Cover Page
Cover Page - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Feb. 23, 2021 | Jun. 30, 2020 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2020 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Transition Report | false | ||
Entity File Number | 001-36376 | ||
Entity Registrant Name | 2U, INC. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 26-2335939 | ||
Entity Address, Address Line One | 7900 Harkins Road | ||
Entity Address, City or Town | Lanham, | ||
Entity Address, State or Province | MD | ||
Entity Address, Postal Zip Code | 20706 | ||
City Area Code | 301 | ||
Local Phone Number | 892-4350 | ||
Title of 12(b) Security | Common stock, $0.001 par value per share | ||
Trading Symbol | TWOU | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 2,387,521,721 | ||
Entity Common Stock, Shares Outstanding (in shares) | 73,994,239 | ||
Documents Incorporated by Reference | Portions of the Company’s definitive proxy statement, to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, for its 2021 Annual Meeting of Stockholders, or an amendment on Form 10-K/A are incorporated by reference in Part III of this Form 10-K. | ||
Entity Central Index Key | 0001459417 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash and cash equivalents | $ 500,629 | $ 170,593 |
Restricted cash | 18,237 | 19,276 |
Accounts receivable, net | 46,663 | 33,655 |
Prepaid expenses and other assets | 39,353 | 37,424 |
Total current assets | 604,882 | 260,948 |
Property and equipment, net | 52,734 | 57,643 |
Right-of-use assets | 60,785 | 43,401 |
Goodwill | 415,830 | 418,350 |
Amortizable intangible assets, net | 312,770 | 333,075 |
Other assets, non-current | 97,263 | 73,413 |
Total assets | 1,544,264 | 1,186,830 |
Current liabilities | ||
Accounts payable and accrued expenses | 130,674 | 87,266 |
Deferred revenue | 75,493 | 48,833 |
Lease liability | 10,024 | 7,320 |
Other current liabilities | 21,178 | 12,535 |
Total current liabilities | 237,369 | 155,954 |
Long-term debt | 273,173 | 246,620 |
Deferred tax liabilities, net | 2,810 | 5,133 |
Lease liability, non-current | 83,228 | 66,974 |
Other liabilities, non-current | 6,694 | 899 |
Total liabilities | 603,274 | 475,580 |
Commitments and contingencies (Note 7) | ||
Stockholders’ equity | ||
Preferred stock, $0.001 par value, 5,000,000 shares authorized, none issued | 0 | 0 |
Common stock, $0.001 par value, 200,000,000 shares authorized, 72,451,521 shares issued and outstanding as of December 31, 2020; 63,569,109 shares issued and outstanding as of December 31, 2019 | 72 | 63 |
Additional paid-in capital | 1,646,574 | 1,197,379 |
Accumulated deficit | (695,872) | (479,388) |
Accumulated other comprehensive loss | (9,784) | (6,804) |
Total stockholders’ equity | 940,990 | 711,250 |
Total liabilities and stockholders’ equity | $ 1,544,264 | $ 1,186,830 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 72,451,521 | 63,569,109 |
Common stock, shares outstanding (in shares) | 72,451,521 | 63,569,109 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Statement [Abstract] | |||
Revenue | $ 774,533 | $ 574,671 | $ 411,769 |
Costs and expenses | |||
Curriculum and teaching | 107,968 | 63,270 | 23,290 |
Servicing and support | 125,851 | 98,890 | 67,203 |
Technology and content development | 155,949 | 115,473 | 63,812 |
Marketing and sales | 390,174 | 342,395 | 221,015 |
General and administrative | 173,526 | 131,020 | 82,989 |
Impairment charge | 0 | 70,379 | 0 |
Total costs and expenses | 953,468 | 821,427 | 458,309 |
Loss from operations | (178,935) | (246,756) | (46,540) |
Interest income | 1,354 | 5,800 | 5,173 |
Interest expense | (27,317) | (13,419) | (108) |
Loss on debt extinguishment | (11,671) | 0 | 0 |
Other expense, net | (1,429) | (707) | (1,722) |
Loss before income taxes | (217,998) | (255,082) | (43,197) |
Income tax benefit | 1,514 | 19,860 | 4,867 |
Net loss | $ (216,484) | $ (235,222) | $ (38,330) |
Net loss per share, basic and diluted (in dollars per share) | $ (3.22) | $ (3.83) | $ (0.69) |
Weighted-average shares of common stock outstanding, basic and diluted (in shares) | 67,142,976 | 61,393,666 | 55,833,492 |
Other comprehensive income (loss) | |||
Foreign currency translation adjustments, net of tax of $0 for all periods presented | $ (2,980) | $ 1,710 | $ (13,840) |
Comprehensive loss | $ (219,464) | $ (233,512) | $ (52,170) |
Consolidated Statements of Op_2
Consolidated Statements of Operations and Comprehensive Loss (Parenthetical) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
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 | Total | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) |
Balance (in shares) at Dec. 31, 2017 | 52,505,856 | ||||
Balance at Dec. 31, 2017 | $ 387,832 | $ 53 | $ 588,289 | $ (205,836) | $ 5,326 |
Increase (Decrease) in Stockholders' Equity | |||||
Issuance of common stock in connection with business combination, net of offering costs (in shares) | 3,833,334 | ||||
Issuance of common stock in connection with a public offering of common stock, net of offering costs | 330,901 | $ 4 | 330,897 | ||
Issuance of common stock in connection with settlement of restricted stock units, net of withholdings (in shares) | 553,159 | ||||
Issuance of common stock in connection with settlement of restricted stock units, net of withholdings | (3,451) | (3,451) | |||
Exercise of stock options (in shares) | 1,012,473 | ||||
Exercise of stock options | 7,366 | $ 1 | 7,365 | ||
Issuance of common stock in connection with employee stock purchase plan (in shares) | 63,671 | ||||
Issuance of common stock in connection with employee stock purchase plan | 3,121 | 3,121 | |||
Stock-based compensation expense | 31,410 | 31,410 | |||
Net loss | (38,330) | (38,330) | |||
Foreign currency translation adjustment | (13,840) | (13,840) | |||
Balance (in shares) at Dec. 31, 2018 | 57,968,493 | ||||
Balance at Dec. 31, 2018 | 705,009 | $ 58 | 957,631 | (244,166) | (8,514) |
Increase (Decrease) in Stockholders' Equity | |||||
Issuance of common stock in connection with business combination, net of offering costs (in shares) | 4,608,101 | ||||
Issuance of common stock in connection with a public offering of common stock, net of offering costs | 184,322 | $ 5 | 184,317 | ||
Issuance of common stock in connection with settlement of restricted stock units, net of withholdings (in shares) | 502,795 | ||||
Issuance of common stock in connection with settlement of restricted stock units, net of withholdings | (2,574) | (2,574) | |||
Exercise of stock options (in shares) | 361,134 | ||||
Exercise of stock options | 3,119 | 3,119 | |||
Issuance of common stock in connection with employee stock purchase plan (in shares) | 123,365 | ||||
Issuance of common stock in connection with employee stock purchase plan | 3,382 | $ 3,400 | 3,382 | ||
Issuance of common stock award (in shares) | 5,221 | ||||
Issuance of common stock award | 0 | ||||
Stock-based compensation expense | 51,504 | 51,504 | |||
Net loss | (235,222) | (235,222) | |||
Foreign currency translation adjustment | $ 1,710 | 1,710 | |||
Balance (in shares) at Dec. 31, 2019 | 63,569,109 | 63,569,109 | |||
Balance at Dec. 31, 2019 | $ 711,250 | $ 63 | 1,197,379 | (479,388) | (6,804) |
Increase (Decrease) in Stockholders' Equity | |||||
Issuance of common stock in connection with business combination, net of offering costs (in shares) | 6,800,000 | ||||
Issuance of common stock in connection with a public offering of common stock, net of offering costs | 299,796 | $ 7 | 299,789 | ||
Equity component of convertible senior notes, net of issuance costs | 114,551 | 114,551 | |||
Purchases of capped calls in connection with convertible senior notes | (50,540) | (50,540) | |||
Issuance of common stock in connection with settlement of restricted stock units, net of withholdings (in shares) | 1,582,362 | ||||
Issuance of common stock in connection with settlement of restricted stock units, net of withholdings | (4,782) | $ 2 | (4,784) | ||
Exercise of stock options (in shares) | 353,480 | ||||
Exercise of stock options | 4,177 | 4,177 | |||
Issuance of common stock in connection with employee stock purchase plan (in shares) | 146,570 | ||||
Issuance of common stock in connection with employee stock purchase plan | 3,960 | $ 4,000 | 3,960 | ||
Stock-based compensation expense | 82,042 | 82,042 | |||
Net loss | (216,484) | (216,484) | |||
Foreign currency translation adjustment | $ (2,980) | (2,980) | |||
Balance (in shares) at Dec. 31, 2020 | 72,451,521 | 72,451,521 | |||
Balance at Dec. 31, 2020 | $ 940,990 | $ 72 | $ 1,646,574 | $ (695,872) | $ (9,784) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities | |||
Net loss | $ (216,484) | $ (235,222) | $ (38,330) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||
Non-cash interest expense | 16,267 | 1,153 | 108 |
Depreciation and amortization expense | 96,469 | 69,843 | 32,785 |
Stock-based compensation expense | 82,042 | 51,504 | 31,410 |
Non-cash lease expense | 15,153 | 11,725 | 0 |
Provision for credit losses | 4,642 | 1,425 | 0 |
Impairment charge | 0 | 70,379 | 0 |
Loss on debt extinguishment | 11,671 | 0 | 0 |
Changes in operating assets and liabilities, net of assets and liabilities acquired: | |||
Accounts receivable, net | (17,877) | 11,949 | (18,497) |
Payments to university clients | 1,889 | (21,675) | (11,322) |
Prepaid expenses and other assets | (28,267) | (6,845) | (4,932) |
Accounts payable and accrued expenses | 11,322 | 17,081 | 4,724 |
Accrued compensation and related benefits | 30,637 | (5,539) | 4,046 |
Deferred revenue | 26,061 | 10,014 | 1,527 |
Other liabilities, net | (5,364) | (29,748) | (6,351) |
Other | 1,443 | 1,982 | 1,712 |
Net cash provided by (used in) operating activities | 29,604 | (51,974) | (3,120) |
Cash flows from investing activities | |||
Purchase of a business, net of cash acquired | (949) | (388,004) | 0 |
Additions of amortizable intangible assets | (62,784) | (64,923) | (65,190) |
Purchases of property and equipment | (6,517) | (13,421) | (11,996) |
Purchase of investments | 0 | (10,000) | (25,000) |
Proceeds from maturities of investments | 0 | 25,000 | 0 |
Advances made to university clients | 0 | (400) | (300) |
Advances repaid by university clients | 925 | 350 | 25 |
Net cash used in investing activities | (69,325) | (451,398) | (102,461) |
Cash flows from financing activities | |||
Proceeds from issuance of common stock, net of offering costs | 299,796 | 0 | 330,901 |
Proceeds from debt | 371,681 | 244,724 | 0 |
Payments on debt | (250,837) | 0 | 0 |
Purchases of capped calls in connection with issuance of convertible senior notes | (50,540) | 0 | 0 |
Prepayment premium on extinguishment of senior secured term loan facility | (2,528) | 0 | 0 |
Payment of debt issuance costs | (3,419) | (1,953) | 0 |
Tax withholding payments associated with settlement of restricted stock units | (4,784) | (2,574) | (3,451) |
Proceeds from exercise of stock options | 4,177 | 3,119 | 7,366 |
Proceeds from employee stock purchase plan share purchases | 3,960 | 3,382 | 3,121 |
Payments for acquisition of amortizable intangible assets | 0 | (2,180) | (4,900) |
Net cash provided by financing activities | 367,506 | 244,518 | 333,037 |
Effect of exchange rate changes on cash | 1,212 | (1,049) | (1,054) |
Net increase (decrease) in cash, cash equivalents and restricted cash | 328,997 | (259,903) | 226,402 |
Cash, cash equivalents and restricted cash, beginning of period | 189,869 | 449,772 | 223,370 |
Cash, cash equivalents and restricted cash, end of period | $ 518,866 | $ 189,869 | $ 449,772 |
Organization
Organization | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization 2U, Inc. (together with its subsidiaries, the “Company”) is a leading digital transformation partner for nonprofit colleges and universities. The Company builds, delivers, and supports more than 500 digital and in-person educational offerings, including graduate degrees, undergraduate degrees, professional certificates, boot camps, and short courses, across the Career Curriculum Continuum. The Company has two reportable segments: the Degree Program Segment and the Alternative Credential Segment. The Company’s Degree Program Segment provides the technology and services to nonprofit colleges and universities to enable the online delivery of degree programs. Students enrolled in these programs are generally seeking an undergraduate or graduate degree of the same quality they would receive on campus. In the first quarter of 2021, the Company changed the name of this segment from Graduate Program Segment to Degree Program Segment because this segment now includes undergraduate degree programs. The Company’s Alternative Credential Segment provides premium online short courses and technical, skills-based boot camps through relationships with nonprofit colleges and universities. Students enrolled in these offerings are generally seeking to reskill or upskill through shorter duration, lower-priced offerings that are relevant to the needs of industry and society. On May 22, 2019, the Company completed its acquisition of Trilogy Education Services, Inc. (“Trilogy”), a workforce accelerator that prepares adult learners for high-growth careers in the digital economy through its boot camp offerings. The acquisition expanded the Company’s university client portfolio and added another offering on the Career Curriculum Continuum to make education more accessible for lifelong learners. The results of Trilogy’s operations are included in the Alternative Credential Segment. Refer to Note 3 for further information about the acquisition of Trilogy. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | 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. 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. Significant estimates and assumptions are inherent in the analysis and the measurement of provisions for credit losses, acquired intangible assets, the recoverability of goodwill, deferred tax assets, and convertible senior notes. Due to the inherent uncertainty involved in making estimates, particularly in light of the COVID-19 pandemic, 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. Revenue Recognition, Accounts Receivable and Provision for Credit Losses The Company generates substantially all of its revenue from contractual arrangements, with either its university clients or students, to provide a comprehensive platform of tightly integrated technology and technology-enabled services that support its offerings. Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing the expected value method. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Any estimates, including the effect of the constraint on variable consideration, are evaluated at each reporting period, and if necessary, the Company adjusts its estimate of the overall transaction price. Revenue is then recognized over the remaining estimated period of performance using the cumulative catch-up method. The Degree Program Segment derives revenue primarily from contractually specified percentages of the amounts the Company’s university clients receive from their students in 2U-enabled degree programs for tuition and fees, less credit card fees and other specified charges the Company has agreed to exclude in certain university contracts. The Company’s contracts with university clients in this segment typically have terms of 10 to 15 years and have a single performance obligation, as the promises to provide a platform of tightly integrated technology and services that university clients need to attract, enroll, educate and support students are not distinct within the context of the contracts. The single performance obligation is delivered as the university clients receive and consume benefits, which occurs ratably over a series of academic terms. The amounts received from university clients over the term of the arrangement are variable in nature in that they are dependent upon the number of students that are enrolled in the program within each academic term. These amounts are allocated to and are recognized ratably over the related academic term, defined as the period beginning on the first day of classes through the last. Revenue is recognized net of an allowance, which is established for the Company’s expected obligation to refund tuition and fees to university clients. The Alternative Credential Segment derives revenue primarily from contracts with students for the tuition and fees paid to enroll in, and progress through, the Company’s short courses and boot camps. The Company’s short courses run between six and 16 weeks, while boot camps run between 12 and 24 weeks. In this segment, the Company’s contracts with students include the delivery of the educational and related student support services and are treated as either a single performance obligation or multiple performance obligations, depending upon the offering being delivered. All performance obligations are satisfied ratably over the same presentation period, which is defined as the period beginning on the first day of the course through the last. The Company recognizes the proceeds received, net of any applicable pricing concessions, from the students enrolled and shares contractually specified amounts received from students with the associated university client, in exchange for licenses to use the university brand name and other university trademarks. These amounts are recognized as curriculum and teaching costs on the Company’s consolidated statements of operations and comprehensive loss. The Company’s contracts with university clients in this segment are typically shorter and less restrictive than the Company’s contracts with university clients in the Degree Program Segment. The Company does not disclose the value of unsatisfied performance obligations for the Degree Program Segment because the variable consideration is allocated entirely to a wholly unsatisfied promise to transfer a service that forms part of a single performance obligation. The Company does not disclose the value of unsatisfied performance obligations for the Alternative Credential Segment because the performance obligations are part of contracts that have original durations of less than one year. Contract Acquisition Costs The Company pays commissions to certain of its employees to obtain contracts with university clients in the Degree Program Segment. These costs are capitalized and recorded on a contract-by-contract basis and amortized using the straight-line method over the expected life, which is generally the length of the contract. With respect to contract acquisition costs in the Alternative Credential Segment, the Company has elected to apply the practical expedient in Accounting Standards Codification (“ASC”) Topic 606 to expense these costs as incurred, as the terms of contracts with students in this segment are less than one year. Payments to University Clients Pursuant to certain of the Company’s contracts in the Degree Program Segment, the Company has made, or is obligated to make, payments to university clients at either the execution of a contract or at the extension of a contract in exchange for various marketing and other rights. Generally, these amounts are capitalized as other assets on the Company’s consolidated balance sheets, and amortized as contra revenue over the life of the contract, commencing on the later of when payment is due or when contract revenue recognition begins. Receivables, Contract Assets and Liabilities Balance sheet items related to contracts consist of accounts receivable, net and deferred revenue on the Company’s consolidated balance sheets. Accounts receivable, net includes trade accounts receivable, which are comprised of billed and unbilled revenue. The Company’s trade accounts receivable balances have terms of less than one year. Accounts receivable, net is stated at amortized cost net of provision for credit losses. The Company’s methodology to measure the provision for credit losses requires an estimation of loss rates based upon historical loss experience adjusted for factors that are relevant to determining the expected collectability of accounts receivable. Some of these factors include current market conditions, delinquency trends, aging behavior of receivables and credit and liquidity quality indicators for industry groups, customer classes or individual customers. The Company’s estimates are reviewed and revised periodically based on the ongoing evaluation of credit quality indicators. Historically, actual write-offs for uncollectible accounts have not significantly differed from prior estimates. Interest-free financing and tuition payment plans are made available to students enrolling in select boot camps within the Alternative Credential Segment. The financing plans, which are managed and serviced by third-party providers, are designed to assist students who are unable to completely cover tuition costs and are available only after all other student financial assistance and scholarships have been applied. The associated financing receivables generally have payment terms that exceed one year and are recorded on the Company’s consolidated balance sheets net of any implied pricing concessions, based on our collections history and market data, and significant financing components. The amount of financing receivables recorded within other assets on the Company’s consolidated balance sheets was $25.4 million and $3.9 million as of December 31, 2020 and 2019, respectively. The Company recognizes unbilled revenue when revenue recognition occurs in advance of billings. Unbilled revenue is recognized in the Degree Program Segment because billings to university clients do not occur until after the academic term has commenced and final enrollment information is available. The Company’s unbilled revenue represents contract assets. Unbilled accounts receivable is recognized in the Alternative Credential Segment once the presentation period commences for amounts to be invoiced to students under installment plans that are paid over the same presentation period. The following table presents the change in provision for credit losses on the Company’s consolidated balance sheets for the period indicated: Provision for Credit Losses (in thousands) Balance as of January 1, 2020 $ 1,331 Current period provision 4,642 Amounts written off (16) Other (21) Balance as of December 31, 2020 $ 5,936 Deferred revenue represents the excess of amounts billed or received as compared to amounts recognized in revenue on the Company’s 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’s deferred revenue represents contract liabilities. The Company generally receives payments from Degree Program Segment university clients early in each academic term and from Alternative Credential Segment students, either in full upon registration for the course or in full before the end of the course based on a payment plan, prior to completion of the service period. These payments are recorded as deferred revenue until the services are delivered or until the Company’s obligations are otherwise met, at which time revenue is recognized. Marketing and Sales Costs The Company’s marketing and sales costs relate to activities to attract students to offerings across both of the Company’s segments. This includes the cost of Search Engine Optimization, Search Engine Marketing and Social Media Optimization, as well as personnel and personnel-related expense for the Company’s marketing and recruiting teams. For the years ended December 31, 2020, 2019 and 2018, expense related to the Company’s marketing and advertising efforts of its own brand were not material. All such costs are expensed as incurred and reported in marketing and sales expense on the Company’s consolidated statements of operations and comprehensive loss. Stock-Based Compensation The Company provides stock-based compensation awards consisting of restricted stock units (“RSUs”), performance restricted stock units (“PRSUs”) and stock options to employees, directors and consultants. The Company measures all stock-based compensation awards at fair value as of the grant date. The fair values of RSUs and PRSUs containing performance-based vesting conditions are based on the fair value of the Company’s stock. The Company uses a Monte Carlo model to estimate the fair value of PRSUs containing market-based vesting conditions and uses a Black-Scholes option pricing model to measure the fair value of stock option grants. The Company also maintains the 2017 Employee Stock Purchase Plan (the “ESPP”) and estimates the fair value of each purchase right thereunder as of the grant date using a Black-Scholes option pricing model. For awards subject only to service-based vesting conditions, the Company recognizes stock-based compensation expense on a straight-line basis over the awards’ requisite service period. For awards subject to both service and performance-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. For awards subject to both service and market-based vesting conditions, the Company recognizes stock-based compensation expense using an accelerated recognition method over the requisite service period beginning with the date of the grant and ending upon completion of the service period, with stock-based compensation expense being recognized irrespective of the achievement of the market condition. For shares subject to the ESPP, the Company uses the straight-line method to record stock-based compensation expense over the respective offering period. Refer to Note 11 for further information about the Company’s stock-based compensation awards. 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 on the consolidated statements of operations and comprehensive loss. Cash and Cash Equivalents Cash and cash equivalents consist of bank checking accounts, money market accounts, investments in certificates of deposit that have an original maturity of three months or less and highly liquid marketable securities with maturities at the time of purchase of three months or less. Restricted Cash The Company maintains restricted cash as collateral for standby letters of credit for the Company’s leased facilities and in connection with the deferred government grant obligations. Fair Value Measurements The carrying amounts of certain assets and liabilities, including cash and cash equivalents, accounts receivable, advances to university clients, 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. Generally, assets are recorded at fair value on a non-recurring basis as a result of impairment charges. The Company remeasures non-financial assets such as goodwill, intangible assets and other long-lived assets at fair value when there is an indicator of impairment, and records them at fair value only when recognizing an impairment loss. 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. Refer to Notes 4 and 5 for further discussion of assets measured at fair value on a nonrecurring basis. 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. The Company has financial instruments, including cash deposits, accounts receivable, accounts payable and debt. The carrying values for such financial instruments, other than debt, each approximated their fair values as of December 31, 2020 and 2019. 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 five four 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 Capitalized Technology. Capitalized technology includes certain purchased software and technology licenses, direct third-party costs, and internal payroll and payroll-related costs used in the creation of our internal-use 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 using the straight-line method over the estimated useful life of the software, which is generally three Capitalized Content Development. The Company develops content for each offering on a course-by-course basis in collaboration with university client faculty and industry experts. Depending upon the offering, the Company may use materials provided by university clients and their faculty, including curricula, case studies, presentations and other reading materials. The Company is responsible for the creation of materials suitable for delivery through the Company’s online learning platform, including all expenses associated with this effort. With respect to the Degree Program Segment, the development of content is part of the Company’s single performance obligation and is considered a contract fulfillment cost. 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’ offerings for delivery via the Company’s online learning platform. 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 begins. The capitalized costs for each offering are recorded on a course-by-course basis and included in capitalized content costs in amortizable intangible assets, net on the Company’s consolidated balance sheets. These costs are amortized using the straight-line method over the estimated useful life of the respective course, which is generally four 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. In order to assess the recoverability of the capitalized technology and content development costs, the costs are grouped by the lowest level of independent cash flows. 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. The Company’s impairment analysis is based upon cumulative results and forecasted performance. Non-Cash Long-Lived Asset Additions The Company had non-cash capital asset additions of $3.3 million and $3.1 million in property and equipment, during the years ended December 31, 2020 and 2019, respectively, primarily related to landlord funded leasehold improvements. Due to extended payment terms associated with the timing of cash capital expenditures made more than 90 days after the date of purchase, an additional $2.2 million was classified as cash flows from financing activities in the consolidated statement of cash flows for the year ended December 31, 2019. Goodwill Goodwill is the excess of purchase price over the fair value of identified net assets of businesses acquired. The Company’s goodwill balance relates to its acquisitions of GetSmarter in July 2017 and Trilogy in May 2019. The Company reviews goodwill annually, as of October 1. 