31, 2017, 2016 and 2015, respectively. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2017 | |
Debt | |
Debt | 8. Debt Lines of Credit On December 31, 2013, the Company entered into a credit agreement with Comerica for a revolving line of credit with an aggregate commitment not to exceed $37.0 million. On December 31, 2015, the Company amended this credit agreement to reduce the aggregate amount it may borrow to $25.0 million. In June 2017, the Company and Comerica amended this credit agreement pursuant to which, among other things, Comerica consented to the Company's acquisition of GetSmarter and the Company's formation of certain subsidiaries in connection therewith. On January 31, 2018, the Company amended this credit agreement to extend the maturity date through March 31, 2018. No amounts were outstanding under this credit agreement as of December 31, 2017 or 2016. The Company intends to extend this agreement under comparable terms, prior to expiration. Under this revolving line of credit, the Company has the option of borrowing funds subject to (i) a base rate, which is equal to 1.5% plus the greater of Comerica's prime rate, the federal funds rate plus 1% or the 30-day LIBOR plus 1%, or (ii) LIBOR plus 2.5%. For amounts borrowed under the base rate, the Company may make interest-only payments quarterly, and may prepay such amounts with no penalty. For amounts borrowed under LIBOR, the Company makes interest-only payments in periods of one, two and three months and will be subject to a prepayment penalty if such borrowed amounts are repaid before the end of the interest period. Borrowings under the line of credit are collateralized by substantially all of the Company's assets. The availability of borrowings under this credit line is subject to compliance with reporting and financial covenants, including, among other things, that the Company achieves specified minimum three-month trailing revenue levels during the term of the agreement and specified minimum six-month trailing profitability levels for some university client programs, measured quarterly. In addition, the Company is required to maintain a minimum adjusted quick ratio, which measures short-term liquidity, of at least 1.10 to 1.00. As of December 31, 2017 and 2016, the Company's adjusted quick ratio was 5.44 and 5.43, respectively. The covenants under the line of credit also place limitations on the Company's ability to incur additional indebtedness or to prepay permitted indebtedness, grant liens on or security interests in its assets, carry out mergers and acquisitions, dispose of assets, declare, make or pay dividends, make capital expenditures in excess of specified amounts, make investments, loans or advances, enter into transactions with affiliates, amend or modify the terms of material contracts, or change its fiscal year. If the Company is not in compliance with the covenants under the line of credit, after any opportunity to cure such non-compliance, or it otherwise experiences an event of default under the line of credit. The Company is currently in compliance with all such covenants. Certain of the Company's operating lease agreements entered into prior to December 31, 2017 require security deposits in the form of cash or an unconditional, irrevocable letter of credit. As of December 31, 2017, the Company has entered into standby letters of credit totaling $11.5 million as security deposits for the applicable leased facilities. Additionally, in June 2017, the Company entered into standby letters of credit totaling $3.5 million in connection with two government grants, as described later in this Note. These letters of credit reduced the aggregate amount the Company may borrow under its revolving line of credit to $10.0 million. The Company's Short Course Segment had $1.9 million of revolving debt facilities that matured on December 31, 2017. These facilities were subsequently extended with a borrowing base of $1.3 million and will mature on March 31, 2018. As of December 31, 2017, there were no amounts outstanding under these facilities and the interest rate was 10.25%. Government Grants On June 22, 2017, the Company executed a conditional loan agreement and received financing from Prince George's County, Maryland that provides for a grant in the form of a forgivable loan of $1.5 million. The financing was secured by a letter of credit pursuant to the Company's line of credit with Comerica. The conditional loan obligation is recorded as deferred government grant obligations on the consolidated balance sheets. The proceeds from this loan are to be used in connection with the relocation of 2U's headquarters, leasehold improvements thereto and other purposes. The loan has a maturity date of June 22, 2027, and bears interest at a rate of 3% per annum. If 2U does not employ at least 650 employees at its Lanham headquarters at any time during the term of the loan period or otherwise defaults on the loan, the entire principal balance, plus accrued interest, will become due and payable. If 2U does not employ at least 1,300 employees at its Lanham headquarters by January 1, 2020, the Company will be required to repay a prorated portion of the loan ($2,252 per employee, for every employee below 1,300), plus interest. During the year ended December 31, 2017, the Company did not incur a material amount of interest expense on this forgivable loan. On June 27, 2017, 2U Harkins Road LLC (a wholly owned subsidiary of the Company) executed a loan agreement and received financing from the Department of Commerce (a principal department of the State of Maryland) that provides for a grant in the form of a forgivable loan of $2.0 million. The financing was secured by a letter of credit pursuant to the Company's line of credit with Comerica. The conditional loan obligation is recorded as "Deferred government grant obligations" on the consolidated balance sheets. The proceeds from this loan are to be used in connection with the relocation of 2U's headquarters, leasehold improvements thereto and other purposes. The loan has a maturity date of December 31, 2026, and bears interest at a rate of 3% per annum. If 2U does not employ at least 650 employees at its Lanham headquarters at any time during the term of the loan period or otherwise defaults on the loan, the entire principal balance, plus accrued interest, will become due and payable. If 2U does not employ at least 1,600 employees at its Lanham headquarters by December 31, 2020, and at each December 31 thereafter through 2026, the Company will be required to repay a prorated portion of the loan ($2,105 per employee, for every employee below 1,600), plus interest. During the year ended December 31, 2017, the Company did not incur a material amount of interest expense on this forgivable loan. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes | |
Income Taxes | 9. Income Taxes The following table presents the components of loss before income taxes: Year Ended December 31, 2017 2016 2015 (in thousands) Loss before income taxes: United States $ ) $ ) $ ) Foreign ) — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ ) $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, 2017, the Company had a tax benefit of $1.3 million, which is solely related to a deferred tax benefit. For the years ended December 31, 2016 and 2015, the Company did not have a current or deferred tax provision or benefit. A reconciliation between the Company's statutory federal income tax rate and the effective tax rate is presented below: Year ended December 31, 2017 2016 2015 U.S. statutory federal income tax rate % % % Increase (decrease) resulting from: U.S. state income taxes, net of federal benefits Foreign tax rate differential ) — — Non-deductible expenses ) ) ) Stock-based compensation ) ) Change in valuation allowance ) ) Change in tax rate ) — — Other ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Effective tax rate % % % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The significant components of the Company's deferred tax assets and liabilities are as follows: As of December 31, 2017 2016 (in thousands) Deferred tax assets: Accrued expenses and other $ $ Accrued compensation and related benefits Rebate reserve Deferred rent Stock-based compensation Deferred income — Foreign net operating loss carryforwards — U.S net operating loss carryforwards Valuation allowance ) ) ​ ​ ​ ​ ​ ​ ​ ​ Total deferred tax assets $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deferred tax liabilities: Prepaid expenses and other $ ) $ ) Capitalized content development costs ) ) Capitalized software development costs ) ) Property and equipment ) ) Intangibles ) — ​ ​ ​ ​ ​ ​ ​ ​ Total deferred tax liabilities $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ Net deferred tax liabilities $ ) $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deferred tax valuation allowances and changes in deferred tax valuation allowances are as follows: Balance at Additions Deductions Balance at End (in thousands) Income tax valuation allowance: Year ended December 31, 2017 $ $ $ ) $ Year ended December 31, 2016 — Year ended December 31, 2015 — At December 31, 2017, the Company had a U.S. net operating loss ("NOL") carryforward of approximately $253.2 million, which expires between 2029 and 2037. The gross amount of the state NOL carryforwards is equal to or less than the federal NOL carryforwards and expires over various periods based on individual state tax laws. The Company also had an NOL carryforward of $6.7 million in its foreign jurisdictions which do not expire. A full valuation allowance has been established to offset its net deferred tax assets in the U.S. and certain foreign jurisdictions as the Company has not generated taxable income since inception and does not have sufficient deferred tax liabilities to recover the deferred tax assets in these jurisdictions. The total increase in the valuation allowance was $8.8 million for the year ended December 31, 2017. The utilization of the NOL carryforwards to reduce future income taxes will depend on the Company's ability to generate sufficient taxable income prior to the expiration of the NOL carryforwards. Under the provisions of Internal Revenue Code Section 382, certain substantial changes in the Company's ownership may result in a limitation on the amount of U.S. net operating loss carryforwards that could be utilized annually to offset future taxable income and taxes payable. The Company does not expect such limitation, if any, to impact the use of the net operating losses prior to their expiration. As of December 31, 2017 and 2016, the Company has not recognized any amounts for uncertain tax positions. The Company has analyzed its filing positions in all significant federal, state and foreign jurisdictions where it is required to file income tax returns, as well as open tax years in these jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local tax examinations by tax authorities for the years prior to 2014, though the NOL carryforwards can be adjusted upon audit and could impact taxes owed in open tax years. No income tax returns are currently under examination by the taxing authorities. On December 22, 2017, the Tax Act and Jobs Act of 2017 (the "Tax Act") was enacted into law and the new legislation contains certain key tax provisions that affected the Company. The Tax Act affects the Company by (i) reducing the U.S. tax rate to 21% effective January 1, 2018, (ii) impacting the values of the Company's deferred assets and liabilities, (iii) changing the Company's ability to utilize future net operating losses and (iv) requiring a one-time tax on any of the Company's unrepatriated foreign earnings and profits ("E&P") in 2017. Pursuant to U.S. GAAP, changes in tax rates and tax laws are accounted for in the period of enactment, and the resulting effects are included as components of the income tax provision related to continuing operations within the same period. Therefore, the following changes in the tax laws have been accounted for in 2017. The Company's deferred tax assets and liabilities and offsetting valuation allowance have been remeasured at the new enacted tax rate as of December 31, 2017. The amount of U.S. net operating losses that the Company has available and the Company's ability to utilize them to reduce future taxable income is not impacted by the Tax Act. However, the Tax Act may impact the amount and ability to utilize net operating losses generated by the Company in the future. Additionally, the Company believes that any undistributed amounts of foreign earnings and profits potentially included in taxable income would be offset by net operating losses; therefore, no transition tax is due by the Company in 2017. The Company is required to recognize the effect of the tax law changes in the period of enactment, such as re-measuring its U.S. deferred tax assets and liabilities as well as reassessing the net realizability of deferred tax assets and liabilities. In December 2017, the SEC issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act ("SAB 118"), which allows entities to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. The Company considers the E&P and other items to be provisional and expects to complete its analysis within the measurement period in accordance with SAB 118, although it does not expect there to be any adjustment to the income tax benefit (expense) on the Company's consolidated statements of operations and comprehensive loss during the re-measurement period. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2017 | |
Stockholders' Equity | |
Stockholders' Equity | 10. Stockholders' Equity On September 30, 2015, the Company sold 3,625,000 shares of its common stock to the public, including 525,000 shares sold pursuant to the underwriters' over-allotment option. The Company received net proceeds of $117.1 million, which the Company intends to use for general corporate purposes, including expenditures for marketing, sales, technology and content development in connection with new program launches and growing existing programs. On September 11, 2017, the Company sold 4,047,500 shares of its common stock to the public, including 547,500 shares sold pursuant to the underwriters' over-allotment option. The Company received net proceeds of $189.5 million, which the Company intends to use for general corporate purposes, including expenditures for graduate program and short course marketing, technology and content development, in connection with new graduate program and short course launches and growing existing graduate programs and short courses. As of December 31, 2017, the Company was authorized to issue 205,000,000 total shares of capital stock, consisting of 200,000,000 shares of common stock and 5,000,000 shares of preferred stock. At December 31, 2017, the Company had reserved a total of 11,388,192 of its authorized shares of common stock for future issuance as follows: Outstanding stock options Possible future issuance under 2014 Equity Incentive Plan Outstanding restricted stock units Available for future issuance under employee stock purchase plan ​ ​ ​ ​ ​ Total shares of common stock reserved for future issuance ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2017 | |
Stock-Based Compensation | |
Stock-Based Compensation | 11. Stock-Based Compensation The Company provides equity-based compensation awards to employees, independent contractors and directors as an effective means for attracting, retaining and motivating such individuals. The Company maintains two share-based compensation plans: the 2014 Equity Incentive Plan (the "2014 Plan") and the 2008 Stock Incentive Plan (the "2008 Plan"). Upon the effective date of the 2014 Plan in January 2014, the Company ceased using the 2008 Plan to grant new equity awards, and began using the 2014 Plan for grants of new equity awards. 2014 Plan In February 2014, the Company's stockholders approved the 2014 Plan. The 2014 Plan provides for the grant of incentive stock options to the Company's employees and its parent and subsidiary corporations' employees, and for the grant of nonstatutory stock options, restricted stock awards, restricted stock unit awards, stock appreciation rights, performance stock awards and other forms of stock compensation to the Company's employees, consultants and directors. The 2014 Plan also provides for the grant of performance-based cash awards to the Company's employees, consultants and directors. A total of 2,800,000 shares of the Company's common stock were initially reserved for issuance pursuant to the 2014 Plan. In addition, the shares reserved for issuance under the 2014 Plan include (a) those shares reserved but unissued under the 2008 Plan, and (b) shares returned to the 2008 Plan as the result of expiration or termination of awards (provided that the maximum number of shares that may be added to the 2014 Plan pursuant to (a) and (b) is 5,943,348 shares). The number of shares of the Company's common stock that may be issued under the 2014 Plan will automatically increase on January 1st of each year, for a period of ten years, from January 1, 2015 continuing through January 1, 2024, by 5% of the total number of shares of the Company's common stock outstanding on December 31st of the preceding calendar year, or a lesser number of shares as may be determined by the Company's board of directors. The shares available for issuance increased by 2,625,292 and 2,357,579 on January 1, 2018 and 2017, respectively, pursuant to the automatic share reserve increase provision under the 2014 Plan. In addition, shares subject to outstanding stock awards granted under the 2008 Plan and 2014 Plan that (i) expire or terminate for any reason prior to exercise or settlement; (ii) are forfeited because of the failure to meet a contingency or condition required to vest such shares or otherwise return to the Company; or (iii) are reacquired, withheld (or not issued) to satisfy a tax withholding obligation in connection with an award or to satisfy the purchase price or exercise price of a stock award, return to the 2014 Plan's share reserve and become available for future grant under the 2014 Plan, up to the maximum number of shares of 5,943,348. As of December 31, 2017, the Company had 4,415,593 shares reserved for issuance under the 2014 Plan. Further, as of December 31, 2017, under the 2014 Plan, options to purchase 2,412,307 shares of the Company's common stock were outstanding at a weighted-average exercise price of $24.77 per share and 1,413,423 restricted stock units were outstanding. The compensation committee of the Company's board of directors, acting under authority delegated from the board of directors, granted on January 1, 2018, option awards to employees to purchase an aggregate of 8,731 shares of common stock at an exercise price of $64.51, restricted stock unit awards for an aggregate of 7,609 shares of common stock and performance stock awards for an aggregate of 56,575 shares of common stock, in each case under the 2014 Plan. 2008 Plan In October 2008, the Company's stockholders approved the Company's 2008 Plan. The 2008 Plan was most recently amended on May 8, 2013. The 2008 Plan provided for the grant of incentive stock options to the Company's employees and the employees of the Company's subsidiaries, and for the grant of nonstatutory stock options, restricted stock awards and deferred stock awards to the Company's employees, directors and consultants. Upon the effective date of the 2014 Plan, the Company ceased using the 2008 Plan to grant new equity awards, and began using the 2014 Plan for grants of new equity awards. Accordingly, as of January 30, 2014, no shares were available for future grant under the 2008 Plan. However, the 2008 Plan will continue to govern the terms and conditions of outstanding awards granted thereunder. As of December 31, 2017, options to purchase 2,146,864 shares of the Company's common stock were outstanding under the 2008 Plan at a weighted-average exercise price of $4.22 per share. Stock-Based Compensation Expense Stock-based compensation expense related to stock-based awards is included in the following line items in the accompanying consolidated statements of operations and comprehensive loss: Year Ended December 31, 2017 2016 2015 (in thousands) Curriculum and teaching $ $ — $ — Servicing and support Technology and content development Marketing and sales General and administrative ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total stock-based compensation expense $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Prior to January 1, 2017, the Company adjusted stock-based compensation expense for estimated forfeitures of stock-based awards. As described in the "Recent Accounting Pronouncements" section of Note 2, beginning on January 1, 2017, the Company accounts for forfeitures (and the impact on stock-based compensation expense) as they occur. Stock Options The terms of stock option grants, including the exercise price per share and vesting periods, are determined by the Company's board of directors or the compensation committee thereof. Stock options are granted at exercise prices of not less than the estimated fair market value of the Company's common stock at the date of grant. Stock options are generally subject to service-based vesting conditions and vest at various times from the date of the grant, with most options vesting in tranches, generally over a period of four years. Stock options granted under the 2014 Plan and the 2008 Plan are subject to service-based vesting conditions, and generally expire ten years from the grant date. The Company values stock options using the Black-Scholes-Merton option pricing model, which requires the input of subjective assumptions, including the risk-free interest rate, expected life of the option, expected stock price volatility and dividend yield. The risk-free interest rate assumption is based upon observed interest rates for constant maturity U.S. Treasury securities consistent with the expected term of the Company's employee stock options. The expected life represents the period of time the stock options are expected to be outstanding and is based on the "simplified method." Under the "simplified method," the expected life of an option is presumed to be the mid-point between the vesting date and the end of the contractual term. The Company used the "simplified method" due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the stock options. Expected volatility is based on the historical volatility of the Company's common stock over the estimated expected life of the stock options. The Company assumed no dividend yield because dividends are not expected to be paid in the near future, which is consistent with the Company's history of not paying dividends. The following table summarizes the assumptions used for estimating the fair value of the stock options granted for the periods presented. Year Ended December 31, 2017 2016 2015 Risk-free interest rate 2.0% - 2.1% 1.1% - 1.9% 1.5% - 1.9% Expected term (years) 6.00 - 6.08 5.43 - 6.50 5.56 - 6.08 Expected volatility 46% - 49% 50% 50% Dividend yield 0% 0% 0% The following is a summary of the stock option activity for the year ended December 31, 2017: Number of Weighted-Average Weighted-Average Aggregate Outstanding balance at December 31, 2016 $ $ Granted Exercised ) Forfeited ) Expired ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outstanding balance at December 31, 2017 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exercisable at December 31, 2017 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Vested and expected to vest at December 31, 2017 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The weighted-average grant date fair value of the Company's stock options granted during the years ended December 31, 2017, 2016 and 2015 was $19.65, $11.41 and $12.54 per share, respectively. The total unrecognized compensation cost related to the unvested options as of December 31, 2017 was $15.6 million and will be recognized over a weighted-average period of approximately 2.4 years. The aggregate intrinsic value of the options exercised during the years ended December 31, 2017, 2016 and 2015 was $24.9 million, $24.9 million and $25.8 million, respectively. Restricted Stock Units Throughout 2017 and 2016, the Company granted restricted stock units under the 2014 Plan to the Company's directors and certain of the Company's employees. The terms of the restricted stock unit grants under the 2014 Plan, including the vesting periods, are determined by the Company's board of directors or the compensation committee thereof. Restricted stock units are generally subject to service-based vesting conditions and vest at various times from the date of the grant, with most restricted stock units vesting in equal annual tranches, generally over a period of four years. The following is a summary of restricted stock unit activity: Number of Weighted-Average Outstanding balance at December 31, 2016 $ Granted Vested ) Forfeited ) ​ ​ ​ ​ ​ ​ ​ ​ Outstanding balance at December 31, 2017 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The total compensation cost related to the nonvested restricted stock units not yet recognized as of December 31, 2017 was $31.5 million and will be recognized over a weighted-average period of approximately 2.1 years. Employee Stock Purchase Plan On June 5, 2017, the Company's stockholders voted upon and approved the Company's 2017 Employee Stock Purchase Plan (the "ESPP"). The ESPP provides for (i) multiple offering periods each year and (ii) that the purchase price for shares of the Company's common stock purchased under the ESPP will not be less than 85% of the fair market value of the Company's common stock on the purchase date. Notwithstanding the foregoing, the Compensation Committee of the Company's Board of Directors may exercise its discretion, subject to certain conditions, to make changes to certain aspects of the ESPP including, but not limited to, the length of the offering periods and that the purchase price will be 85% of the lesser of the fair market value of 2U's common stock on the purchase date or the fair market value of 2U's common stock on the first day of the offering period. The first offering period begins on January 1, 2018, and will end on June 30, 2018. Eligible employees will be able to select a rate of payroll deduction between 1% and 15% of their salary or wage compensation received from the Company as in effect at the start of the offering period, subject to a maximum payroll deduction per calendar year of $25,000. The ESPP is intended to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code. A maximum of 1,000,000 shares of 2U's common stock may be issued under the ESPP, subject to adjustments for certain capital transactions. |
Net Loss per Share
Net Loss per Share | 12 Months Ended |
Dec. 31, 2017 | |
Net Loss per Share | |
Net Loss per Share | 12. Net Loss per Share Diluted net loss per share is the same as basic net loss per share for all periods presented because the effects of potentially dilutive items were anti-dilutive, given the Company's net loss. The following securities have been excluded from the calculation of weighted-average shares of common stock outstanding because the effect is anti-dilutive for the years ended December 31, 2017, 2016 and 2015: Year Ended December 31, 2017 2016 2015 Stock options Restricted stock units Basic and diluted net loss per share is calculated as follows: Year Ended December 31, 2017 2016 2015 Numerator (in thousands): Net loss $ ) $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Denominator: Weighted-average shares of common stock outstanding, basic and diluted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss per share, basic and diluted $ ) $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Segment and Geographic Informat
Segment and Geographic Information | 12 Months Ended |
Dec. 31, 2017 | |
Segment and Geographic Information | |