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 a reporting unit below its carrying value. The Company tests goodwill at the reporting unit level, which is an operating segment or one level below an operating segment. The Company initially assesses qualitative factors to determine if it is necessary to perform a quantitative goodwill impairment review. The Company reviews goodwill for impairment using a quantitative approach 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 completion of a quantitative assessment, the Company may be required to recognize an impairment based on the difference between the carrying value and the fair value of the reporting unit. The Company determines the fair value of a reporting unit by utilizing a weighted combination of the income-based and market-based approaches. The income-based approach requires the Company to make significant assumptions and estimates. These assumptions and estimates primarily include, but are not limited to, the selection of appropriate peer group companies, discount rates, terminal growth rates, and forecasts of revenue, operating income, depreciation and amortization expense, capital expenditures and future working capital requirements. When determining these assumptions and preparing these estimates, the Company considers each reporting unit’s historical results and current operating trends, revenue, profitability, cash flow results and forecasts, and industry trends. These estimates can be affected by a number of factors including, but not limited to, general economic and regulatory conditions, market capitalization, the continued efforts of competitors to gain market share and prospective student enrollment patterns. In addition, the value of a reporting unit using the market-based approach is estimated by comparing the reporting unit to other publicly traded companies and/or to publicly-disclosed business mergers and acquisitions in similar lines of business. The value of a reporting unit is based on pricing multiples of certain financial parameters observed in the comparable companies. The Company also makes estimates and assumptions for market values to determine a reporting unit’s estimated fair value. Based on the Company’s quantitative assessment performed during 2019 and the qualitative assessment performed as of October 1, 2020, the date of the annual goodwill impairment assessment, the Company determined that the estimated fair values of the reporting units exceeded their carrying values. It is possible that future changes in the Company’s circumstances, including potential impacts from COVID-19, or in the variables associated with the judgments, assumptions and estimates used in assessing the fair value of our reporting units, could require the Company to record additional impairment charges in the future. Equity Interests As of both December 31, 2020 and 2019, the Company had a $10.0 million investment in an education technology company recorded within other assets, non-current on the consolidated balance sheets. This investment does not have a readily determinable fair value, and is accounted for as a cost method investment, which is subject to fair value remeasurement upon the occurrence of an observable event. As of December 31, 2020, there were no events that would require a change in the fair value of this investment. Employee Benefits The Company offers a variety of benefits to its employees (e.g., health care, gym memberships and tuition reimbursement). The Company accounts for costs related to providing employee benefits as incurred, unless there is a service requirement, in which case, such costs are recognized over the service commitment period. Convertible Senior Notes In April 2020, the Company issued 2.25% convertible senior notes due May 1, 2025 (the “Notes”) in an aggregate principal amount of $380 million, including the exercise by the initial purchasers of an option to purchase additional Notes, in a private offering. Refer to Note 9 for more information regarding the Notes. The Notes are accounted for in accordance with Financial Accounting Standards Board (“FASB”) ASC Subtopic 470-20, Debt with Conversion and Other Options (“ASC 470-20”). Pursuant to ASC 470-20, issuers of certain convertible debt instruments, such as the Notes, that have a net settlement feature and may be settled wholly or partially in cash upon conversion are required to separately account for the liability (debt) and equity (conversion option) components of the instrument. The carrying amount of the liability component of the instrument is computed by estimating the fair value of a similar liability without the conversion option using a market-based approach. The amount of the equity component is then calculated by deducting the fair value of the liability component from the principal amount of the instrument. The difference between the principal amount and the liability component represents a debt discount that is amortized to interest expense over the term of the Notes using the effective interest rate method. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. In accounting for the issuance costs related to the Notes, the allocation of issuance costs incurred between the liability and equity components was based on their relative values. Debt Issuance Costs Debt issuance costs are incurred as a result of entering into certain borrowing transactions and are presented as a reduction from the carrying amount of the debt liability on the Company’s consolidated balance sheets. Debt issuance costs are amortized over the term of the associated debt instrument. The amortization of debt issuance costs is included as a component of interest expense on the Company’s consolidated statements of operations and comprehensive loss. If the Company extinguishes debt prior to the end of the underlying instrument’s full term, some or all of the unamortized debt issuance costs may need to be written off, and a loss on extinguishment may need to be recognized. Refer to Note 9 for further information about the Company’s debt. Leases The Company adopted ASC Topic 842, Leases , on January 1, 2019 using the modified retrospective approach and no prior periods were restated. For the Company’s operating leases, an assessment is performed to determine if an arrangement is a lease at inception. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As the information necessary to determine the rate implicit in the Company’s leases is not readily available, the Company determines its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any prepaid lease payments made, less lease incentives. The Company’s lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company does not have any finance leases for any periods presented. The Company has elected, as an accounting policy for its leases of real estate, to account for lease and non-lease components in a contract as a single lease component. In addition, the recognition requirements are not applied to leases with a term of 12 months or less. Rather, the lease payments for short-term leases are recognized on the consolidated statements of operations and comprehensive loss on a straight-line basis over the lease term. Variable payments that depend on an index or a rate are initiall |
Business Combination
Business Combination | 12 Months Ended |
Dec. 31, 2020 | |
Business Combinations [Abstract] | |
Business Combination | Business Combination On May 22, 2019, the Company completed its acquisition of Trilogy pursuant to an Agreement and Plan of Merger and Reorganization, dated as of April 7, 2019 (the “Merger Agreement”), for a net purchase price of $608.6 million in cash and stock consideration, subject to final adjustments related to working capital and indebtedness. These final adjustments to the purchase price were paid in the first quarter of 2020. Under the terms of the Merger 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 Trilogy. These awards were issued pursuant to the Company’s 2014 Equity Incentive Plan, are subject to future service requirements and primarily vested over an 18-month period. In addition, a portion of the purchase price held in escrow was recognized as compensation expense in the third quarter of 2019 as the service requirements of certain key employees was determined to be fulfilled. The net assets and results of operations of Trilogy are included on the Company’s consolidated financial statements within the Alternative Credential Segment as of May 22, 2019. The following table reflects the Company’s completed valuation of the assets acquired and liabilities assumed of Trilogy as of the date of the acquisition: Estimated Average Purchase Price (in thousands) Cash and cash equivalents $ 35,320 Current assets 30,081 Property and equipment, net 2,411 Other non-current assets 6,276 Amortizable intangible assets: Developed technology 3 48,096 Developed content 4 48,050 University client relationships 10 84,150 Trade names and domain names 5 7,100 Goodwill 425,346 Current liabilities (57,010) Non-current liabilities (21,224) $ 608,596 Intangible assets are valued using the cost replacement, multi-period excess earnings and relief-from-royalty methodologies, which are Level 3 measurements. The fair value of the developed technology and developed content acquired from Trilogy was determined using the replacement cost method under the cost approach. Under the replacement cost method, consideration was given to the estimated time, investment and resources required to recreate the acquired intangibles, adjusted for obsolescence, an estimated developer’s profit and rate of return, in accordance with accepted valuation methodologies. The fair value of university client relationships was determined using the multi-period excess earnings method under the income approach based on discounted projected cash flows associated with the net earnings attributable to the acquired customer relationships. These projected cash flows are estimated over the remaining economic life of the intangible asset and are considered from a market participant perspective. Significant estimates and assumptions required under this method include growth rates for revenue attributable to the existing university client base, forecasted margins, attrition and renewal rates, a discount rate, and contributory asset charges. Trade names were valued using the relief-from-royalty method under the income approach. This method assumes that trade names have value to the extent that their owner is relieved of the obligation to pay royalties for the benefits received from them. This method required several assumptions, including future revenue for the trade name, the appropriate royalty rate and the discount rate. The goodwill balance is primarily attributed to the assembled workforce, expanded market opportunities and operating synergies anticipated upon the integration of the operations of the Company and Trilogy. The goodwill resulting from the acquisition will not be tax deductible. Refer to Note 5 for details. |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Property and Equipment, Net The following table presents the components of property and equipment, net on the Company’s consolidated balance sheets as of each of the dates indicated. December 31, December 31, (in thousands) Computer hardware $ 9,053 $ 8,685 Furniture and office equipment 18,041 18,478 Leasehold improvements 58,443 50,461 Leasehold improvements in process 2,184 4,318 Total 87,721 81,942 Accumulated depreciation and amortization (34,987) (24,299) Property and equipment, net $ 52,734 $ 57,643 Depreciation expense of property and equipment was $13.4 million, $11.6 million and $8.9 million for the years ended December 31, 2020, 2019 and 2018, respectively. |
Goodwill and Amortizable Intang
Goodwill and Amortizable Intangible Assets | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Amortizable Intangible Assets | Goodwill and Amortizable Intangible Assets The following table presents the changes in the carrying amount of goodwill by reportable segment on the Company’s consolidated balance sheets for the periods indicated. Degree Program Segment Alternative Credential Segment Total (in thousands) Balance as of December 31, 2018 $ — $ 61,852 $ 61,852 Goodwill recognized in connection with business combination — 425,346 425,346 Impairment charge (cumulative) — (70,379) (70,379) Foreign currency translation adjustments — 1,531 1,531 Balance as of December 31, 2019 — 418,350 418,350 Foreign currency translation adjustments and other — (2,520) (2,520) Balance as of December 31, 2020 $ — $ 415,830 $ 415,830 The Company experienced a sustained decline in its stock price during the third quarter of 2019, which management deemed a triggering event that required the Company to perform an interim goodwill impairment test as of September 1, 2019. The Company’s test relied in part on the work of an independent valuation firm engaged to provide inputs as to the fair value of the reporting units and to assist in the related calculations and analysis. The results of the interim impairment test indicated that the carrying value of the boot camp business acquired in 2019 within the Company’s Alternative Credential Segment exceeded the fair value by $70.4 million. The decrease in this reporting unit’s fair value was primarily due to lower expectations of future performance due to the impact of changes in key management as well as an increased focus in integrating the operations of the newly acquired reporting unit, which impacted the estimated operating cash flows. As a result, the Company recorded an impairment charge of $70.4 million on the consolidated statements of operations and comprehensive loss in the third quarter of 2019. For purposes of testing the Company’s goodwill for impairment, fair value measurements were determined primarily using a weighted combination of the income-based and market-based approaches. The income-based approach largely relied on inputs that were not observable to active markets, which would be deemed “Level 3” fair value measurements, as defined in the Fair Value Measurements section of Note 2. These inputs included the Company’s expectations about future revenue growth, profitability, income tax rates, cash flows and the rate at which cash flows should be discounted, in order to determine this fair value estimate. The primary input used in the market-based approach was publicly-available data on the financial ratios of the Company’s competitors. The following table presents the components of amortizable intangible assets, net on the Company’s consolidated balance sheets as of each of the dates indicated. December 31, 2020 December 31, 2019 Estimated Gross Accumulated Net Gross Accumulated Net (in thousands) Capitalized technology 3-5 $ 165,254 $ (75,822) $ 89,432 $ 142,712 $ (41,106) $ 101,606 Capitalized content development 4-5 208,170 (88,168) 120,002 167,758 (54,736) 113,022 University client relationships 9-10 109,498 (23,376) 86,122 110,344 (12,419) 97,925 Trade names and domain names 5-10 26,697 (9,483) 17,214 26,462 (5,940) 20,522 Total amortizable intangible assets, net $ 509,619 $ (196,849) $ 312,770 $ 447,276 $ (114,201) $ 333,075 The amounts presented in the table above include $38.6 million and $30.7 million of in process capitalized technology and content development as of December 31, 2020 and December 31, 2019, respectively. The Company recorded amortization expense related to amortizable intangible assets of $83.1 million, $58.3 million and $23.9 million for the years ended December 31, 2020, 2019 and 2018, respectively. The following table presents the estimated future amortization expense of the Company’s amortizable intangible assets placed in service as of December 31, 2020. Future Amortization Expense (in thousands) 2021 $ 81,927 2022 65,971 2023 48,928 2024 29,368 2025 16,434 Thereafter 31,477 Total $ 274,105 |