Segment and Geographic Information | 13. Segment and Geographic Information As a result of the acquisition of GetSmarter on July 1, 2017, the Company's operations consist of two operating segments and two reportable segments: the Graduate Program Segment and the Short Course Segment. The Company's Graduate Program Segment provides services to well-recognized nonprofit colleges and universities primarily in the United States to enable the online delivery of graduate programs. The Company's Short Course Segment provides premium online short courses to working professionals. The reportable segments represent businesses for which separate financial information is utilized by the chief operating decision maker for the purpose of allocating resources and evaluating performance. During the year ended December 31, 2017, four university clients in the Graduate Program Segment each accounted for 10% or more of the Company's consolidated revenue, as follows: $77.6 million, $48.2 million, $30.1 million and $28.3 million, which equals 27%, 17%, 11% and 10% of the Company's consolidated revenue, respectively. During the year ended December 31, 2016, three university clients in the Graduate Program Segment each accounted for 10% or more of the Company's consolidated revenue, as follows: $71.0 million, $36.7 million and $22.1 million, which equals 35%, 18% and 11% of the Company's consolidated revenue, respectively. As of December 31, 2017, two university clients in the Graduate Program Segment each accounted for 10% or more of the Company's consolidated accounts receivable balance, as follows: $9.4 million and $2.0 million, which equals 67% and 14% of the Company's consolidated accounts receivable, respectively. As of December 31, 2016, two university clients in the Graduate Program Segment each accounted for 10% or more of the Company's consolidated accounts receivable balance, as follows: $5.8 million and $1.4 million, which equals 74% and 17% of the Company's consolidated accounts receivable, respectively. For the Company's Short Course Segment, revenue and accounts receivable are derived from individual students, rather than directly from university clients. For the year ended December 31, 2017, revenue associated with the Company's three largest university clients in this segment accounted for approximately 82% of the segment's revenue, which was less than 10% of the Company's consolidated revenue on a combined basis. As of December 31, 2017, none of the student accounts receivable balances within this segment accounted for more than 10% of the Company's consolidated accounts receivable. Segment Performance The following table summarizes financial information regarding each reportable segment's results of operations for the periods presented: Year Ended December 31, 2017 2016 2015 (dollars in thousands) Revenue* Graduate program segment $ $ $ Short course segment — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total revenue $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment profitability** Graduate program segment $ $ $ ) Short course segment ) — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total segment profitability $ $ $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment profitability margin*** Graduate program segment % % )% Short course segment )% — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total segment profitability margin % % )% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ * The Company did not have any material intersegment revenues for any periods presented. ** The Company evaluates segment profitability as net income or net loss, as applicable, before net interest income (expense), taxes, depreciation and amortization, foreign currency gains or losses, acquisition-related gains or losses and stock-based compensation expense. Some or all of these items may not be applicable in any given reporting period. *** The Company defines segment profitability margin as segment profitability as a percentage of segment revenue The following table reconciles net loss to total segment profitability: Year Ended December 31, 2017 2016 2015 (in thousands) Net loss $ ) $ ) $ ) Adjustments: Interest income ) ) ) Interest expense Foreign currency loss — — Depreciation and amortization expense Income tax benefit ) — — Stock-based compensation expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total adjustments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total segment profitability $ $ $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The Company's total assets by segment are as follows: December 31, 2017 December 31, 2016 (in thousands) Total assets Graduate program segment $ $ Short course segment — ​ ​ ​ ​ ​ ​ ​ ​ Total assets $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Geographical Information The Company's non-U.S. revenue for the year ended December 31, 2017, determined based upon the university client's functional currency, was $10.0 million, entirely from the Short Course Segment's operations outside of the U.S. The Company did not have non-U.S. revenue for the years ended December 31, 2016 and 2015. The Company's long-lived assets in non-U.S. countries as of December 31, 2017 totaled approximately $0.7 million. The Company did not have non-U.S. long-lived assets as of December 31, 2016. |
Retirement Plan
Retirement Plan | 12 Months Ended |
Dec. 31, 2017 | |
Retirement Plan | |
Retirement Plan | 14. Retirement Plan The Company has established a 401(k) plan for eligible employees to contribute up to 100% of their compensation, limited by the IRS-imposed maximum contribution amount. The Company matches 33% of each employee's contribution up to 6% of the employee's salary deferral. For the years ended December 31, 2017, 2016 and 2015, the Company made employer contributions of $1.3 million, $1.1 million and $0.8 million, respectively. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions | |
Related Party Transactions | 15. Related Party Transactions During the years ended December 31, 2016 and 2015, the Company subleased office space to an entity that was, upon execution of the sublease in 2011, a greater than 5% stockholder. The lease required the subtenant to reimburse the Company for the allocated cost of the office space subleased. The Company had no transactions with this related party during the year ended December 31, 2017, other than the repayment of a $0.1 million security deposit in connection with the expiration of the sublease in December 2016. For the years ended December 31, 2016 and 2015, the Company recorded $0.3 million and $0.3 million, respectively, as rental income from this related entity. The Company utilized the marketing and event planning services of a company that is partially owned by one of the Company's former executives. The Company had no transactions with this related party during the year ended December 31, 2017. The Company recorded $1.4 million and $1.7 million for the expenses incurred related to the services provided by this related party for the years ended December 31, 2016 and 2015, respectively. No material amounts were due to the related party or recorded in accounts payable on the consolidated balance sheets as of December 31, 2017 and 2016. |
Quarterly Financial Information
Quarterly Financial Information (Unaudited) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information (Unaudited) | |
Quarterly Financial Information (Unaudited) | 16. Quarterly Financial Information (Unaudited) The following tables set forth certain unaudited quarterly financial data for 2017 and 2016. This unaudited information has been prepared on the same basis as the audited information included elsewhere in this Annual Report and includes all adjustments necessary to present fairly the information set forth therein. The operating results are not necessarily indicative of results for any future period. Three Months Ended March 31, June 30, September 30, December 31, (in thousands, except share and per share amounts) Revenue $ $ $ $ Costs and expenses Curriculum and teaching — — Servicing and support Technology and content development Marketing and sales General and administrative ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total costs and expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income (loss) from operations ) ) ) Interest income Interest expense — ) ) ) Other income (expense), net — ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income (loss) before income taxes ) ) ) Income tax benefit (expense) — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) $ ) $ ) $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) per share, basic $ ) $ ) $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) per share, diluted $ ) $ ) $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average shares used in computing net income (loss) per share, basic ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average shares used in computing net income (loss) per share, diluted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, June 30, September 30, December 31, (in thousands, except share and per share amounts) Revenue $ $ $ $ Costs and expenses Servicing and support Technology and content development Marketing and sales General and administrative ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total costs and expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loss from operations ) ) ) ) Interest income Interest expense ) ) — — Loss before income taxes ) ) ) ) Income tax benefit (expense) — — — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss $ ) $ ) $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss per share, basic and diluted $ ) $ ) $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average shares used in computing net loss per share, basic and diluted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Significant Accounting Polici24
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Significant Accounting Policies | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries and have been prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP") and include the assets, liabilities, results of operations and cash flows of the Company. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Reclassifications | Reclassifications The Company has reclassified capitalized technology and content development, as well as other amortizable intangible assets, into amortizable intangible assets, net on the consolidated balance sheets and consolidated statements of cash flows. In addition, certain other prior period amounts in the consolidated balance sheets and consolidated statements of cash flows have been reclassified to conform to the current period's presentation. These reclassifications had no impact on total assets, total liabilities, cash flows from operating activities or cash flows from investing activities previously reported for any periods presented. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts reported herein. The Company bases its estimates and assumptions on historical experience and on various other factors that it believes to be reasonable under the circumstances. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in those estimates. The Company evaluates its estimates and assumptions on an ongoing basis. |
Business Combinations | Business Combinations The purchase price of an acquisition is allocated to the assets acquired, including intangible assets, and liabilities assumed, based on their respective fair values at the acquisition date. Acquisition-related costs are expensed as incurred. The excess of the cost of an acquired entity of the net of the amounts assigned to the assets acquired and liabilities assumed is recognized as goodwill. The net assets and results of operations of an acquired entity are included in the Company's consolidated financial statements from the acquisition date. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. All of the Company's cash is held at financial institutions that management believes to be of high credit quality. The Company's bank accounts exceed federally insured limits at times. The Company has not experienced any losses on cash to date. To manage accounts receivable risk, the Company maintains an allowance for doubtful accounts, if needed. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of bank checking accounts, money market accounts, investments in certificates of deposit that mature in less than three months and highly liquid marketable securities with maturities at the time of purchase of three months or less. |
Fair Value Measurements | Fair Value Measurements The carrying amounts of certain assets and liabilities, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and other current liabilities, approximate their respective fair values due to their short-term nature. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on the Company's principal or, in the absence of a principal, most advantageous, market for the specific asset or liability. U.S. GAAP provides for a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The fair value hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs when determining fair value. The three tiers are defined as follows: • Level 1 —Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; • Level 2 —Observable inputs, other than quoted prices in active markets, that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and • Level 3 —Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. |
Advances to University Clients | Advances to University Clients The Company is contractually obligated to pay advances to certain of its university clients in order to fund start-up expenses of the program on behalf of the university client. Advances to university clients are stated at realizable value. Advances are repaid to the Company on terms as required in the respective agreements. The Company recognizes imputed interest income on these advance payments when there is a significant amount of imputed interest. |
Property and Equipment | Property and Equipment Property and equipment is stated at cost less accumulated depreciation and amortization. Expenditures for major additions, construction and improvements are capitalized. Depreciation and amortization is expensed using the straight-line method over the estimated useful lives of the related assets, which range from three to five years for computer hardware and five to seven years for furniture and office equipment. Leasehold improvements are depreciated on a straight-line basis over the lesser of the remaining term of the leased facility or the estimated useful life of the improvement, which generally ranges from four to approximately 11 years. Useful lives of significant assets are periodically reviewed and adjusted prospectively to reflect the Company's current estimates of the respective assets' expected utility. Repair and maintenance costs are expensed as incurred. |
Amortizable Intangible Assets | Amortizable Intangible Assets Acquired Intangible Assets. The Company capitalizes purchased intangible assets such as software, websites and domains and amortizes them on a straight-line basis over their estimated useful life. Historically, the Company has assessed the useful lives of these acquired intangible assets to be between three and ten years. Capitalized Technology. The Company capitalizes certain costs related to internal-use software, primarily consisting of direct labor associated with creating the software. Software development projects generally include three stages: the preliminary project stage (all costs are expensed as incurred), the application development stage (certain costs are capitalized and certain costs are expensed as incurred) and the post-implementation/operation stage (all costs are expensed as incurred). Costs capitalized in the application development stage include costs of designing the application, coding, integrating the Company's and the university's networks and systems, and the testing of the software. Capitalization of costs requires judgment in determining when a project has reached the application development stage and the period over which the Company expects to benefit from the use of that software. Once the software is placed in service, these costs are amortized on the straight-line method over the estimated useful life of the software, which is generally three years. Capitalized Content Development. The Company develops content on a course-by-course basis in conjunction with the faculty for each university client program. The university clients and their faculty generally provide course outlines in the form of the curriculum, required textbooks, case studies and other reading materials, as well as presentations that are typically used in the on-campus setting. The Company is then responsible for, and incurs all of the expenses related to, the conversion of the materials provided by each university client into a format suitable for delivery through our online learning platform. The content development costs that qualify for capitalization are third-party direct costs, such as videography, editing and other services associated with creating digital content. Additionally, the Company capitalizes internal payroll and payroll-related costs incurred to create and produce videos and other digital content utilized in the university clients' programs for delivery via Online Campus. Capitalization ends when content has been fully developed by both the Company and the university client, at which time amortization of the capitalized content development costs begin. The capitalized costs are recorded on a course-by-course basis and included in capitalized content costs on the consolidated balance sheets. These costs are amortized using the straight-line method over the estimated useful life of the respective capitalized content program, which is generally five years. The estimated useful life corresponds with the planned curriculum refresh rate. This refresh rate is consistent with expected curriculum refresh rates as cited by program faculty members for similar on-campus programs. It is reasonably possible that developed content could be refreshed before the estimated useful lives are complete or be expensed immediately in the event that the development of a course is discontinued prior to launch. |
Evaluation of Long-Lived Assets | Evaluation of Long-Lived Assets The Company reviews long-lived assets, which consist of property and equipment, capitalized technology costs, capitalized content development costs and acquired finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. Recoverability of a long-lived asset is measured by a comparison of the carrying value of an asset or asset group to the future undiscounted net cash flows expected to be generated by that asset or asset group. If such assets are not recoverable, the impairment to be recognized is measured by the amount by which the carrying value of an asset exceeds the estimated fair value (discounted cash flow) of the asset or asset group. In order to assess the recoverability of the capitalized technology and content development costs, the costs are grouped by degree vertical, which is the lowest level of independent cash flows. The Company's impairment analysis is based upon cumulative results and forecasted performance. The actual results could vary from the Company's forecasts, especially in relation to recently launched programs. |
Non-Cash Long-Lived Asset Additions | Non-Cash Long-Lived Asset Additions During the year ended December 31, 2017, the Company had capital asset additions of $62.3 million in property and equipment and capitalized technology and content development, of which $11.2 million consisted of non-cash capital expenditures, primarily related to landlord funded leasehold improvements. During the year ended December 31, 2016, the Company had capital asset additions of $30.8 million in property and equipment and capitalized technology and content development, of which $6.4 million consisted of non-cash capital expenditures, primarily related to landlord funded leasehold improvements. |
Goodwill | Goodwill Goodwill is the excess of purchase price over the fair value of identified net assets of the business acquired. The Company's goodwill balance was established in connection with the acquisition of GetSmarter in 2017. The Company will review goodwill at least annually, as of October 1, for possible impairment, beginning in 2018. Between annual tests, goodwill is reviewed for possible impairment if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value. The Company will test goodwill at the reporting unit level, which is an operating segment or one level below an operating segment. The Company initially will assess qualitative factors to determine if it is necessary to perform the two-step goodwill impairment review. The Company will review goodwill for impairment using the two-step process if it decides to bypass the qualitative assessment or determines that it is more likely than not that the fair value of a reporting unit is less than its carrying value based on a qualitative assessment. Upon the completion of the two-step process, the Company may be required to recognize an impairment based on the difference between the carrying value and the fair value of the goodwill recorded. |
Government Grants | Government Grants Government grants awarded to the Company in the form of forgivable loans are recorded as deferred government grant obligations within long-term liabilities on the consolidated balance sheets until all contingencies are resolved and the grant is determined to be realized. |
Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that are included in the financial statements. Under this method, the deferred tax assets and liabilities are determined based on the differences between the financial statement and tax bases of the assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on the deferred tax assets and liabilities is recognized in earnings in the period when the new rate is enacted. Deferred tax assets are subject to periodic recoverability assessments. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that more likely than not will be realized. The Company considers all positive and negative evidence relating to the realization of the deferred tax assets in assessing the need for a valuation allowance. The Company currently maintains a full valuation allowance against deferred tax assets in the U.S and certain entities in the foreign jurisdictions. The Company records a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. The Company accounts for uncertainty in income taxes using a two-step approach for evaluating tax positions. Step one, recognition, occurs when the Company concludes that a tax position, based solely on its technical merits, is more likely than not to be sustained upon examination. Step two, measurement, determines the amount of benefit that is more likely than not to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. De-recognition of a tax position that was previously recognized would occur if the Company subsequently determines that a tax position no longer meets the more likely than not threshold of being sustained. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the consolidated statements of operations and comprehensive loss. |
Revenue Recognition, Accounts Receivable and Allowance for Doubtful Accounts | Revenue Recognition, Accounts Receivable and Allowance for Doubtful Accounts The Company recognizes revenue when all of the following conditions are met: (i) persuasive evidence of an arrangement exists, (ii) rendering of services is complete, (iii) fees are fixed or determinable and (iv) collection of fees is reasonably assured. Revenue for both of our segments is recognized ratably over the service period, which the Company defines as the first through the last day of the graduate program class or short course. The Company establishes a refund allowance, if necessary, for its share of tuition and fees ultimately uncollected either by its university clients within the Graduate Program Segment or by the Company within the Short Course Segment. Payments to university clients that are not for distinct goods or services are recognized as a reduction of revenue over the contractual term or the period to which they relate. The Graduate Program Segment derives revenue primarily from a contractually specified percentage of the amounts the Company's university clients receive from their students in the 2U-enabled graduate program for tuition and fees, less credit card fees and other specified charges that the Company has agreed to exclude in certain of our university client contracts. Most of our contracts with university clients within this segment have 10 to 15 year initial terms. The Short Course Segment derives revenue directly from students for the tuition and fees paid to enroll in and progress through our short courses. A contractually specified percentage of the gross proceeds from students is shared with the university clients, in the form of a royalty recognized within the Company's consolidated statements of operations and comprehensive loss as curriculum and teaching costs, for providing the content and certifying the course. Our university client contracts within this segment are typically shorter and less restrictive than our contracts within our Graduate Program Segment. The Company generally receives payments for revenue from graduate program university clients early in each academic term and from short course students, either in full upon registration of the course or in full before the end of the course based on a payment plan, prior to completion of the service period. The Company records these payments as deferred revenue until the services are delivered or until the obligations are otherwise met, at which time revenue is recognized. Deferred revenue as of a particular balance sheet date represents the excess of amounts billed or received as compared to amounts recognized in revenue in the consolidated statements of operations and comprehensive loss as of the end of the reporting period, and such amounts are reflected as a current liability on the Company's consolidated balance sheets. The Company generates substantially all of its revenue from multiple-deliverable contractual arrangements, and provide a combination of access to the platform of technology and technology-enabled services that support the complete lifecycle of a graduate program or short course, including attracting students, advising prospective students through the admissions application process, providing technical, success coaching and other support, facilitating accessibility to individuals with disabilities and in some cases, facilitating in-program field placements. The Company has determined that no individual deliverable has standalone value upon delivery and, therefore, the multiple deliverables within its arrangements do not qualify for treatment as separate units of accounting. Accordingly, the Company considers all deliverables to be a single unit of accounting and recognizes revenue from the entire arrangement over the term of the service period. The Company's accounts receivable are stated at net realizable value. The Company utilizes the allowance method to provide for doubtful accounts based on management's evaluation of the collectability of the amounts due. The estimate is based on historical collection experience and a review of the current status of accounts receivable. Historically, actual write-offs for uncollectible accounts have not significantly differed from estimates. As of December 31, 2017 and 2016, the allowance for doubtful accounts was $0.3 million and zero, respectively, and relates to amounts from the Short Course Segment. |
Marketing and Sales Costs | Marketing and Sales Costs The majority of the marketing and sales costs incurred by the Company are directly related to acquiring students for its university clients' programs, with lesser amounts related to the Company's own marketing and advertising efforts. For the years ended December 31, 2017, 2016 and 2015, costs related to the Company's own marketing and advertising efforts were not material. All such costs are expensed as incurred and reported in marketing and sales expense in the Company's consolidated statements of operations and comprehensive loss. As of December 31, 2017 and 2016, the Company had $11.7 million and $5.6 million, respectively, of accrued marketing costs included in accounts payable and accrued expenses on the consolidated balance sheets. |