Accrued Expenses and Deferred C
Accrued Expenses and Deferred Costs | 12 Months Ended |
Dec. 31, 2020 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Deferred Costs | Accrued Expenses and Deferred Costs The following table presents the components of accounts payable and accrued expenses on the Company’s consolidated balance sheets as of each of the dates indicated. December 31, 2020 December 31, 2019 (in thousands) Accrued university and instructional staff compensation $ 27,371 $ 23,419 Accrued marketing costs 24,682 22,055 Accrued transaction, integration and restructuring-related costs* 3,492 4,459 Accrued compensation and related benefits 52,820 21,885 Accounts payable and other accrued expenses 22,309 15,448 Total accounts payable and accrued expenses $ 130,674 $ 87,266 * As of December 31, 2020 and 2019, accrued transaction, integration and restructuring-related costs included zero and $0.5 million, respectively, related to an employee termination benefits reserve for organizational restructuring. In response to COVID-19, various government programs have been announced to provide financial relief for affected businesses. Most significantly, under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted in the United States on March 27, 2020, the Company is allowed to defer payment of the employer’s share of Social Security taxes incurred from March 27, 2020 through December 31, 2020. In addition, the CARES Act provides eligible employers with an employee retention tax credit for employees whose services were impacted by COVID-19. The amount of payroll taxes subject to deferred payment, net of employee retention tax credits, is approximately $11.3 million. This total deferred amount is payable in equal installments, with 50% due by December 31, 2021 and the remainder due by December 31, 2022. As of December 31, 2020 and 2019, the Company had balances of $6.3 million and $3.1 million, respectively, of deferred costs incurred to integrate the software associated with its cloud computing arrangements, within other assets, non-current on the consolidated balance sheets. Such costs are subject to amortization over the remaining contractual term of the associated cloud computing arrangement, with a useful life of between three |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal Contingencies The Company is involved in various claims and legal proceedings arising in the ordinary course of business. The Company accrues a liability when a loss is considered probable and the amount can be reasonably estimated. While the Company does not expect that the ultimate resolution of any existing claims and proceedings (other than the specific matter described below, if decided adversely), individually or in the aggregate, will have a material adverse effect on its financial position, an unfavorable outcome in some or all of these proceedings could have a material adverse impact on the results of operations or cash flows for a particular period. This assessment is based on the Company’s current understanding of relevant facts and circumstances. With respect to current legal proceedings, the Company does not believe it is probable a material loss exceeding amounts already recognized has been incurred as of the date of the balance sheets presented herein. As such, the Company’s view of these matters is subject to inherent uncertainties and may change in the future. In re 2U, Inc., Securities Class Action On August 7 and 9, 2019, Aaron Harper and Anne M. Chinn filed putative class action complaints against the Company, Christopher J. Paucek, the Company’s CEO, and Catherine A. Graham, the Company’s former CFO, in the United States District Court for the Southern District of New York, alleging violations of Sections 10(b) and 20(a) of the Exchange Act, and Rule 10b-5 promulgated thereunder, based upon allegedly false and misleading statements regarding the Company’s business prospects and financial projections. The district court transferred the cases to the United States District Court for the District of Maryland, consolidated them under docket number 8:19-cv-3455 (D. Md.), and appointed Fiyyaz Pirani as the lead plaintiff in the consolidated action. On July 30, 2020, Mr. Pirani filed a consolidated class action complaint (“CAC”), adding Harsha Mokkarala, the Company’s former Chief Marketing Officer, as a defendant. The CAC also asserts claims under Sections 11, 12(a)(2), and 15 of the Securities Act of 1933, as amended, against Mr. Paucek, Ms. Graham, members of the Company’s board of directors, and the Company’s underwriters, based on allegations related to the Company’s secondary stock offering on May 23, 2018. The proposed class consists of all persons who acquired the Company’s securities between February 26, 2018 and July 30, 2019. On October 27, 2020, defendants filed a motion to dismiss. On December 18, 2020, the plaintiffs filed their opposition brief and on February 9, 2021 the defendants filed a reply brief. The Company believes that the claims are without merit, and it intends to vigorously defend against these claims. However, due to the complex nature of the legal and factual issues involved, the outcome of this matter is not presently determinable. Stockholder Derivative Suits On April 30, 2020, Richard Theis filed a stockholder derivative complaint purportedly on behalf of the Company and against Christopher J. Paucek, the Company’s CEO, Catherine A. Graham, the Company’s former CFO, and the Company’s board of directors in the United States District Court for the Southern District of New York, with docket number 20-cv-3360. The complaint alleges claims for breaches of fiduciary duty, insider sales and misappropriation of information, unjust enrichment, and violations of Section 14(a) of the Exchange Act, based upon allegedly false and misleading statements regarding the Company’s business prospects and financial projections. On July 22, 2020, the court entered a joint stipulation staying the case pending resolution of the securities class action. Due to the complex nature of the legal and factual issues involved, the outcome of this matter is not presently determinable. On August 21, 2020, Thomas Lucey filed a stockholder derivative complaint purportedly on behalf of the Company and against Christopher J. Paucek, the Company’s CEO, Catherine A. Graham, the Company’s former CFO, Harsha Mokkarala, the Company’s former Chief Marketing Officer and the Company’s board of directors in the United States District Court for the District of Maryland, with docket number 1:20-cv-02424-GLR. The complaint alleges claims for breaches of fiduciary duty, insider trading, and contribution for alleged violations of Sections 10(b) and 21D of the Exchange Act, based upon allegedly false and misleading statements regarding the Company’s business prospects and financial projections. On September 3, 2020, the court entered a joint stipulation staying the case pending resolution of the securities class action. Due to the complex nature of the legal and factual issues involved, the outcome of this matter is not presently determinable. On November 30, 2020, Leo Shumacher filed a stockholder derivative complaint purportedly on behalf of the Company and against Christopher J. Paucek, the Company’s CEO, Catherine A. Graham, the Company’s former CFO, Harsha Mokkarala, the Company’s former Chief Marketing Officer, and the Company’s board of directors in the Court of Chancery of the State of Delaware, with docket number 2020-1019-AGB. The complaint alleges claims for breaches of fiduciary duty and unjust enrichment, based upon allegedly false and misleading statements regarding the Company’s business prospects and financial projections. On January 6, 2021, the court entered a joint stipulation staying the case pending resolution of the securities class action. Due to the complex nature of the legal and factual issues involved, the outcome of this matter is not presently determinable. Marketing and Sales Commitments Certain agreements entered into between the Company and its university clients in the Degree Program Segment require the Company to commit to meet certain staffing and spending investment thresholds related to marketing and sales activities. In addition, certain agreements in the Degree Program Segment 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 Pursuant to certain of the Company’s contracts in the Degree Program Segment, the Company has made, or is obligated to make, payments to university clients in exchange for contract extensions and various marketing and other rights. The following table presents the estimated future minimum payments due to university clients as of December 31, 2020. Future Minimum Payments (in thousands) 2021 $ 1,625 2022 625 2023 625 2024 625 2025 625 Thereafter 2,525 Total future minimum payments to university clients $ 6,650 Contingent Payments The Company has entered into agreements with certain of its university clients in the Degree Program Segment that require the Company to make future minimum payments in the event that certain program metrics are not achieved on an annual basis. The Company recognizes any estimated contingent payments under these agreements as contra revenue over the period to which they relate, and records a liability in other current liabilities on the consolidated balance sheets. As of December 31, 2020, the Company has entered into an agreement to make an additional investment in an education technology company of up to $5.0 million, upon demand by the investee. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Leases | Leases The Company leases facilities under non-cancellable operating leases primarily in the United States, South Africa, the United Kingdom and Canada. The Company’s operating leases have remaining lease terms of between less than one In October 2020, the Company entered into an agreement with an unrelated party to sublease a portion of the Company’s office space in the United States. As of December 31, 2020, this sublease was classified as an operating lease and had a remaining term of 2.8 years, with scheduled annual rent increases and no option to extend or renew the sublease term. Sublease income is recognized on a straight-line basis over the sublease term as a reduction to expense incurred by the Company under the associated head lease. The following table presents the components of lease expense on the Company’s consolidated statements of operations and comprehensive loss for each of the periods indicated. Year Ended 2020 2019 (in thousands) Operating lease expense $ 15,153 $ 11,725 Short-term lease expense 362 737 Variable lease expense 5,837 4,195 Sublease income (36) — Total lease expense $ 21,316 $ 16,657 As of December 31, 2020, for the Company’s operating leases, the weighted-average remaining lease term was 7.4 years and the weighted-average discount rate was 11.4%. For the years ended December 31, 2020 and 2019, cash paid for amounts included in the measurement of operating lease liabilities was $17.3 million and $13.5 million. The following table presents the maturities of the Company’s operating lease liabilities as of the date indicated, and excludes the impact of future sublease income totaling $0.7 million in aggregate. December 31, 2020 (in thousands) 2021 $ 19,847 2022 18,992 2023 18,774 2024 18,373 2025 14,347 Thereafter 48,965 Total lease payments 139,298 Less: imputed interest (46,046) Total lease liability $ 93,252 As of December 31, 2020, the Company had additional operating leases for facilities that have not yet commenced with future minimum lease payments of approximately $51.2 million. Each of these operating leases will commence during the fiscal year ending 2021 and have lease terms of approximately 12 years. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Debt The following table presents the components of outstanding long-term debt on the Company’s consolidated balance sheets as of each of the dates indicated. December 31, 2020 December 31, 2019 (in thousands) Convertible senior notes $ 380,000 $ — Senior secured term loan facility — 250,000 Deferred government grant obligations 3,500 3,500 Other borrowings 1,343 998 Less: unamortized debt discount and issuance costs (111,043) (7,238) Total debt 273,800 247,260 Less: current portion of long-term debt (627) (640) Total long-term debt $ 273,173 $ 246,620 The Company believes the carrying value of its long-term debt approximates the fair value of the debt as the terms and interest rates approximate the market rates, other than the Notes, which had an estimated fair value of $616.6 million as of December 31, 2020. Each of the Company’s long-term debt instruments were classified as Level 2 within the fair value hierarchy. Convertible Senior Notes In April 2020, the Company issued the Notes in an aggregate principal amount of $380 million, including the exercise by the initial purchasers of an option to purchase additional Notes, in a private placement to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended. The net proceeds from the offering of the Notes were approximately $369.6 million after deducting the initial purchasers’ discounts, commissions and offering expenses payable by the Company. The Notes are governed by an indenture (the “Indenture”) between the Company and Wilmington Trust, National Association, as trustee. The Notes bear interest at a rate of 2.25% per annum, payable semi-annually in arrears on May 1 and November 1 of each year, beginning on November 1, 2020. The Notes will mature on May 1, 2025, unless earlier repurchased, redeemed or converted. The interest expense related to the Notes for the year ended December 31, 2020, including amortization of the debt discount and debt issuance costs, was $19.8 million. The associated effective interest rate of the Notes for the year ended December 31, 2020 was approximately 10.9%. The Notes are the senior, unsecured obligations of the Company and are equal in right of payment with the Company’s senior unsecured indebtedness, senior in right of payment to the Company’s indebtedness that is expressly subordinated to the Notes, effectively subordinated to the Company’s senior secured indebtedness (including the Loans (as defined below)), to the extent of the value of the collateral securing that indebtedness, and structurally subordinated to all indebtedness and