Leases | Leases The Company leases all of its office facilities and enters into various other lease agreements in conducting its business. At the inception of each lease, the Company evaluates the lease agreement to determine whether the lease is an operating or capital lease. Additionally, many of the Company's lease agreements contain renewal options, tenant improvement allowances, rent holiday and/or rent escalation clauses. The Company defers tenant improvement allowances and amortizes such balances as a reduction of rent expense over the term of the lease. When rent holidays or rent escalations are included in a lease agreement, the Company records a deferred rent asset or liability in the consolidated financial statements, and records these items in rent expense evenly over the term of the lease. The Company is also required to make additional payments under operating lease terms for taxes, insurance and other operating expenses incurred during the operating lease period; such items are expensed as incurred. Rental deposits are included as other assets in the consolidated financial statements for lease agreements the require payments in advance or deposits held for security that are refundable, less any damages, at the end of the respective lease. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation awards based on the fair value of the award as of the grant date. For awards subject to service-based vesting conditions, the Company recognizes stock-based compensation expense on a straight-line basis over the awards' requisite service period. Effective April 1, 2017, expected volatility is based on the historical volatilities of the Company's common stock. Prior to January 1, 2017, the Company adjusted stock-based compensation expense for estimated forfeitures of stock-based awards. As described in the "Recent Accounting Pronouncements" section of this Note, beginning on January 1, 2017, the Company accounts for forfeitures (and the impact on stock-based compensation expense) as they occur. For awards subject to both performance and service-based vesting conditions, the Company recognizes stock-based compensation expense using an accelerated recognition method when it is probable that the performance condition will be achieved. |
Foreign Currency Translation | Foreign Currency Translation For the portion of the Company's non-U.S. business where the local currency is the functional currency, operating results are translated into U.S. dollars using the average rate of exchange for the period, and assets and liabilities are converted at the closing rates on the period end date. Gains and losses on translation of these accounts are accumulated and reported as a separate component of stockholder's equity and comprehensive loss. For any transaction that is in a currency different from the entity's functional currency, the Company records a gain or loss based on the difference between the exchange rate at the transaction date and the exchange rate at the transaction settlement date (or rate at period end, if unsettled) as other income (expense), net in the consolidated statements of operations and comprehensive loss. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In January 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment , which eliminates step two from the goodwill impairment test and requires an entity to recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value, up to the amount of goodwill allocated to that reporting unit. The amendments in this ASU are effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company is evaluating the impact that this standard will have on its consolidated financial position or related disclosures. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business , which revises the definition of a business and provides new guidance in evaluating when a set of transferred assets and activities is a business. The amendments in this ASU are effective for fiscal years beginning after December 15, 2017, with early adoption permitted. The Company early adopted this ASU in the third quarter of 2017, in connection with the acquisition of GetSmarter. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash , a consensus of the FASB Emerging Issues Task Force. The ASU requires companies to explain the changes in the combined total of restricted and unrestricted cash balances in the statement of cash flows. The amendments in this ASU are effective for fiscal years beginning after December 15, 2017, with early adoption permitted. Adoption of the ASU is retrospective to each prior period presented. The Company early adopted this ASU in the second quarter of 2017. Adoption of this standard did not have a material impact on the presentation of prior periods. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments . The ASU addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice surrounding how certain transactions are classified in the statement of cash flows. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2017. The Company is currently evaluating the effect that this standard will have on its consolidated statements of cash flows and related disclosures. In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting . The ASU simplifies various aspects related to the accounting and presentation of share-based payments. The guidance also allows employers to withhold shares to satisfy minimum statutory withholding requirements up to the employees' maximum individual tax rate without causing the award to be classified as a liability. Additionally, the guidance stipulates that cash paid by an employer to a taxing authority when directly withholding shares for tax withholding purposes should be classified as a financing activity on the statement of cash flows, and allows companies to elect an accounting policy to either estimate the share-based award forfeitures (and expense) or account for forfeitures (and expense) as they occur. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016. The Company adopted this ASU on January 1, 2017. In connection with the adoption of this standard, the Company elected to no longer apply an estimated forfeiture rate and will instead account for forfeitures as they occur. Accordingly, the Company applied the modified retrospective adoption approach, which resulted in a $0.1 million cumulative-effect reduction to retained earnings with an offset to additional paid-in-capital. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) . The ASU introduces a model for lessees requiring most leases to be reported on the balance sheet. Lessor accounting remains substantially similar to current U.S. GAAP. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018. The Company is currently evaluating the effect that this ASU will have on its consolidated financial position and related disclosures, and believes that this standard may materially increase its other non-current assets and non-current liabilities on the consolidated balance sheets in order to record right-of-use assets and related liabilities for its existing operating leases. In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements— Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern . The ASU requires that an entity's management evaluate whether there are conditions or events that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued. The amendments in this ASU are effective for annual reporting periods ending after December 15, 2016. The Company adopted this ASU on January 1, 2017. Adoption of this standard did not have a material impact on the Company's financial reporting process. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) , which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In July 2015, the FASB deferred the mandatory effective date of this ASU by one year from January 1, 2017 to January 1, 2018. Early application is permitted, but not prior to the original effective date of January 1, 2017. Subsequently, the FASB has issued the following standards related to ASU No. 2014-09: ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations ; ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing ; ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients ; and ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers . The Company must adopt ASU No. 2016-08, ASU No. 2016-10, ASU No. 2016-12 and ASU No. 2016-20 with ASU No. 2014-09 (collectively, the "new revenue standard"). The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company has finalized its assessment of the new standard, and will adopt the new revenue standard effective January 1, 2018 using the modified retrospective method. As part of its assessment, the Company completed reviews of its contracts and evaluated its costs, particularly costs of obtaining contracts with its university clients and costs associated with content development. Certain of these contract and content costs will be capitalized under the new standard. However, the Company has concluded that, upon adoption, the new revenue standard will not have a material impact on the amount and timing of either its revenue or costs. |
Business Combination (Tables)
Business Combination (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Business Combination | |
Schedule of estimated fair values of the assets acquired and liabilities assumed | Estimated Average Purchase Price (in thousands) Cash and cash equivalents $ Current assets Property and equipment, net Amortizable intangible assets: Capitalized technology 3 Capitalized content development 4 University client relationships 9 Trade names and domain names 10 Goodwill Current liabilities ) Non-current liabilities ) ​ ​ ​ ​ ​ ​ ​ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of unaudited pro forma combined revenue and net loss | Year Ended 2017 2016 (in thousands) Pro forma revenue $ $ Pro forma net loss ) ) Pro forma net loss per share, basic and diluted $ ) $ ) |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property and Equipment, Net | |
Schedule of property and equipment, net | December 31, December 31, (in thousands) Computer hardware $ $ Furniture and office equipment Leasehold improvements Leasehold improvements in process ​ ​ ​ ​ ​ ​ ​ ​ Total Accumulated depreciation and amortization ) ) ​ ​ ​ ​ ​ ​ ​ ​ Property and equipment, net $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Goodwill and Amortizable Inta27
Goodwill and Amortizable Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Amortizable Intangible Assets | |
Schedule of amortizable intangible assets | December 31, 2017 December 31, 2016 Estimated Gross Accumulated Net Gross Accumulated Net (in thousands) Capitalized technology 3 $ $ ) $ $ $ ) $ Capitalized content development 4 ) ) University client relationships 9 ) — — — Trade names and domain names 10 ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total amortizable intangible assets, net $ $ ) $ $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of estimated future amortization expense for amortizable intangible assets | As of December 31, 2017, the estimated future amortization expense for amortizable intangible assets placed in service is as follows (in thousands): 2018 $ 2019 2020 2021 2022 Thereafter ​ ​ ​ ​ ​ Total $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies | |
Schedule of future minimum payments to university clients | Currently, the future minimum payments to the Company's university clients in exchange for contract extensions and various marketing and other rights were as follows (in thousands): 2018 $ 2019 2020 2021 2022 Thereafter ​ ​ ​ ​ ​ Total future minimum payments to university clients $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Operating Leases (Tables)
Operating Leases (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Operating Leases | |
Schedule of future minimum lease payments | As of December 31, 2017, the future minimum lease payments were as follows (in thousands): 2018 $ 2019 2020 2021 2022 Thereafter ​ ​ ​ ​ ​ Total future minimum lease payments $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes | |
Schedule components of loss before income taxes | Year Ended December 31, 2017 2016 2015 (in thousands) Loss before income taxes: United States $ ) $ ) $ ) Foreign ) — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ ) $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Reconciliation of the statutory federal income tax rate to the actual effective income tax rate | Year ended December 31, 2017 2016 2015 U.S. statutory federal income tax rate % % % Increase (decrease) resulting from: U.S. state income taxes, net of federal benefits Foreign tax rate differential ) — — Non-deductible expenses ) ) ) Stock-based compensation ) ) Change in valuation allowance ) ) Change in tax rate ) — — Other ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Effective tax rate % % % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Components of the Company's deferred tax assets and liabilities | As of December 31, 2017 2016 (in thousands) Deferred tax assets: Accrued expenses and other $ $ Accrued compensation and related benefits Rebate reserve Deferred rent Stock-based compensation Deferred income — Foreign net operating loss carryforwards — U.S net operating loss carryforwards Valuation allowance ) ) ​ ​ ​ ​ ​ ​ ​ ​ Total deferred tax assets $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deferred tax liabilities: Prepaid expenses and other $ ) $ ) Capitalized content development costs ) ) Capitalized software development costs ) ) Property and equipment ) ) Intangibles ) — ​ ​ ​ ​ ​ ​ ​ ​ Total deferred tax liabilities $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ Net deferred tax liabilities $ ) $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Summary of deferred tax valuation allowances | Balance at Additions Deductions Balance at End (in thousands) Income tax valuation allowance: Year ended December 31, 2017 $ $ $ ) $ Year ended December 31, 2016 — Year ended December 31, 2015 — |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Stockholders' Equity | |
Schedule of shares of common stock reserved for future issuance | At December 31, 2017, the Company had reserved a total of 11,388,192 of its authorized shares of common stock for future issuance as follows: Outstanding stock options Possible future issuance under 2014 Equity Incentive Plan Outstanding restricted stock units Available for future issuance under employee stock purchase plan ​ ​ ​ ​ ​ Total shares of common stock reserved for future issuance ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Stock options | |
Stock-Based Compensation | |
Schedule of stock-based compensation expense included in the consolidated statements of operations and comprehensive loss | Year Ended December 31, 2017 2016 2015 (in thousands) Curriculum and teaching $ $ — $ — Servicing and support Technology and content development Marketing and sales General and administrative ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total stock-based compensation expense $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Summary assumptions used for estimating the fair value of the stock options granted | Year Ended December 31, 2017 2016 2015 Risk-free interest rate 2.0% - 2.1% 1.1% - 1.9% 1.5% - 1.9% Expected term (years) 6.00 - 6.08 5.43 - 6.50 5.56 - 6.08 Expected volatility 46% - 49% 50% 50% Dividend yield 0% 0% 0% |
Summary of stock option activity | Number of Weighted-Average Weighted-Average Aggregate Outstanding balance at December 31, 2016 $ $ Granted Exercised ) Forfeited ) Expired ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outstanding balance at December 31, 2017 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exercisable at December 31, 2017 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Vested and expected to vest at December 31, 2017 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Restricted Stock Units | |
Stock-Based Compensation | |
Summary of restricted stock unit activity | Number of Weighted-Average Outstanding balance at December 31, 2016 $ Granted Vested ) Forfeited ) ​ ​ ​ ​ ​ ​ ​ ​ Outstanding balance at December 31, 2017 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Net Loss per Share (Tables)
Net Loss per Share (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Net Loss per Share | |
Schedule of potential dilutive securities that would have been anti-dilutive due to net loss | Year Ended December 31, 2017 2016 2015 Stock options Restricted stock units |
Schedule of calculation of basic and diluted net loss per share | Year Ended December 31, 2017 2016 2015 Numerator (in thousands): Net loss $ ) $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Denominator: Weighted-average shares of common stock outstanding, basic and diluted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss per share, basic and diluted $ ) $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Segment and Geographic Inform34
Segment and Geographic Information (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Segment and Geographic Information | |
Schedule of revenue, segment profitability and segment profitability margin by segment | Year Ended December 31, 2017 2016 2015 (dollars in thousands) Revenue* Graduate program segment $ $ $ Short course segment — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total revenue $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment profitability** Graduate program segment $ $ $ ) Short course segment ) — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total segment profitability $ $ $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment profitability margin*** Graduate program segment % % )% Short course segment )% — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total segment profitability margin % % )% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ * The Company did not have any material intersegment revenues for any periods presented. ** The Company evaluates segment profitability as net income or net loss, as applicable, before net interest income (expense), taxes, depreciation and amortization, foreign currency gains or losses, acquisition-related gains or losses and stock-based compensation expense. Some or all of these items may not be applicable in any given reporting period. *** The Company defines segment profitability margin as segment profitability as a percentage of segment revenue |
Schedule of reconciliation of net loss to total segment profitability | Year Ended December 31, 2017 2016 2015 (in thousands) Net loss $ ) $ ) $ ) Adjustments: Interest income ) ) ) Interest expense Foreign currency loss — — Depreciation and amortization expense Income tax benefit ) — — Stock-based compensation expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total adjustments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total segment profitability $ $ $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of total assets by segment | December 31, 2017 December 31, 2016 (in thousands) Total assets Graduate program segment $ $ Short course segment — ​ ​ ​ ​ ​ ​ ​ ​ Total assets $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Quarterly Financial Informati35
Quarterly Financial Information (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information (Unaudited) | |
Schedule of unaudited quarterly results | Three Months Ended March 31, June 30, September 30, December 31, (in thousands, except share and per share amounts) Revenue $ $ $ $ Costs and expenses Curriculum and teaching — — Servicing and support Technology and content development Marketing and sales General and administrative ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total costs and expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income (loss) from operations ) ) ) Interest income Interest expense — ) ) ) Other income (expense), net — ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income (loss) before income taxes ) ) ) Income tax benefit (expense) — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) $ ) $ ) $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) per share, basic $ ) $ ) $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) per share, diluted $ ) $ ) $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average shares used in computing net income (loss) per share, basic ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average shares used in computing net income (loss) per share, diluted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, June 30, September 30, December 31, (in thousands, except share and per share amounts) Revenue $ $ $ $ Costs and expenses Servicing and support Technology and content development Marketing and sales General and administrative ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total costs and expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loss from operations ) ) ) ) Interest income Interest expense ) ) — — Loss before income taxes ) ) ) ) Income tax benefit (expense) — — — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss $ ) $ ) $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss per share, basic and diluted $ ) $ ) $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average shares used in computing net loss per share, basic and diluted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Organization (Details)
Organization (Details) | Jul. 01, 2017segment |
Organization | |
Number of operating segments | 2 |
Significant Accounting Polici37
Significant Accounting Policies (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | |
Amortizable Intangible Assets | |||
Useful life of capitalized content development costs | 5 years | ||
Non-Cash Long-Lived Asset Additions | |||
Capital asset additions during the period | $ 62.3 | $ 30.8 | |
Minimum | |||
Amortizable Intangible Assets | |||
Estimated useful life of intangible assets (in years) | 3 years | ||
Maximum | |||
Amortizable Intangible Assets | |||
Estimated useful life of intangible assets (in years) | 10 years | ||
Accounts payable and accrued expenses | |||
Marketing and Sales Costs | |||
Accrued marketing costs | $ 11.7 | 5.6 | |
ASU 2016-09 | |||
Recent Accounting Pronouncements | |||
Amount of cumulative-effect reduction to retained earnings with an offset to additional paid-in-capital | $ (0.1) | ||
Computer hardware | Minimum | |||
Property and Equipment, Net | |||
Useful lives (in years) | 3 years | ||
Computer hardware | Maximum | |||
Property and Equipment, Net | |||
Useful lives (in years) | 5 years | ||
Furniture and office equipment | Minimum | |||
Property and Equipment, Net | |||
Useful lives (in years) | 5 years | ||
Furniture and office equipment | Maximum | |||
Property and Equipment, Net | |||
Useful lives (in years) | 7 years | ||
Leasehold improvements | Minimum | |||
Property and Equipment, Net | |||
Useful lives (in years) | 4 years | ||
Leasehold improvements | Maximum | |||
Property and Equipment, Net | |||
Useful lives (in years) | 11 years | ||
Internally-developed software | |||
Amortizable Intangible Assets | |||
Estimated useful life of intangible assets (in years) | 3 years | ||
Landlord funded leasehold improvements | |||
Non-Cash Long-Lived Asset Additions | |||
Non-cash capital expenditure | $ 11.2 | 6.4 | |
Graduate Program Segment | Minimum | |||
Revenue by segment | |||
Term of revenue contracts | 10 years | ||
Graduate Program Segment | Maximum | |||
Revenue by segment | |||
Term of revenue contracts | 15 years | ||
Short Course Segment | |||
Revenue by segment | |||
Allowance for Doubtful Accounts Receivable | $ 0.3 | $ 0 |
Business Combination - Estimate
Business Combination - Estimated fair values of the assets acquired and liabilities assumed (Details) - USD ($) $ / shares in Units, $ in Thousands | Jul. 01, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Acquisition | |||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | |
Goodwill | $ 71,988 | ||
GetSmarter | |||
Acquisition | |||
Cash consideration | $ 98,700 | ||
Potential earn-out payment | $ 20,000 | ||
Common stock, par value (in dollars per share) | $ 0.001 | ||
Cash and Cash Equivalents | $ 1,584 | ||
Current assets | 3,676 | ||
Property and equipment, net | 479 | ||
Goodwill | 68,172 | ||
Current Liabilities | (9,031) | ||
Non-Current Liabilities | (10,894) | ||
Total | $ 98,686 | ||
Decrease in goodwill related to contingent consideration | $ 2,000 | ||
GetSmarter | Minimum | |||
Acquisition | |||
Vesting period (in years) | 2 years | ||
GetSmarter | Maximum | |||
Acquisition | |||
Vesting period (in years) | 4 years | ||
Capitalized technology | GetSmarter | |||
Acquisition | |||
Amortizable intangible assets | $ 2,800 | ||
Capitalized content development | GetSmarter | |||
Acquisition | |||
Amortizable intangible assets | 5,000 | ||
University client relationships | GetSmarter | |||
Acquisition | |||
Amortizable intangible assets | 28,000 | ||
Trade names and domain names | GetSmarter | |||
Acquisition | |||
Amortizable intangible assets | $ 8,900 |
Business Combination - Estima39
Business Combination - Estimated Average Useful Life (Details) | Jul. 01, 2017 | Dec. 31, 2017 |
Capitalized technology | ||
Useful lives | ||
Estimated Average Useful Life (in years) | 3 years | |
Capitalized content development | ||
Useful lives | ||
Estimated Average Useful Life (in years) | 4 years | |
University client relationships | ||
Useful lives | ||
Estimated Average Useful Life (in years) | 9 years | |
Trade names and domain names | ||
Useful lives | ||
Estimated Average Useful Life (in years) | 10 years | |
GetSmarter | Capitalized technology | ||
Useful lives | ||
Estimated Average Useful Life (in years) | 3 years | |
GetSmarter | Capitalized content development | ||
Useful lives | ||
Estimated Average Useful Life (in years) | 4 years | |
GetSmarter | University client relationships | ||
Useful lives | ||
Estimated Average Useful Life (in years) | 9 years | |
GetSmarter | Trade names and domain names | ||
Useful lives | ||
Estimated Average Useful Life (in years) | 10 years |
Business Combination - Pro form
Business Combination - Pro forma combined revenue and net loss (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Business Combination | ||
Pro forma revenue | $ 294,446 | $ 223,532 |
Pro forma net loss | $ (37,267) | $ (27,959) |
Pro forma net loss per share, basic and diluted | $ (0.76) | $ (0.60) |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property and Equipment, Net | |||
Property and equipment, gross | $ 56,153 | $ 19,692 | |
Accumulated depreciation and amortization | (7,098) | (4,096) | |
Property and equipment, net | 49,055 | 15,596 | |
Depreciation expense | 5,500 | 1,700 | $ 1,100 |
Computer hardware | |||
Property and Equipment, Net | |||
Property and equipment, gross | 8,519 | 3,935 | |
Furniture and office equipment | |||
Property and Equipment, Net | |||
Property and equipment, gross | 5,354 | 2,204 | |
Leasehold improvements | |||
Property and Equipment, Net | |||
Property and equipment, gross | 42,086 | 6,689 | |
Leasehold improvements in process | |||
Property and Equipment, Net | |||
Property and equipment, gross | $ 194 | $ 6,864 |
Goodwill and Amortizable Inta42
Goodwill and Amortizable Intangible Assets (Details) - USD ($) $ in Thousands | Jul. 01, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Goodwill and Amortizable Intangible Assets | ||||
Goodwill | $ 71,988 | |||
Change in goodwill balance as a result of changes in foreign currency | 3,800 | |||
Gross Carrying Amount | 124,542 | $ 57,817 | ||
Accumulated Amortization | (33,781) | (23,686) | ||
Net Carrying Amount | 90,761 | 34,131 | ||
Amortization expense | $ 14,000 | 8,000 | $ 6,100 | |
Capitalized technology | ||||
Goodwill and Amortizable Intangible Assets | ||||
Estimated Average Useful Life (in years) | 3 years | |||
Gross Carrying Amount | $ 27,108 | 17,100 | ||
Accumulated Amortization | (9,486) | (7,822) | ||
Net Carrying Amount | $ 17,622 | 9,278 | ||
Capitalized content development | ||||
Goodwill and Amortizable Intangible Assets | ||||
Estimated Average Useful Life (in years) | 4 years | |||
Gross Carrying Amount | $ 55,872 | 37,956 | ||
Accumulated Amortization | (21,417) | (15,367) | ||
Net Carrying Amount | $ 34,455 | 22,589 | ||
University client relationships | ||||
Goodwill and Amortizable Intangible Assets | ||||
Estimated Average Useful Life (in years) | 9 years | |||
Gross Carrying Amount | $ 29,443 | |||
Accumulated Amortization | (1,636) | |||
Net Carrying Amount | $ 27,807 | |||
Trade names and domain names | ||||
Goodwill and Amortizable Intangible Assets | ||||
Estimated Average Useful Life (in years) | 10 years | |||
Gross Carrying Amount | $ 12,119 | 2,761 | ||
Accumulated Amortization | (1,242) | (497) | ||
Net Carrying Amount | 10,877 | 2,264 | ||
In process capitalized technology and content development | ||||
Goodwill and Amortizable Intangible Assets | ||||
Net Carrying Amount | $ 15,600 | $ 8,700 | ||
GetSmarter | ||||
Goodwill and Amortizable Intangible Assets | ||||
Goodwill | $ 68,172 | |||
GetSmarter | Capitalized technology | ||||
Goodwill and Amortizable Intangible Assets | ||||
Estimated Average Useful Life (in years) | 3 years | |||
GetSmarter | Capitalized content development | ||||