other liabilities, including trade payables, and (to the extent the Company is not a holder thereof) preferred equity, if any, of the Company’s subsidiaries. In accounting for the issuance of the Notes, the Company separated the Notes into liability and equity components. The carrying amount of the liability component was calculated using a discount rate of 10.3%, which was determined by measuring the fair value of a similar debt instrument that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option, excluding debt issuance costs, was $117.8 million and was determined by deducting the fair value of the liability component from the par value of the Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the liability component over its carrying amount, or the debt discount, is amortized to interest expense at an annual effective interest rate over the contractual term of the Notes. Holders may convert their Notes at their option in the following circumstances: • during any calendar quarter commencing after the calendar quarter ending on September 30, 2020 (and only during such calendar quarter), if the last reported sale price per share of the Company’s common stock, exceeds 130% of the conversion price for each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; • during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “measurement period”) in which the trading price per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Company’s common stock on such trading day and the conversion rate on such trading day; • upon the occurrence of certain corporate events or distributions on the Company’s common stock, as provided in the Indenture; • if the Company calls such Notes for redemption; and • at any time from, and including, November 1, 2024 until the close of business on the second scheduled trading day immediately before the maturity date. The initial conversion rate for the Notes is 35.3773 shares of the Company’s common stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $28.27 per share of the Company’s common stock, and is subject to adjustment upon the occurrence of certain specified events as set forth in the Indenture. Upon conversion, the Company will pay or deliver, as applicable, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election. It is our intent to settle conversions of the Notes through combination settlement, which contemplates repayment in cash of the principal amount and repayment in shares of the Company’s common stock of any excess of the conversion value over the principal amount. Upon the occurrence of a “make-whole fundamental change” (as defined in the Indenture), the Company will in certain circumstances increase the conversion rate for a specified period of time. In addition, upon the occurrence of a “fundamental change” (as defined in the Indenture), holders of the Notes may require the Company to repurchase their Notes at a cash repurchase price equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any. The Notes will be redeemable, in whole or in part, at the Company’s option at any time, and from time to time, on or after May 5, 2023 and on or before the 40th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, but only if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice, and (ii) the trading day immediately before the date the Company sends such notice. In addition, calling any Note for redemption will constitute a “make-whole fundamental change” with respect to that Note, in which case the conversion rate applicable to the conversion of that Note will be increased in certain circumstances if such Note is converted after it is called for redemption. No sinking fund is provided for the Notes. In connection with the Notes, the Company entered into privately negotiated capped call transactions (the “Capped Call Transactions”) with certain counterparties. The Capped Call Transactions are generally expected to reduce potential dilution to the Company’s common stock upon any conversion of Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset subject to a cap, based on the cap price of the Capped Call Transactions. The cap price of the Capped Call Transactions is initially $44.34 per share. The cost of the Capped Call Transactions was approximately $50.5 million. In April 2020, the Company used a portion of the proceeds from the sale of the Notes to repay in full all amounts outstanding, and discharge all obligations in respect of, the Term Loan (as defined below). The Company intends to use the remaining net proceeds from the sale of the Notes for working capital or other general corporate purposes, which may include capital expenditures, potential acquisitions and strategic transactions. Credit Agreement On June 25, 2020, the Company entered into a credit agreement (the “Credit Agreement”) with Morgan Stanley Senior Funding, Inc., as administrative agent and collateral agent, and certain other lenders party thereto that provides for $50 million in revolving loans (the “Loans”). The Credit Agreement allows for incremental borrowings from time to time in an aggregate amount for all such incremental amounts not to exceed (i) the lesser of (x) $50 million and (y) an amount such that the aggregate principal amount of the lenders’ commitments under the revolving credit facility does not exceed $100 million, plus (ii) certain specified prepayments of indebtedness, plus (iii) an unlimited amount subject to satisfaction of a leverage ratio based compliance test. The Loans mature on December 26, 2023 and bear interest, at the Company’s option, at variable rates based on (i) a customary base rate plus an applicable margin of 2.75% or (ii) an adjusted LIBOR rate (with a floor of 0.00%) for the interest period relevant to such borrowing plus an applicable margin of 3.75%. The Credit Agreement contains customary conditions to borrowing, events of default and covenants, including covenants that restrict the Company’s ability to incur indebtedness, grant liens, make investments and acquisitions, pay dividends, repurchase equity interests in the Company and enter into affiliate transactions and asset sales. The Credit Agreement also contains financial covenants that require the Company to (i) maintain minimum liquidity and minimum consolidated EBITDA (as defined in the Credit Agreement) through the Company’s fiscal quarter ending on December 31, 2021 and (ii) not exceed certain maximum leverage and fixed charge ratios for any period of four consecutive fiscal quarters ending after (but not including) December 31, 2021 through the maturity date. As of December 31, 2020, no amounts were outstanding under the Credit Agreement. Senior Secured Term Loan Facility The Company had a credit agreement with Owl Rock Capital Corporation, as administrative agent and collateral agent, and certain other lenders party thereto that provided for a $250 million senior secured term loan facility (the “Term Loan”). On April 23, 2020, the Company repaid its $250 million Term Loan in full, plus accrued interest of $1.3 million, and terminated the credit agreement with Owl Rock Capital Corporation. In addition, the Company recognized a loss on debt extinguishment of $11.7 million, consisting of a write-off of previously capitalized deferred financing costs of $9.2 million and a prepayment premium of $2.5 million. Deferred Government Grant Obligations Government grants awarded to the Company in the form of forgivable loans are recorded within long-term debt on the Company’s consolidated balance sheets until all contingencies are resolved and the grants are determined to be realized. The Company has a total of two outstanding conditional loan agreements with Prince George’s County, Maryland and the State of Maryland for an aggregate amount of $3.5 million, each bearing an interest rate of 3% per annum. These agreements are conditional loan obligations that may be forgiven, provided that the Company attains certain conditions related to employment levels at 2U’s Lanham, Maryland headquarters. In July 2020, the Company amended its conditional loan agreement with Prince George’s County to modify the terms of the employment level thresholds. The conditional loan with Prince George’s County has a maturity date of June 22, 2027. In January 2021, the Company amended its conditional loan agreement with the State of Maryland to modify the terms of the employment level thresholds and extend the maturity date to June 30, 2028. The interest expense related to these loans for the years ended December 31, 2020 and 2019 was immaterial. As of December 31, 2020 and 2019, the Company’s combined accrued interest balance associated with the deferred government grant obligations was $0.4 million and $0.3 million, respectively. Letters of Credit Certain of the Company’s operating lease agreements entered into require security deposits in the form of cash or an unconditional, irrevocable letter of credit. As of December 31, 2020, the Company has entered into standby letters of credit totaling $17.4 million as security deposits for the applicable leased facilities and in connection with the deferred government grant obligations. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The following table presents the components of loss before income taxes on the Company’s consolidated statements of operations and comprehensive loss for each of the periods indicated. Year Ended December 31, 2020 2019 2018 (in thousands) Loss before income taxes: United States $ (204,522) $ (239,629) $ (33,339) Foreign (13,476) (15,453) (9,858) Total $ (217,998) $ (255,082) $ (43,197) The following table presents the components of the income tax benefit (provision) on the Company’s consolidated statements of operations and comprehensive loss for each of the periods indicated. Year Ended December 31, 2020 2019 2018 (in thousands) Current income tax (provision) benefit: United States federal and state $ (347) $ (97) $ — Foreign (249) 3 — Total current income tax provision $ (596) $ (94) $ — Deferred income tax benefit: United States federal and state $ — $ 17,459 $ 2,774 Foreign 2,110 2,495 2,093 Total deferred income tax benefit $ 2,110 $ 19,954 $ 4,867 Total income tax benefit $ 1,514 $ 19,860 $ 4,867 The following table presents a reconciliation between the Company’s statutory federal income tax rate and the effective tax rate for each of the periods indicated. Year Ended December 31, 2020 2019 2018 U.S. statutory federal income tax rate 21.0 % 21.0 % 21.0 % Increase (decrease) resulting from: U.S. state income taxes, net of federal benefits 5.0 4.2 0.9 Foreign tax rate differential 0.3 0.2 1.1 Non-deductible expenses (0.4) (0.7) (2.4) Non-deductible compensation (2.0) (0.4) (0.2) Stock-based compensation 0.7 0.5 30.0 Change in valuation allowance (23.9) (10.9) (39.3) Change in tax rate 0.1 — (0.1) Non-deductible impairment — (5.8) — Other (0.1) (0.3) 0.3 Effective tax rate 0.7 % 7.8 % 11.3 % The following table presents the significant components of deferred tax assets and liabilities on the Company’s consolidated balance sheets as of each of the dates indicated. As of December 31, 2020 2019 (in thousands) Deferred tax assets: Accrued expenses and other $ 8,772 $ 3,037 Accrued compensation and related benefits 12,552 2,779 Stock-based compensation 18,811 14,546 Deferred income 1,113 345 Lease liability 24,775 19,538 Interest expense carryforwards 5,393 2,059 Foreign net operating loss carryforwards 3,499 3,171 U.S. net operating loss carryforwards 186,089 164,854 Valuation allowance (137,767) (116,244) Total deferred tax assets $ 123,237 $ 94,085 Deferred tax liabilities: Prepaid expenses and other $ (197) $ (142) Property and equipment (1,684) (3,056) Right-of-use assets (16,116) (11,321) Intangibles (79,164) (84,025) Deferred rent (912) (674) Nondeductible interest on debt discount (27,974) — Total deferred tax liabilities (126,047) (99,218) Net deferred tax liabilities $ (2,810) $ (5,133) As of December 31, 2020, the Company had a U.S. net operating loss (“NOL”) carryforward of approximately $706.0 million, of which $265.0 million expires between 2029 and 2037. In accordance with the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), U.S. NOLs arising in a tax year ending after 2017 will not expire. The Company has generated $441.0 million of U.S. NOLs in tax years ending after 2017. 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 $15.2 million in its foreign jurisdictions, which does 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 $21.5 million for the year ended December 31, 2020. 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. A one-time tax benefit of approximately $17.5 million related to the acquisition of Trilogy was included in the Company’s income tax benefit for the year ended December 31, 2019. This one-time benefit relates to the release of the Company’s tax valuation allowance that was no longer needed as a result of recognizing an additional net deferred tax liability, due to the acquisition of Trilogy. As of December 31, 2020 and 2019, 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 2017, 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. The Tax Act includes Global Intangible Low-Taxed Income (“GILTI”) provisions that require a company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. Due to foreign subsidiary losses, this provision did not apply to the Company in 2020. Another significant section of the Tax Act, the Base Erosion Anti-Abuse Tax (“BEAT”), did not apply to the Company’s 2020 tax year as the Company did not meet the minimum revenue requirements under the BEAT. As these taxes may become applicable in the future, the Company will continue to monitor the potential impact. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Common Stock As of December 31, 2020, 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. As of December 31, 2020, there were 72,451,521 shares of common stock outstanding, and the Company had reserved a total of 25,422,424 of its authorized shares of common stock for future issuance as follows: Shares Reserved for Future Issuance Outstanding restricted stock units 3,010,019 Outstanding performance restricted stock units 1,355,296 Outstanding stock options 3,916,867 Reserved for convertible senior notes 17,140,242 Total shares of common stock reserved for future issuance 25,422,424 On August 6, 2020, the Company sold 6,800,000 shares of the Company’s common stock to the public. The Company received net proceeds of $299.8 million, which the Company intends to use for working capital and other general corporate purposes, which may include capital expenditures, potential acquisitions, growth opportunities and strategic transactions. On May 22, 2019, the Company issued 4,608,101 shares of common stock in connection with its acquisition of Trilogy. On May 22, 2018, the Company sold 3,833,334 shares of its common stock to the public, including 500,000 shares sold pursuant to the underwriters’ over-allotment option, and received net proceeds of $330.9 million. Stock-Based Compensation The Company maintains two stock-based compensation plans: the Amended and Restated 2014 Equity Incentive Plan (the “2014 Plan”) and the 2008 Stock Incentive Plan (the “2008 Plan” and together with the 2014 Plan, the “Stock Plans”). Upon the effective date of the 2014 Plan in January 2014, the Company ceased using the 2008 Plan to grant 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 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, directors and consultants. The 2014 Plan also provides for the grant of performance-based cash awards to the Company’s employees, directors and consultants. 