Goodwill and Amortizable Intangible Assets | ||||
Estimated Average Useful Life (in years) | 4 years | |||
GetSmarter | University client relationships | ||||
Goodwill and Amortizable Intangible Assets | ||||
Estimated Average Useful Life (in years) | 9 years | |||
GetSmarter | Trade names and domain names | ||||
Goodwill and Amortizable Intangible Assets | ||||
Estimated Average Useful Life (in years) | 10 years | |||
GetSmarter | Short Course Segment | ||||
Goodwill and Amortizable Intangible Assets | ||||
Goodwill | $ 68,200 |
Goodwill and Amortizable Inta43
Goodwill and Amortizable Intangible Assets - Estimated Future Amortization Expense and License agreement (Details) - USD ($) $ in Thousands | Jan. 19, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Future amortization expense | |||
Net Carrying Amount | $ 90,761 | $ 34,131 | |
Excluding in process capitalized technology and content development | |||
Future amortization expense | |||
2,018 | 17,571 | ||
2,019 | 15,595 | ||
2,020 | 12,102 | ||
2,021 | 8,216 | ||
2,022 | 5,404 | ||
Thereafter | 16,296 | ||
Net Carrying Amount | $ 75,184 | ||
Flatiron School, Inc | Software license and services agreement | |||
Future amortization expense | |||
License and services costs | $ 14,500 |
Commitments and Contingencies44
Commitments and Contingencies (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Future minimum payments to clients | |
2,018 | $ 5,975 |
2,019 | 875 |
2,020 | 625 |
2,021 | 625 |
2,022 | 625 |
Thereafter | 4,400 |
Total future minimum payments to university clients | $ 13,125 |
Operating Leases (Details)
Operating Leases (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Feb. 28, 2017USD ($)ft²floor | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Operating Leases | ||||
Total future minimum lease payments | $ 142,310 | |||
Future minimum lease payments | ||||
2,018 | 9,308 | |||
2,019 | 11,862 | |||
2,020 | 11,549 | |||
2,021 | 13,685 | |||
2,022 | 13,719 | |||
Thereafter | 82,187 | |||
Deferred rent liability | 6,500 | $ 2,500 | ||
Sublease income | 0 | 300 | $ 300 | |
Rent expense net of sublease income | $ 8,500 | $ 5,800 | $ 3,500 | |
Leased facility in Brooklyn, New York | ||||
Operating Leases | ||||
Number of floors leased | floor | 3 | |||
Area of office space leased | ft² | 80,000 | |||
Total future minimum lease payments | $ 52,500 | |||
Term of the lease | 12 years |
Debt (Details)
Debt (Details) | Jun. 27, 2017USD ($)employee | Jun. 22, 2017USD ($)employee | Dec. 31, 2017USD ($) | Mar. 31, 2018USD ($) | Jun. 30, 2017USD ($)item | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2013USD ($) |
Lines of Credit | ||||||||
Aggregate borrowing base | $ 25,000,000 | $ 37,000,000 | ||||||
Amount outstanding | $ 0 | $ 0 | ||||||
Adjusted quick ratio | 5.44 | 5.43 | ||||||
Security deposit | $ 11,500,000 | |||||||
Government Grants | ||||||||
Amount of loan | 3,500,000 | $ 3,500,000 | ||||||
Number of government grants | item | 2 | |||||||
Prince George's County, Maryland | ||||||||
Government Grants | ||||||||
Amount of loan | $ 1,500,000 | |||||||
Loan interest rate (in percentage) | 3.00% | |||||||
Minimum number of employees required to avoid default of loan for payment principal and accrued interest | employee | 650 | |||||||
Minimum number of employees required to avoid default of loan for payment prorated portion and interest | employee | 1,300 | |||||||
Amount of prorated portion of loan per employee | $ 2,252 | |||||||
Standby letters of credit | ||||||||
Lines of Credit | ||||||||
Aggregate borrowing base | $ 10,000,000 | |||||||
Short Course Segment | ||||||||
Lines of Credit | ||||||||
Amount outstanding | $ 0 | |||||||
Interest rate (in percentage) | 10.25% | |||||||
Short Course Segment | Revolving working capital facility | ||||||||
Lines of Credit | ||||||||
Aggregate borrowing base | $ 1,900,000 | |||||||
Short Course Segment | Revolving working capital facility | Subsequent Event | ||||||||
Lines of Credit | ||||||||
Aggregate borrowing base | $ 1,300,000 | |||||||
Harkins Road LLC | Department of Commerce | ||||||||
Government Grants | ||||||||
Amount of loan | $ 2,000,000 | |||||||
Loan interest rate (in percentage) | 3.00% | |||||||
Minimum number of employees required to avoid default of loan for payment principal and accrued interest | employee | 650 | |||||||
Minimum number of employees required to avoid default of loan for payment prorated portion and interest | employee | 1,600 | |||||||
Amount of prorated portion of loan per employee | $ 2,105 | |||||||
Base rate | ||||||||
Lines of Credit | ||||||||
Variable interest rate basis | Base rate | |||||||
Applicable margin (as a percent) | 1.50% | |||||||
Federal fund rate | ||||||||
Lines of Credit | ||||||||
Variable interest rate basis | Federal fund rate | |||||||
Applicable margin (as a percent) | 1.00% | |||||||
30 days LIBOR | ||||||||
Lines of Credit | ||||||||
Variable interest rate basis | 30-day LIBOR | |||||||
Applicable margin (as a percent) | 1.00% | |||||||
LIBOR | ||||||||
Lines of Credit | ||||||||
Variable interest rate basis | LIBOR | |||||||
Applicable margin (as a percent) | 2.50% | |||||||
Minimum | ||||||||
Lines of Credit | ||||||||
Covenants ratio | 1.10 |
Income Taxes - Other (Details)
Income Taxes - Other (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Components of loss before income taxes | |||||||||||
United States | $ (25,002) | $ (20,684) | $ (26,733) | ||||||||
Foreign | (5,718) | ||||||||||
Loss before income taxes | $ 186 | $ (15,713) | $ (11,754) | $ (3,439) | $ (2,209) | $ (6,758) | $ (8,337) | $ (3,380) | (30,720) | $ (20,684) | $ (26,733) |
Deferred tax benefit | $ 1,300 | ||||||||||
Reconciliation between statutory federal income tax rate and the effective tax rate | |||||||||||
U.S. statutory federal income tax rate (as a percent) | 35.00% | 35.00% | 35.00% | ||||||||
U.S. state income taxes, net of federal benefits (as a percent) | 9.90% | 5.50% | 7.70% | ||||||||
Foreign tax rate differential (as a percent) | (1.40%) | ||||||||||
Non-deductible expenses (as a percent) | (1.80%) | (1.50%) | (1.00%) | ||||||||
Stock-based compensation (as a percent) | 40.90% | (2.90%) | (1.00%) | ||||||||
Change in valuation allowance (as a percent) | 29.80% | (36.60%) | (39.10%) | ||||||||
Change in tax rate (as a percent) | (108.00%) | ||||||||||
Other (as a percent) | (0.20%) | 0.50% | (1.60%) | ||||||||
Effective tax rate (as a percent) | 4.20% | 0.00% | 0.00% | ||||||||
Deferred tax assets: | |||||||||||
Accrued expenses and other | 2,395 | 2,757 | $ 2,395 | $ 2,757 | |||||||
Accrued compensation and related benefits | 3,524 | 4,317 | 3,524 | 4,317 | |||||||
Rebate reserve | 20 | 126 | 20 | 126 | |||||||
Deferred rent | 6,924 | 1,028 | 6,924 | 1,028 | |||||||
Stock-based compensation | 6,874 | 7,127 | 6,874 | 7,127 | |||||||
Deferred income | 191 | 191 | |||||||||
Foreign net operating loss carryforwards | 1,704 | 1,704 | |||||||||
U.S net operating loss carryforwards | 69,425 | 61,995 | 69,425 | 61,995 | |||||||
Valuation allowance | (71,101) | (62,297) | (71,101) | (62,297) | |||||||
Total deferred tax assets | 19,956 | 15,053 | 19,956 | 15,053 | |||||||
Deferred tax liabilities: | |||||||||||
Prepaid expenses and other | (355) | (1,524) | (355) | (1,524) | |||||||
Capitalized content development costs | (8,600) | (9,368) | (8,600) | (9,368) | |||||||
Capitalized software development costs | (4,356) | (3,848) | (4,356) | (3,848) | |||||||
Property and equipment | (4,720) | (313) | (4,720) | (313) | |||||||
Intangibles | (12,012) | (12,012) | |||||||||
Total deferred tax liabilities | (30,043) | $ (15,053) | (30,043) | $ (15,053) | |||||||
Net deferred tax liabilities | $ (10,087) | $ (10,087) |
Income Taxes - Change in Deferr
Income Taxes - Change in Deferred Tax Valuation Allowance (Details) - Income tax valuation allowance - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Valuation allowance | |||
Balance at Beginning of Period | $ 62,297 | $ 54,739 | $ 44,309 |
Additions Charged to Expense | 17,967 | 7,558 | 10,430 |
Deductions | (9,163) | ||
Balance at End of Period | $ 71,101 | $ 62,297 | $ 54,739 |
Income Taxes - Carryforwards (D
Income Taxes - Carryforwards (Details) $ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017USD ($)item | Dec. 31, 2016 | Dec. 31, 2015 | |
Increase in valuation allowance | $ 8.8 | |||
Income tax returns currently under examination | item | 0 | |||
Reduced U.S. tax rate | 35.00% | 35.00% | 35.00% | |
Transition tax | $ 0 | |||
Forecast | ||||
Reduced U.S. tax rate | 21.00% | |||
U.S. | ||||
Operating Loss Carryforwards | 253.2 | |||
Foreign | ||||
Operating Loss Carryforwards | $ 6.7 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ in Thousands | Sep. 11, 2017 | Sep. 30, 2015 | Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2015 | Jan. 01, 2018 | Jan. 01, 2017 | Dec. 31, 2016 |
Stockholders' Equity | ||||||||
Proceeds from issuance of common stock, net of offering costs | $ 189,463 | $ 117,112 | ||||||
Authorized shares of capital stock | 205,000,000 | 205,000,000 | ||||||
Authorized shares of common stock | 200,000,000 | 200,000,000 | 200,000,000 | |||||
Authorized shares of preferred stock | 5,000,000 | 5,000,000 | 5,000,000 | |||||
Shares of common stock reserved for future issuance | ||||||||
Outstanding stock options | 4,559,176 | 4,559,176 | ||||||
Possible future issuance under 2014 Equity Incentive Plan | 4,415,593 | 4,415,593 | ||||||
Outstanding restricted stock units | 1,413,423 | 1,413,423 | ||||||
Available for future issuance under employee stock purchase plan | 1,000,000 | 1,000,000 | ||||||
Total shares of common stock reserved for future issuance | 11,388,192 | 11,388,192 | ||||||
Equity Incentive Plan 2014 | ||||||||
Shares of common stock reserved for future issuance | ||||||||
Total shares of common stock reserved for future issuance | 4,415,593 | 4,415,593 | 2,625,292 | 2,357,579 | ||||
Common Stock | ||||||||
Stockholders' Equity | ||||||||
Shares issued | 4,047,500 | 3,625,000 | 4,047,500 | 3,625,000 | ||||
Proceeds from issuance of common stock, net of offering costs | $ 189,500 | $ 117,100 | ||||||
Common Stock | Underwriters' over-allotment option | ||||||||
Stockholders' Equity | ||||||||
Shares issued | 547,500 | 525,000 |
Stock-Based Compensation - Expe
Stock-Based Compensation - Expense (Details) $ / shares in Units, $ in Thousands | Jan. 01, 2018$ / sharesshares | Dec. 31, 2017USD ($)item$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($) | Jan. 01, 2017shares | Jan. 30, 2014shares |
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ||||||
Number of share-based employee compensation plans | item | 2 | |||||
Common stock reserved for issuance | 11,388,192 | |||||
Stock-based compensation expense | $ | $ 21,930 | $ 15,823 | $ 12,499 | |||
Curriculum and teaching | ||||||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ||||||
Stock-based compensation expense | $ | 3 | |||||
Servicing and support | ||||||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ||||||
Stock-based compensation expense | $ | 4,036 | 3,245 | 2,270 | |||
Technology and content development | ||||||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ||||||
Stock-based compensation expense | $ | 3,306 | 2,392 | 1,548 | |||
Marketing and sales | ||||||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ||||||
Stock-based compensation expense | $ | 1,742 | 1,317 | 1,057 | |||
General and administrative | ||||||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ||||||
Stock-based compensation expense | $ | $ 12,843 | $ 8,869 | $ 7,624 | |||
Restricted Stock Units | ||||||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ||||||
Restricted stock units outstanding | 1,413,423 | 1,412,934 | ||||
Number of restricted stock units granted (in shares) | 620,259 | |||||
Stock options | ||||||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ||||||
Option to purchase common stock, outstanding | 4,559,176 | 4,882,237 | ||||
Weighted average exercise price | $ / shares | $ 15.10 | $ 10.74 | ||||
Granted (in shares) | 605,640 | |||||
Exercise price (in dollars per share) | $ / shares | $ 40.90 | |||||
2008 Equity Incentive Plan | ||||||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ||||||
Number of options or stock awards available for grant under the Plan | 0 | |||||
Option to purchase common stock, outstanding | 2,146,864 | |||||
Weighted average exercise price | $ / shares | $ 4.22 | |||||
Equity Incentive Plan 2014 | ||||||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ||||||
Shares authorized under the plan | 2,800,000 | |||||
Number of shares that may be added to the 2014 Plan | 5,943,348 | |||||
Period of annual automatic increase in the number of shares authorized | 10 years | |||||
Percentage applied on total number of shares of common stock outstanding on previous calendar year for automatic inclusion in the plan | 5.00% | |||||
Common stock reserved for issuance | 2,625,292 | 4,415,593 | 2,357,579 | |||
Option to purchase common stock, outstanding | 2,412,307 | |||||
Weighted average exercise price | $ / shares | $ 24.77 | |||||
Equity Incentive Plan 2014 | Maximum | ||||||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ||||||
Number of options or stock awards available for grant under the Plan | 5,943,348 | |||||
Equity Incentive Plan 2014 | Restricted Stock Units | ||||||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ||||||
Restricted stock units outstanding | 1,413,423 | |||||
Number of restricted stock units granted (in shares) | 7,609 | |||||
Equity Incentive Plan 2014 | Stock options | ||||||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ||||||
Granted (in shares) | 8,731 | |||||
Exercise price (in dollars per share) | $ / shares | $ 64.51 | |||||
Equity Incentive Plan 2014 | Performance Stock Awards | ||||||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ||||||
Number of restricted stock units granted (in shares) | 56,575 |
Stock-Based Compensation - Othe
Stock-Based Compensation - Other (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Additional disclosures | |||
Compensation cost related to the nonvested awards not yet recognized | $ 15,600 | ||
Weighted average period for recognition of compensation cost | 2 years 4 months 24 days | ||
Summary of restricted stock unit activity | |||
Total unrecognized compensation cost related to unvested RSUs | $ 31,500 | ||
Unrecognized compensation cost period expected to be realized | 2 years 1 month 6 days | ||
Stock options | |||
Stock-Based Compensation | |||
Vesting period | 4 years | ||
Expiration period | 10 years | ||
Fair value assumptions and methodology | |||
Risk-free interest rate minimum (as a percent) | 2.00% | 1.10% | 1.50% |
Risk-free interest rate maximum (as a percent) | 2.10% | 1.90% | 1.90% |
Expected volatility minimum (as a percent) | 46.00% | ||
Expected volatility maximum (as a percent) | 49.00% | ||
Expected volatility (as a percent) | 50.00% | 50.00% | |
Dividend yield (as a percent) | 0.00% | 0.00% | 0.00% |
Number of Options | |||
Outstanding balance at the beginning of the period (in shares) | 4,882,237 | ||
Granted (in shares) | 605,640 | ||
Exercised (in shares) | (846,821) | ||
Forfeited (in shares) | (65,853) | ||
Expired (in shares) | (16,027) | ||
Outstanding balance at the end of the period (in shares) | 4,559,176 | 4,882,237 | |
Exercisable at the end of the period (in shares) | 3,357,682 | ||
Vested and expected to vest at the end of the period (in shares) | 4,559,176 | ||
Weighted Average Exercise Price per Share | |||
Outstanding balance at the beginning of the period (in dollars per share) | $ 10.74 | ||
Granted (in dollars per share) | 40.90 | ||
Exercised (in dollars per share) | 7.81 | ||
Forfeited (in dollars per share) | 23.63 | ||
Expired (in dollars per share) | 13.26 | ||
Outstanding balance at the end of the period (in dollars per share) | 15.10 | $ 10.74 | |
Exercisable at the end of the period (in dollars per share) | 8.96 | ||
Vested and expected to vest at the end of the period (in dollars per share) | 15.10 | ||
Weighted average grant date fair value (in dollars per share) | $ 19.65 | $ 11.41 | $ 12.54 |
Weighted Average Remaining Contractual Term | |||
Outstanding balance | 5 years 10 months 17 days | 6 years 3 months 18 days | |
Granted | 8 years 11 months 12 days | ||
Exercised | 3 years 11 months 19 days | ||
Exercisable at the end of the period | 4 years 11 months 1 day | ||
Vested and expected to vest at the end of the period | 5 years 10 months 17 days | ||
Aggregate Intrinsic Value | |||
Outstanding balance at the end of the period | $ 225,283 | $ 95,081 | |
Exercisable at the end of the period | 186,529 | ||
Vested and expected to vest at the end of the period | 225,283 | ||
Additional disclosures | |||
Aggregate intrinsic value of employee options exercised | $ 24,900 | $ 24,900 | $ 25,800 |
Stock options | Minimum | |||
Fair value assumptions and methodology | |||
Expected term in (years) | 6 years | 5 years 5 months 5 days | 5 years 6 months 22 days |
Stock options | Maximum | |||
Fair value assumptions and methodology | |||
Expected term in (years) | 6 years 29 days | 6 years 6 months | 6 years 29 days |
Restricted Stock Units | |||
Stock-Based Compensation | |||
Vesting period | 4 years | ||
Summary of restricted stock unit activity | |||
Outstanding balance at the beginning of the period (in shares) | 1,412,934 | ||
Granted (in shares) | 620,259 | ||
Vested (in shares) | (494,504) | ||
Forfeited (in shares) | (125,266) | ||
Outstanding balance at the end of the period (in shares) | 1,413,423 | 1,412,934 | |
Weighted-Average Grant-Date Fair value | |||
Outstanding at the beginning of the period (in dollars per share) | $ 20.60 | ||
Granted (in dollars per share) | 41.74 | ||
Vested (in dollars per share) | 18.98 | ||
Forfeited (in dollars per share) | 26.16 | ||
Outstanding at the end of the period (in dollars per share) | $ 29.95 | $ 20.60 |
Stock-Based Compensation - Empl
Stock-Based Compensation - Employee Stock Purchase Plan (Details) | Jun. 05, 2017USD ($)shares |
Employee Stock Purchase Plan | |
Percentage of purchase price to fair market value | 85.00% |
Maximum payroll deduction amount per calendar year | $ | $ 25,000 |
Minimum | |
Employee Stock Purchase Plan | |
Percentage of payroll deduction | 1.00% |
Maximum | |
Employee Stock Purchase Plan | |
Percentage of payroll deduction | 15.00% |
Maximum shares of common stock issued under ESPP | shares | 1,000,000 |
Net Loss per Share - Antidiluti
Net Loss per Share - Antidilutive (Details) - shares | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Restricted Stock Units | |||
Potential dilutive securities that would have been anti-dilutive | |||
Potential dilutive securities that would have been anti-dilutive due to net loss (in shares) | 1,413,423 | 1,412,934 | 1,220,008 |
Stock options | |||
Potential dilutive securities that would have been anti-dilutive | |||
Potential dilutive securities that would have been anti-dilutive due to net loss (in shares) | 4,559,176 | 4,882,237 | 5,298,510 |
Net Loss per Share - Other (Det
Net Loss per Share - Other (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Numerator | |||||||
Net loss | $ (29,423) | $ (20,684) | $ (26,733) | ||||
Denominator: | |||||||
Weighted-average shares of common stock outstanding, basic and diluted | 47,075,167 | 46,903,628 | 46,494,464 | 45,953,082 | 49,062,611 | 46,609,751 | 42,420,356 |
Net loss per share, basic and diluted (in dollars per share) | $ (0.05) | $ (0.14) | $ (0.18) | $ (0.07) | $ (0.60) | $ (0.44) | $ (0.63) |
Segment and Geographic Inform56
Segment and Geographic Information - Concentration Risk (Details) $ in Thousands | Jul. 01, 2017segment | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2017USD ($)client | Dec. 31, 2016USD ($)client | Dec. 31, 2015USD ($) |
Segment Information | ||||||||||||
Number of operating segments | segment | 2 | |||||||||||
Number of reportable segments | segment | 2 | |||||||||||
Revenue | $ 86,678 | $ 70,250 | $ 64,995 | $ 64,829 | $ 57,350 | $ 51,960 | $ 49,110 | $ 47,444 | $ 286,752 | $ 205,864 | $ 150,194 | |
Accounts receivable, net | 14,174 | 7,860 | 14,174 | 7,860 | ||||||||
Graduate Program Segment | ||||||||||||
Segment Information | ||||||||||||
Revenue | 270,432 | $ 205,864 | $ 150,194 | |||||||||
Short Course Segment | ||||||||||||
Segment Information | ||||||||||||
Revenue | $ 16,320 | |||||||||||
Customer concentration risk | Revenue | Graduate Program Segment | ||||||||||||
Segment Information | ||||||||||||
Number of clients who account for more then 10% | client | 4 | 3 | ||||||||||
Customer concentration risk | Revenue | Short Course Segment | ||||||||||||
Segment Information | ||||||||||||
Percentage of concentration of credit risk | 82.00% | |||||||||||
Credit concentration risk | Accounts receivable | Graduate Program Segment | ||||||||||||
Segment Information | ||||||||||||
Number of clients who account for more then 10% | client | 2 | 2 | ||||||||||
University client A | Customer concentration risk | Revenue | Graduate Program Segment | ||||||||||||
Segment Information | ||||||||||||
Revenue | $ 77,600 | $ 71,000 | ||||||||||
Percentage of concentration of credit risk | 27.00% | 35.00% | ||||||||||
University client A | Credit concentration risk | Accounts receivable | Graduate Program Segment | ||||||||||||
Segment Information | ||||||||||||
Accounts receivable, net | 9,400 | 5,800 | $ 9,400 | $ 5,800 | ||||||||
Percentage of concentration of credit risk | 67.00% | 74.00% | ||||||||||
University client B | Customer concentration risk | Revenue | Graduate Program Segment | ||||||||||||
Segment Information | ||||||||||||
Revenue | $ 48,200 | $ 36,700 | ||||||||||
Percentage of concentration of credit risk | 17.00% | 18.00% | ||||||||||
University client B | Credit concentration risk | Accounts receivable | Graduate Program Segment | ||||||||||||
Segment Information | ||||||||||||
Accounts receivable, net | $ 2,000 | $ 1,400 | $ 2,000 | $ 1,400 | ||||||||
Percentage of concentration of credit risk | 14.00% | 17.00% | ||||||||||
University client C | Customer concentration risk | Revenue | Graduate Program Segment | ||||||||||||
Segment Information | ||||||||||||
Revenue | $ 30,100 | $ 22,100 | ||||||||||
Percentage of concentration of credit risk | 11.00% | 11.00% | ||||||||||
University client D | Customer concentration risk | Revenue | Graduate Program Segment | ||||||||||||
Segment Information | ||||||||||||
Revenue | $ 28,300 | |||||||||||
Percentage of concentration of credit risk | 10.00% |
Segment and Geographic Inform57
Segment and Geographic Information - Segment Performance (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenue by segment | ||||||||||||
Total segment revenue | $ 86,678 | $ 70,250 | $ 64,995 | $ 64,829 | $ 57,350 | $ 51,960 | $ 49,110 | $ 47,444 | $ 286,752 | $ 205,864 | $ 150,194 | |
Profitability by Segment | ||||||||||||
Total Segment Profitability | $ 11,416 | $ 4,541 | $ (6,629) | |||||||||
Segment profitability margin | ||||||||||||
Total segment profitability margin (in percent) | 4.00% | 2.00% | (4.00%) | |||||||||
Net loss | ||||||||||||
Net loss | 509 | (14,739) | (11,754) | (3,439) | (2,209) | (6,758) | (8,337) | (3,380) | $ (29,423) | $ (29,423) | $ (20,684) | $ (26,733) |
Adjustments | ||||||||||||
Interest income | (104) | (18) | (53) | $ (196) | (163) | $ (37) | (91) | (92) | (371) | (383) | (167) | |
Interest expense | 50 | 36 | $ 1 | $ 9 | $ 26 | 87 | 35 | 552 | ||||
Foreign currency loss | 866 | |||||||||||
Depreciation and amortization expense | 19,624 | 9,750 | 7,220 | |||||||||
Income tax benefit | (323) | $ (974) | (1,297) | |||||||||
Stock-based compensation expense | 21,930 | 15,823 | 12,499 | |||||||||
Total adjustments | 40,839 | 25,225 | 20,104 | |||||||||
Total assets | ||||||||||||
Total assets | 482,062 | 244,320 | 482,062 | 482,062 | 244,320 | |||||||
Graduate Program Segment | ||||||||||||
Revenue by segment | ||||||||||||
Total segment revenue | 270,432 | 205,864 | 150,194 | |||||||||
Profitability by Segment | ||||||||||||
Total Segment Profitability | $ 13,022 | $ 4,541 | $ (6,629) | |||||||||
Segment profitability margin | ||||||||||||
Total segment profitability margin (in percent) | 5.00% | 2.00% | (4.00%) | |||||||||
Total assets | ||||||||||||
Total assets | 359,597 | $ 244,320 | 359,597 | $ 359,597 | $ 244,320 | |||||||
Short Course Segment | ||||||||||||
Revenue by segment | ||||||||||||
Total segment revenue | 16,320 | |||||||||||
Profitability by Segment | ||||||||||||
Total Segment Profitability | $ (1,606) | |||||||||||
Segment profitability margin | ||||||||||||
Total segment profitability margin (in percent) | (1.00%) | |||||||||||
Total assets | ||||||||||||
Total assets | $ 122,465 | $ 122,465 | $ 122,465 |
Segment and Geographic Inform58
Segment and Geographic Information - Geographical Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Geographical Information | |||||||||||
Revenue | $ 86,678 | $ 70,250 | $ 64,995 | $ 64,829 | $ 57,350 | $ 51,960 | $ 49,110 | $ 47,444 | $ 286,752 | $ 205,864 | $ 150,194 |
Short Course Segment | |||||||||||
Geographical Information | |||||||||||
Revenue | 16,320 | ||||||||||
Short Course Segment | Non-US | |||||||||||
Geographical Information | |||||||||||
Revenue | 10,000 | ||||||||||
Long-lived assets | $ 700 | $ 700 |
Retirement Plan (Details)
Retirement Plan (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Retirement Plan | |||
Eligible Employees to contribute | 100.00% | ||
Employee contribution | 33.00% | ||
Maximum matching contributions as a percentage of eligible compensation | 6.00% | ||
Contributions made by Company | $ 1.3 | $ 1.1 | $ 0.8 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Related Party Transactions | |||
Repayment of security deposit | $ 0.1 | ||
Rental income from related entity | $ 0.3 | $ 0.3 | |
Executive Officer | |||
Related Party Transactions | |||
Expenses incurred related to the services received from related party | $ 0 | $ 1.4 | $ 1.7 |
Minimum | |||
Related Party Transactions | |||
Ownership interest (as percent) | 5.00% | 5.00% |
Quarterly Financial Informati61
Quarterly Financial Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Quarterly Financial Information (Unaudited) | ||||||||||||
Revenue | $ 86,678 | $ 70,250 | $ 64,995 | $ 64,829 | $ 57,350 | $ 51,960 | $ 49,110 | $ 47,444 | $ 286,752 | $ 205,864 | $ 150,194 | |
Costs and expenses | ||||||||||||
Curriculum and teaching | 4,817 | 1,792 | 6,609 | |||||||||
Servicing and support | 13,445 | 12,939 | 13,458 | 10,925 | 10,859 | 10,351 | 10,260 | 9,512 | 50,767 | 40,982 | 32,047 | |
Technology and content development | 12,846 | 12,735 | 11,140 | 9,205 | 8,496 | 8,670 | 8,842 | 7,275 | 45,926 | 33,283 | 27,211 | |
Marketing and sales | 37,700 | 41,311 | 37,242 | 34,670 | 27,306 | 28,165 | 27,483 | 23,656 | 150,923 | 106,610 | 82,911 | |
General and administrative | 17,844 | 17,227 | 13,930 | 13,664 | 13,061 | 11,569 | 10,944 | 10,447 | 62,665 | 46,021 | 34,123 | |
Total costs and expenses | 86,652 | 86,004 | 75,770 | 68,464 | 59,722 | 58,755 | 57,529 | 50,890 | 316,890 | 226,896 | 176,292 | |
Loss from operations | 26 | (15,754) | (10,775) | (3,635) | (2,372) | (6,795) | (8,419) | (3,446) | (30,138) | (21,032) | (26,098) | |
Interest income | 104 | 18 | 53 | 196 | 163 | 37 | 91 | 92 | 371 | 383 | 167 | |
Interest expense | (50) | (36) | (1) | (9) | (26) | (87) | (35) | (552) | ||||
Other income (expense), net | 106 | 59 | (1,031) | (866) | (250) | |||||||
Loss before income taxes | 186 | (15,713) | (11,754) | (3,439) | (2,209) | (6,758) | (8,337) | (3,380) | (30,720) | (20,684) | (26,733) | |
Income tax benefit (expense) | 323 | 974 | 1,297 | |||||||||
Net loss | $ 509 | $ (14,739) | $ (11,754) | $ (3,439) | $ (2,209) | $ (6,758) | $ (8,337) | $ (3,380) | $ (29,423) | $ (29,423) | $ (20,684) | $ (26,733) |
Net income (loss) per share, basic (in dollars per share) | $ 0.01 | $ (0.30) | $ (0.25) | $ (0.07) | ||||||||
Net income (loss) per share, diluted (in dollars per share) | $ 0.01 | $ (0.30) | $ (0.25) | $ (0.07) | ||||||||
Weighted-average shares used in computing net income (loss) per share, basic (in shares) | 52,330,067 | 48,961,914 | 47,668,397 | 47,237,341 | ||||||||
Weighted-average shares used in computing net income (loss) per share, diluted (in shares) | 56,593,108 | 48,961,914 | 47,668,397 | 47,237,341 | ||||||||
Net loss per share, basic and diluted (in dollars per share) | $ (0.05) | $ (0.14) | $ (0.18) | $ (0.07) | $ (0.60) | $ (0.44) | $ (0.63) | |||||
Weighted-average shares used in computing net loss per share, basic and diluted (in shares) | 47,075,167 | 46,903,628 | 46,494,464 | 45,953,082 | 49,062,611 | 46,609,751 | 42,420,356 |