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 future issuance under the 2014 Plan increased by 3,619,344 and 3,175,011 on January 1, 2021 and 2020, respectively, pursuant to the automatic share reserve increase provision in 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 or 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, 2020, the Company had 6,214,809 shares reserved for issuance under the 2014 Plan. Further, as of December 31, 2020, under the 2014 Plan, options to purchase 2,960,275 shares of the Company’s common stock were outstanding at a weighted-average exercise price of $45.21 per share, and 3,010,019 RSUs and 1,355,296 PRSUs were also outstanding. 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. The Company ceased granting equity awards under the 2008 Plan, and 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, 2020, options to purchase 956,592 shares of the Company’s common stock were outstanding under the 2008 Plan at a weighted-average exercise price of $6.00 per share. Employee Stock Purchase Plan The Company also has an ESPP. The Company’s ESPP provides (i) for two offering periods each year and (ii) that the purchase price for shares of the Company’s common stock purchased under the ESPP will be 90% of the lesser of the fair market value of the Company’s common stock on the purchase date or the fair market value of the Company’s common stock on the first day of the offering period. 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 the Company’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. Participating eligible employees 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, with the aggregate purchase limited to a maximum fair market value of $25,000 per employee per year. Participation in the ESPP began on January 1, 2018. 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. During the years ended December 31, 2020 and 2019, an aggregate of 146,570 and 123,365 shares, respectively, of the Company’s common stock were purchased in accordance with the ESPP. Net proceeds from the issuance of these shares were $4.0 million and $3.4 million for the years ended December 31, 2020 and 2019, respectively. As of December 31, 2020, 666,394 shares remained available for purchase under the ESPP. Stock-Based Compensation Expense The following table presents stock-based compensation expense related to the Stock Plans and the ESPP, contained on the following line items on the Company’s consolidated statements of operations and comprehensive loss for each of the periods indicated. Year Ended December 31, 2020 2019 2018 (in thousands) Curriculum and teaching $ 230 $ 45 $ 14 Servicing and support 14,033 8,915 4,764 Technology and content development 12,014 8,241 4,094 Marketing and sales 8,217 7,021 2,743 General and administrative 47,548 27,282 19,795 Total stock-based compensation expense $ 82,042 $ 51,504 $ 31,410 Restricted Stock Units The 2014 Plan provides for the issuance of RSUs to employees and consultants. RSUs generally vest over a three Throughout 2020 and 2019, the Company granted RSUs under the 2014 Plan to the Company’s directors and certain of the Company’s employees and certain consultants. 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 three The following table presents a summary of the Company’s RSU activity for the period indicated. Number of Weighted-Average Outstanding balance as of December 31, 2019 2,281,142 $ 40.49 Granted 1,936,788 20.85 Vested (923,375) 38.97 Forfeited (284,536) 28.99 Outstanding balance as of December 31, 2020 3,010,019 $ 29.41 The total compensation cost related to the unvested RSUs not yet recognized as of December 31, 2020 was $59.3 million and will be recognized over a weighted-average period of approximately 1.9 years. Performance Restricted Stock Units The 2014 Plan provides for the issuance of PRSUs to employees and consultants. PRSUs generally include both service conditions and market conditions related to total shareholder return targets relative to that of companies comprising the Russell 3000 Index. During the fourth quarter of 2019, the Company granted 1.3 million PRSUs with a weighted-average grant date fair value per share of $22.94 to certain of its employees. These PRSU awards are subject to vesting over a period of three years, based on the Company’s stock price achieving predetermined total shareholder return targets relative to that of companies comprising the Russell 3000 Index during each of the one, two and three-year vesting periods. The PRSU award agreements provide that the quantity of units subject to vesting may range from 200% to 0% of the granted quantities, depending on the achievement of market-based targets. The expense recognized each period is determined at the time of grant and not subject to fluctuation due to the achievement of market-based targets. In the fourth quarter of 2020, as a result of the achievement of market-based targets for the first performance period of these PRSUs, 200% of the eligible units vested. During the first quarter of 2020, as part of its annual equity awards cycle, the Company awarded 1.9 million PRSUs with an aggregate intrinsic value of $37.8 million. Of these PRSUs, 0.6 million were granted with a weighted-average grant date fair value per share of $22.45. These PRSU awards are subject to vesting over a period of one year, based on the Company’s stock price achieving predetermined total shareholder return targets relative to that of companies comprising the Russell 3000 Index. The PRSU award agreements provide that the quantity of units subject to vesting may range from 200% to 0% of the granted quantities for the first performance period, depending on the achievement of market-based targets. The expense recognized each period is determined at the time of grant and not subject to fluctuation due to the achievement of market-based targets. In January 2021, as a result of the achievement of market-based targets for the first performance period of these PRSUs, 200% of the granted quantities vested. Achievement percentages applicable to each performance period will be determined prior to the grant date. The following table summarizes the assumptions used for estimating the fair values of the PRSUs subject to market-based vesting conditions that were granted for the periods presented. Year Ended December 31, 2020 2019 Risk-free interest rate 1.5% 1.5% - 1.7% Expected term (years) 1.00 1.00 - 3.00 Expected volatility 75% 74% - 75% Dividend yield 0% 0% The following table presents a summary of the Company’s PRSU activity for the period indicated. Number of Weighted-Average Outstanding balance as of December 31, 2019 1,413,773 $ 28.12 Granted 1,042,106 21.83 Vested (807,514) 20.86 Forfeited (293,069) 47.10 Outstanding balance as of December 31, 2020 1,355,296 $ 23.51 The total compensation cost related to the unvested PRSUs not yet recognized as of December 31, 2020 was $8.8 million and will be recognized over a weighted-average period of approximately 1.3 years. Stock Options The Stock Plans provide for the issuance of stock options to employees and consultants. Stock options issued under the Stock Plans generally are exercisable for periods not to exceed 10 years and generally vest over four years. 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 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 uses 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 assumes 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 declaring or paying dividends to date. 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, 2020 2019 2018 Risk-free interest rate 1.5% 1.6% - 2.6% 2.3% - 3.0% Expected term (years) 6.04 5.96 - 6.08 5.97 - 6.77 Expected volatility 64% 45% - 64% 44% - 45% Dividend yield 0% 0% 0% The following table presents a summary of the Company’s stock option activity for the period indicated. Number of Weighted-Average Weighted-Average Aggregate Outstanding balance as of December 31, 2019 4,373,895 $ 34.24 5.88 $ 28,736 Granted 8,597 19.61 9.08 Exercised (353,480) 11.82 2.29 Forfeited (58,155) 57.42 Expired (53,990) 52.95 Outstanding balance as of December 31, 2020 3,916,867 35.63 5.08 59,906 Exercisable as of December 31, 2020 3,213,131 $ 28.48 4.47 59,011 The weighted-average grant date fair value of stock options granted during the years ended December 31, 2020, 2019 and 2018 was $11.48, $28.49 and $39.66 per share, respectively. The aggregate intrinsic value of options exercised during the years ended December 31, 2020, 2019 and 2018 was $8.7 million, $15.4 million and $54.0 million, respectively. The total unrecognized compensation cost related to the unvested options as of December 31, 2020 was $19.9 million and will be recognized over a weighted-average period of approximately 2.3 years. |
Net Loss per Share
Net Loss per Share | 12 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |
Net Loss per Share | 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 each of the periods indicated. Year Ended December 31, 2020 2019 2018 Stock options 3,916,867 4,373,895 4,057,788 Restricted stock units 3,010,019 2,281,142 1,139,045 Performance restricted stock units 1,355,296 1,413,773 — Shares related to convertible senior notes 3,432,837 — — Total antidilutive securities 11,715,019 8,068,810 5,196,833 The following table presents the calculation of the Company’s basic and diluted net loss per share for each of the periods indicated. The calculation of diluted net loss per share reflects the Company’s intent to settle conversions of the Notes through a combination settlement, which contemplates repayment in cash of the principal amount and repayment in shares of the Company’s common stock of any excess of the conversion value over the principal amount. Year Ended December 31, 2020 2019 2018 Numerator (in thousands): Net loss $ (216,484) $ (235,222) $ (38,330) Denominator: Weighted-average shares of common stock outstanding, basic and diluted 67,142,976 61,393,666 55,833,492 Net loss per share, basic and diluted $ (3.22) $ (3.83) $ (0.69) |
Segment and Geographic Informat
Segment and Geographic Information | 12 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
Segment and Geographic Information | Segment and Geographic Information The Company has two reportable segments: the Degree Program Segment (formerly known as the Graduate Program Segment) and the Alternative Credential Segment. The Company’s reportable segments are determined based on (i) financial information reviewed by the chief operating decision maker, the Chief Executive Officer (“CEO”), (ii) internal management and related reporting structure, and (iii) the basis upon which the CEO makes resource allocation decisions. The Company’s Degree Program Segment includes the technology and services provided to nonprofit colleges and universities to enable the online delivery of degree programs. The Company’s Alternative Credential Segment includes the premium online short courses and technical skills-based boot camps provided through relationships with nonprofit colleges and universities. Significant Customers For the year ended December 31, 2020, one university client in the Degree Program Segment accounted for 10% or more of the Company’s consolidated revenue, contributing $74.6 million, or approximately 10% of the Company’s consolidated revenue. For the year ended December 31, 2019, one university client in the Degree Program Segment accounted for 10% or more of the Company’s consolidated revenue, contributing $83.5 million, or approximately 15% of the Company’s consolidated revenue. For the year ended December 31, 2018, three university clients in the Degree Program Segment each accounted for 10% or more of the Company’s consolidated revenue, contributing $86.9 million, $54.2 million and $42.7 million, or approximately 21%, 13% and 10% of the Company’s consolidated revenue, respectively. As of December 31, 2020, two university clients each accounted for 10% or more of the Company’s consolidated accounts receivable, net balance, as follows: $5.8 million and $5.2 million, which equaled 12% and 11% of the Company’s consolidated accounts receivable, net balance, respectively. As of December 31, 2019, two university clients in the Degree Program Segment each accounted for 10% or more of the Company’s consolidated accounts receivable, net balance, contributing $6.1 million and $4.9 million, or approximately 18% and 15% of the Company’s consolidated accounts receivable, net balance, respectively. Segment Performance The following table presents financial information regarding each of the Company’s reportable segment’s results of operations for each of the periods indicated. Year Ended December 31, 2020 2019 2018 (in thousands) Revenue by segment* Degree Program Segment $ 486,676 $ 417,206 $ 348,361 Alternative Credential Segment 287,857 157,465 63,408 Total revenue $ 774,533 $ 574,671 $ 411,769 Segment profitability** Degree Program Segment $ 49,607 $ 5,770 $ 16,839 Alternative Credential Segment (33,534) (29,716) 816 Total segment profitability $ 16,073 $ (23,946) $ 17,655 Segment profitability margin*** Degree Program Segment 10.2 % 1.4 % 4.8 % Alternative Credential Segment (11.6) (18.9) 1.3 Total segment profitability margin 2.1 % (4.2) % 4.3 % * The Company has excluded immaterial amounts of intersegment revenues from the years ended December 31, 2020, 2019 and 2018. ** The Company defines segment profitability as net income or net loss, as applicable, before net interest income (expense), foreign currency gains or losses, taxes, depreciation and amortization expense, deferred revenue fair value adjustments, transaction costs, integration costs, restructuring-related costs, stockholder activism costs, certain litigation-related costs, consisting of fees for certain non-ordinary course litigation and other proceedings, impairment charges, losses on debt extinguishment, 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 the respective segment’s revenue. The following table presents a reconciliation of the Company’s total segment profitability to net loss for each of the periods indicated. Year Ended December 31, 2020 2019 2018 (in thousands) Net loss $ (216,484) $ (235,222) $ (38,330) Adjustments: Stock-based compensation expense 82,042 51,504 31,410 Foreign currency loss 1,429 707 1,722 Net interest expense (income) 25,963 7,619 (5,065) Income tax benefit (1,514) (19,860) (4,867) Depreciation and amortization expense 96,469 69,843 32,785 Loss on debt extinguishment 11,671 — — Impairment charge — 70,379 — Other* 16,497 31,084 — Total adjustments 232,557 211,276 55,985 Total segment profitability $ 16,073 $ (23,946) $ 17,655 * Includes (i) transaction and integration costs of $2.3 million and $8.0 million for the years ended December 31, 2020 and 2019, respectively, (ii) restructuring-related costs of $6.8 million and $10.8 million for the years ended December 31, 2020 and 2019, respectively, (iii) stockholder activism and litigation-related costs of $7.4 million and $1.0 million for the years ended December 31, 2020 and 2019, respectively, and (iv) deferred revenue fair value adjustments of $11.2 million for the year ended December 31, 2019. The following table presents the Company’s total assets by segment as of each of the dates indicated. December 31, December 31, (in thousands) Total assets Degree Program Segment $ 830,706 $ 507,187 Alternative Credential Segment 713,558 679,643 Total assets $ 1,544,264 $ 1,186,830 Trade Accounts Receivable and Contract Liabilities The following table presents the Company’s trade accounts receivable and contract liabilities in each segment as of each of the dates indicated. December 31, December 31, (in thousands) Trade accounts receivable Degree Program Segment accounts receivable $ 16,424 $ 3,454 Degree Program Segment unbilled revenue 6,072 12,123 Alternative Credential Segment accounts receivable 29,717 19,408 Provision for credit losses (5,936) (1,330) Total trade accounts receivable $ 46,277 $ 33,655 Contract liabilities Degree Program Segment deferred revenue $ 1,714 $ 2,210 Alternative Credential Segment deferred revenue 73,779 46,623 Total contract liabilities $ 75,493 $ 48,833 For the Degree Program Segment, revenue recognized during the years ended December 31, 2020 and 2019 that was included in the deferred revenue balance at the beginning of each year was $2.2 million and $2.4 million, respectively. For the Alternative Credential Segment, revenue recognized during the years ended December 31, 2020 and 2019 that was included in the deferred revenue balance at the beginning of the year was $46.6 million and $5.4 million, respectively. Contract Acquisition Costs The Degree Program Segment had $0.5 million and $0.5 million of net capitalized contract acquisition costs recorded primarily within other assets, non-current on the consolidated balance sheets as of December 31, 2020 and 2019, respectively. For the year ended December 31, 2020, the Company did not capitalize any amounts and recorded an immaterial amount of amortization expense in the Degree Program Segment. Geographical Information The Company’s non-U.S. revenue is based on the currency of the country in which the university client primarily operates. The Company’s non-U.S. revenue was $73.0 million, $40.8 million and $33.9 million for the years ended December 31, 2020, 2019 and 2018, respectively. Substantially all of the Company’s non-U.S. revenue for each of the aforementioned periods was sourced from the Alternative Credential Segment’s operations outside of the U.S. The Company’s long-lived tangible assets in non-U.S. countries as of December 31, 2020 and 2019 totaled approximately $1.6 million and $2.7 million, respectively. |
Retirement Plan
Retirement Plan | 12 Months Ended |
Dec. 31, 2020 | |
Retirement Benefits [Abstract] | |
Retirement Plan | 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 each plan year. For the years ended December 31, 2020, 2019 and 2018, the Company made employer contributions of $3.6 million, $3.0 million and $2.1 million, respectively. |
Quarterly Financial Information
Quarterly Financial Information (Unaudited) | 12 Months Ended |
Dec. 31, 2020 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Information (Unaudited) | Quarterly Financial Information (Unaudited) The following tables presents certain unaudited quarterly financial data for 2020 and 2019. 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 $ 175,479 $ 182,687 $ 201,073 $ 215,294 Costs and expenses Curriculum and teaching 20,478 26,256 30,153 31,081 Servicing and support 30,533 30,294 32,536 32,488 Technology and content development 35,510 37,307 40,223 42,909 Marketing and sales 99,215 98,341 100,068 92,550 General and administrative 43,653 39,554 44,000 46,319 Total costs and expenses 229,389 231,752 246,980 245,347 Loss from operations (53,910) (49,065) (45,907) (30,053) Interest income 513 154 713 (26) Interest expense (5,493) (6,518) (7,564) (7,742) Loss on debt extinguishment — (11,671) — — Other (expense) income, net (2,271) 570 42 230 Loss before income taxes (61,161) (66,530) (52,716) (37,591) Income tax benefit (expense) 1,055 363 162 (66) Net loss $ (60,106) $ (66,167) $ (52,554) $ (37,657) Net loss per share, basic and diluted $ (0.94) $ (1.03) $ (0.77) $ (0.52) Weighted-average shares used in computing net loss per share, basic and diluted 63,626,333 64,075,405 68,580,439 72,228,308 Three Months Ended March 31, June 30, September 30, December 31, (in thousands, except share and per share amounts) Revenue $ 122,234 $ 135,461 $ 153,798 $ 163,178 Costs and expenses Curriculum and teaching 6,701 13,308 21,336 21,925 Servicing and support 20,174 23,993 27,351 27,372 Technology and content development 19,794 26,043 34,132 35,504 Marketing and sales 76,961 89,749 93,521 82,164 General and administrative 23,023 28,408 42,040 37,549 Impairment charge — — 70,379 — Total costs and expenses 146,653 181,501 288,759 204,514 Loss from operations (24,419) (46,040) (134,961) (41,336) Interest income 2,349 1,814 924 713 Interest expense (55) (2,424) (5,651) (5,289) Other (expense) income, net (370) (13) (710) 386 Loss before income taxes (22,495) (46,663) (140,398) (45,526) Income tax benefit (expense) 941 18,691 (714) 942 Net loss $ (21,554) $ (27,972) $ (141,112) $ (44,584) Net loss per share, basic and diluted $ (0.37) $ (0.46) $ (2.23) $ (0.70) Weighted-average shares used in computing net loss per share, basic and diluted 58,138,692 60,516,662 63,358,890 63,481,130 |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2020 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
Schedule II - Valuation and Qualifying Accounts | Schedule II—Valuation and Qualifying Accounts (in thousands) Balance at Beginning of Period Additions Charged to Expense/Against Revenue Deductions Balance at End of Period Allowance for doubtful accounts: Year ended December 31, 2020 $ 1,331 $ 4,642 $ (37) $ 5,936 Year ended December 31, 2019 257 1,425 (351) 1,331 Year ended December 31, 2018 $ 287 $ 571 $ (601) $ 257 Balance at Beginning of Period Additions Deductions Balance at End of Period Income tax valuation allowance: Year ended December 31, 2020 $ 116,244 $ 21,523 $ — $ 137,767 Year ended December 31, 2019 88,061 45,642 (17,459) 116,244 Year ended December 31, 2018 $ 71,101 $ 16,960 $ — $ 88,061 |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
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. |
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. Significant estimates and assumptions are inherent in the analysis and the measurement of provisions for credit losses, acquired intangible assets, the recoverability of goodwill, deferred tax assets, and convertible senior notes. Due to the inherent uncertainty involved in making estimates, particularly in light of the COVID-19 pandemic, 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. |
Revenue Recognition, Receivables and Provision for Credit Losses | Revenue Recognition, Accounts Receivable and Provision for Credit Losses The Company generates substantially all of its revenue from contractual arrangements, with either its university clients or students, to provide a comprehensive platform of tightly integrated technology and technology-enabled services that support its offerings. Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing the expected value method. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Any estimates, including the effect of the constraint on variable consideration, are evaluated at each reporting period, and if necessary, the Company adjusts its estimate of the overall transaction price. Revenue is then recognized over the remaining estimated period of performance using the cumulative catch-up method. The Degree Program Segment derives revenue primarily from contractually specified percentages of the amounts the Company’s university clients receive from their students in 2U-enabled degree programs for tuition and fees, less credit card fees and other specified charges the Company has agreed to exclude in certain university contracts. The Company’s contracts with university clients in this segment typically have terms of 10 to 15 years and have a single performance obligation, as the promises to provide a platform of tightly integrated technology and services that university clients need to attract, enroll, educate and support students are not distinct within the context of the contracts. The single performance obligation is delivered as the university clients receive and consume benefits, which occurs ratably over a series of academic terms. The amounts received from university clients over the term of the arrangement are variable in nature in that they are dependent upon the number of students that are enrolled in the program within each academic term. These amounts are allocated to and are recognized ratably over the related academic term, defined as the period beginning on the first day of classes through the last. Revenue is recognized net of an allowance, which is established for the Company’s expected obligation to refund tuition and fees to university clients. The Alternative Credential Segment derives revenue primarily from contracts with students for the tuition and fees paid to enroll in, and progress through, the Company’s short courses and boot camps. The Company’s short courses run between six and 16 weeks, while boot camps run between 12 and 24 weeks. In this segment, the Company’s contracts with students include the delivery of the educational and related student support services and are treated as either a single performance obligation or multiple performance obligations, depending upon the offering being delivered. All performance obligations are satisfied ratably over the same presentation period, which is defined as the period beginning on the first day of the course through the last. The Company recognizes the proceeds received, net of any applicable pricing concessions, from the students enrolled and shares contractually specified amounts received from students with the associated university client, in exchange for licenses to use the university brand name and other university trademarks. These amounts are recognized as curriculum and teaching costs on the Company’s consolidated statements of operations and comprehensive loss. The Company’s contracts with university clients in this segment are typically shorter and less restrictive than the Company’s contracts with university clients in the Degree Program Segment. The Company does not disclose the value of unsatisfied performance obligations for the Degree Program Segment because the variable consideration is allocated entirely to a wholly unsatisfied promise to transfer a service that forms part of a single performance obligation. The Company does not disclose the value of unsatisfied performance obligations for the Alternative Credential Segment because the performance obligations are part of contracts that have original durations of less than one year. Contract Acquisition Costs The Company pays commissions to certain of its employees to obtain contracts with university clients in the Degree Program Segment. These costs are capitalized and recorded on a contract-by-contract basis and amortized using the straight-line method over the expected life, which is generally the length of the contract. With respect to contract acquisition costs in the Alternative Credential Segment, the Company has elected to apply the practical expedient in Accounting Standards Codification (“ASC”) Topic 606 to expense these costs as incurred, as the terms of contracts with students in this segment are less than one year. Payments to University Clients Pursuant to certain of the Company’s contracts in the Degree Program Segment, the Company has made, or is obligated to make, payments to university clients at either the execution of a contract or at the extension of a contract in exchange for various marketing and other rights. Generally, these amounts are capitalized as other assets on the Company’s consolidated balance sheets, and amortized as contra revenue over the life of the contract, commencing on the later of when payment is due or when contract revenue recognition begins. Receivables, Contract Assets and Liabilities Balance sheet items related to contracts consist of accounts receivable, net and deferred revenue on the Company’s consolidated balance sheets. Accounts receivable, net includes trade accounts receivable, which are comprised of billed and unbilled revenue. The Company’s trade accounts receivable balances have terms of less than one year. Accounts receivable, net is stated at amortized cost net of provision for credit losses. The Company’s methodology to measure the provision for credit losses requires an estimation of loss rates based upon historical loss experience adjusted for factors that are relevant to determining the expected collectability of accounts receivable. Some of these factors include current market conditions, delinquency trends, aging behavior of receivables and credit and liquidity quality indicators for industry groups, customer classes or individual customers. The Company’s estimates are reviewed and revised periodically based on the ongoing evaluation of credit quality indicators. Historically, actual write-offs for uncollectible accounts have not significantly differed from prior estimates. Interest-free financing and tuition payment plans are made available to students enrolling in select boot camps within the Alternative Credential Segment. The financing plans, which are managed and serviced by third-party providers, are designed to assist students who are unable to completely cover tuition costs and are available only after all other student financial assistance and scholarships have been applied. The associated financing receivables generally have payment terms that exceed one year and are recorded on the Company’s consolidated balance sheets net of any implied pricing concessions, based on our collections history and market data, and significant financing components. The amount of financing receivables recorded within other assets on the Company’s consolidated balance sheets was $25.4 million and $3.9 million as of December 31, 2020 and 2019, respectively. The Company recognizes unbilled revenue when revenue recognition occurs in advance of billings. Unbilled revenue is recognized in the Degree Program Segment because billings to university clients do not occur until after the academic term has commenced and final enrollment information is available. The Company’s unbilled revenue represents contract assets. Unbilled accounts receivable is recognized in the Alternative Credential Segment once the presentation period commences for amounts to be invoiced to students under installment plans that are paid over the same presentation period. The following table presents the change in provision for credit losses on the Company’s consolidated balance sheets for the period indicated: Provision for Credit Losses (in thousands) Balance as of January 1, 2020 $ 1,331 Current period provision 4,642 Amounts written off (16) Other (21) Balance as of December 31, 2020 $ 5,936 Deferred revenue represents the excess of amounts billed or received as compared to amounts recognized in revenue on the Company’s 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’s deferred revenue represents contract liabilities. The Company generally receives payments from Degree Program Segment university clients early in each academic term and from Alternative Credential Segment students, either in full upon registration for the course or in full before the end of the course based on a payment plan, prior to completion of the service period. These payments are recorded as deferred revenue until the services are delivered or until the Company’s obligations are otherwise met, at which time revenue is recognized. Marketing and Sales Costs The Company’s marketing and sales costs relate to activities to attract students to offerings across both of the Company’s segments. This includes the cost of Search Engine Optimization, Search Engine Marketing and Social Media Optimization, as well as personnel and personnel-related expense for the Company’s marketing and recruiting teams. For the years ended December 31, 2020, 2019 and 2018, expense related to the Company’s marketing and advertising efforts of its own |
Stock-Based Compensation | Stock-Based Compensation The Company provides stock-based compensation awards consisting of restricted stock units (“RSUs”), performance restricted stock units (“PRSUs”) and stock options to employees, directors and consultants. The Company measures all stock-based compensation awards at fair value as of the grant date. The fair values of RSUs and PRSUs containing performance-based vesting conditions are based on the fair value of the Company’s stock. The Company uses a Monte Carlo model to estimate the fair value of PRSUs containing market-based vesting conditions and uses a Black-Scholes option pricing model to measure the fair value of stock option grants. The Company also maintains the 2017 Employee Stock Purchase Plan (the “ESPP”) and estimates the fair value of each purchase right thereunder as of the grant date using a Black-Scholes option pricing model. For awards subject only to service-based vesting conditions, the Company recognizes stock-based compensation expense on a straight-line basis over the awards’ requisite service period. For awards subject to both service and performance-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. For awards subject to both service and market-based vesting conditions, the Company recognizes stock-based compensation expense using an accelerated recognition method over the requisite service period beginning with the date of the grant and ending upon completion of the service period, with stock-based compensation expense being recognized irrespective of the achievement of the market condition. For shares subject to the ESPP, the Company uses the straight-line method to record stock-based compensation expense over the respective offering period. |
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 on the consolidated statements of operations and comprehensive loss. |
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 have an original maturity of three months or less and highly liquid marketable securities with maturities at the time of purchase of three months or less. |
Restricted Cash | Restricted Cash The Company maintains restricted cash as collateral for standby letters of credit for the Company’s leased facilities and in connection with the deferred government grant obligations. |
Fair Value Measurements | Fair Value Measurements The carrying amounts of certain assets and liabilities, including cash and cash equivalents, accounts receivable, advances to university clients, 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. Generally, assets are recorded at fair value on a non-recurring basis as a result of impairment charges. The Company remeasures non-financial assets such as goodwill, intangible assets and other long-lived assets at fair value when there is an indicator of impairment, and records them at fair value only when recognizing an impairment loss. 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. Refer to Notes 4 and 5 for further discussion of assets measured at fair value on a nonrecurring basis. 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. |
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 five four |
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 Capitalized Technology. Capitalized technology includes certain purchased software and technology licenses, direct third-party costs, and internal payroll and payroll-related costs used in the creation of our internal-use 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 using the straight-line method over the estimated useful life of the software, which is generally three Capitalized Content Development. The Company develops content for each offering on a course-by-course basis in collaboration with university client faculty and industry experts. Depending upon the offering, the Company may use materials provided by university clients and their faculty, including curricula, case studies, presentations and other reading materials. The Company is responsible for the creation of materials suitable for delivery through the Company’s online learning platform, including all expenses associated with this effort. With respect to the Degree Program Segment, the development of content is part of the Company’s single performance obligation and is considered a contract fulfillment cost. four |
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. In order to assess the recoverability of the capitalized technology and content development costs, the costs are grouped by the lowest level of independent cash flows. 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. The Company’s impairment analysis is based upon cumulative results and forecasted performance. |
Non-Cash Long-Lived Asset Additions | Non-Cash Long-Lived Asset Additions The Company had non-cash capital asset additions of $3.3 million and $3.1 million in property and equipment, during the years ended December 31, 2020 and 2019, respectively, primarily related to landlord funded leasehold improvements. Due to extended payment terms associated with the timing of cash capital expenditures made more than 90 days after the date of purchase, an additional $2.2 million was classified as cash flows from financing activities in the consolidated statement of cash flows for the year ended December 31, 2019. |
Goodwill | Goodwill Goodwill is the excess of purchase price over the fair value of identified net assets of businesses acquired. The Company’s goodwill balance relates to its acquisitions of GetSmarter in July 2017 and Trilogy in May 2019. The Company reviews goodwill annually, as of October 1. 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 a reporting unit below its carrying value. The Company tests goodwill at the reporting unit level, which is an operating segment or one level below an operating segment. The Company initially assesses qualitative factors to determine if it is necessary to perform a quantitative goodwill impairment review. The Company reviews goodwill for impairment using a quantitative approach 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 completion of a quantitative assessment, the Company may be required to recognize an impairment based on the difference between the carrying value and the fair value of the reporting unit. The Company determines the fair value of a reporting unit by utilizing a weighted combination of the income-based and market-based approaches. The income-based approach requires the Company to make significant assumptions and estimates. These assumptions and estimates primarily include, but are not limited to, the selection of appropriate peer group companies, discount rates, terminal growth rates, and forecasts of revenue, operating income, depreciation and amortization expense, capital expenditures and future working capital requirements. When determining these assumptions and preparing these estimates, the Company considers each reporting unit’s historical results and current operating trends, revenue, profitability, cash flow results and forecasts, and industry trends. These estimates can be affected by a number of factors including, but not limited to, general economic and regulatory conditions, market capitalization, the continued efforts of competitors to gain market share and prospective student enrollment patterns. In addition, the value of a reporting unit using the market-based approach is estimated by comparing the reporting unit to other publicly traded companies and/or to publicly-disclosed business mergers and acquisitions in similar lines of business. The value of a reporting unit is based on pricing multiples of certain financial parameters observed in the comparable companies. The Company also makes estimates and assumptions for market values to determine a reporting unit’s estimated fair value. Based on the Company’s quantitative assessment performed during 2019 and the qualitative assessment performed as of October 1, 2020, the date of the annual goodwill impairment assessment, the Company determined that the estimated fair values of the reporting units exceeded their carrying values. It is possible that future changes in the Company’s circumstances, including potential impacts from COVID-19, or in the variables associated with the judgments, assumptions and estimates used in assessing the fair value of our reporting units, could require the Company to record additional impairment charges in the future. |
Equity Interests | Equity Interests As of both December 31, 2020 and 2019, the Company had a $10.0 million investment in an education technology company recorded within other assets, non-current on the consolidated balance sheets. This investment does not have a readily determinable fair value, and is accounted for as a cost method investment, which is subject to fair value remeasurement upon the occurrence of an observable event. |
Employee Benefits | Employee Benefits The Company offers a variety of benefits to its employees (e.g., health care, gym memberships and tuition reimbursement). The Company accounts for costs related to providing employee benefits as incurred, unless there is a service requirement, in which case, such costs are recognized over the service commitment period. |
Convertible Senior Notes and Debt Issuance Costs | The Notes are accounted for in accordance with Financial Accounting Standards Board (“FASB”) ASC Subtopic 470-20, Debt with Conversion and Other Options (“ASC 470-20”). Pursuant to ASC 470-20, issuers of certain convertible debt instruments, such as the Notes, that have a net settlement feature and may be settled wholly or partially in cash upon conversion are required to separately account for the liability (debt) and equity (conversion option) components of the instrument. The carrying amount of the liability component of the instrument is computed by estimating the fair value of a similar liability without the conversion option using a market-based approach. The amount of the equity component is then calculated by deducting the fair value of the liability component from the principal amount of the instrument. The difference between the principal amount and the liability component represents a debt discount that is amortized to interest expense over the term of the Notes using the effective interest rate method. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. In accounting for the issuance costs related to the Notes, the allocation of issuance costs incurred between the liability and equity components was based on their relative values. Debt Issuance Costs Debt issuance costs are incurred as a result of entering into certain borrowing transactions and are presented as a reduction from the carrying amount of the debt liability on the Company’s consolidated balance sheets. Debt issuance costs are |
Leases | Leases The Company adopted ASC Topic 842, Leases , on January 1, 2019 using the modified retrospective approach and no prior periods were restated. For the Company’s operating leases, an assessment is performed to determine if an arrangement is a lease at inception. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As the information necessary to determine the rate implicit in the Company’s leases is not readily available, the Company determines its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any prepaid lease payments made, less lease incentives. The Company’s lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company does not have any finance leases for any periods presented. The Company has elected, as an accounting policy for its leases of real estate, to account for lease and non-lease components in a contract as a single lease component. In addition, the recognition requirements are not applied to leases with a term of 12 months or less. Rather, the lease payments for short-term leases are recognized on the consolidated statements of operations and comprehensive loss on a straight-line basis over the lease term. Variable payments that depend on an index or a rate are initially measured using the index or rate at the lease commencement date. Such variable payments are included in the total lease payments when measuring the lease liabilities and ROU assets. The Company will only remeasure variable payments that depend on an index or a rate when the Company is remeasuring the lease liabilities due to any of the following occurring: (i) the lease is modified and the modification is not accounted for as a separate contract; (ii) a contingency, upon which some or all of the variable lease payments that will be paid over the remainder of the lease term are based, is resolved; (iii) there is a change in lease term; (iv) there is a change in the probability of exercising a purchase option; or (v) there is a change in the amount probable of being owed under residual value guarantees. Until the lease liabilities are remeasured due to one of the aforementioned events, additional payments for an increase in the index or rate will be recognized in the period in which they are incurred. Variable payments that do not depend on an index or a rate are excluded from the measurement of the lease liabilities and recognized in the consolidated statements of operations and comprehensive loss in the period in which the obligation for those payments is incurred. |
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, 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 on the Company’s consolidated financial statements from the acquisition date. |
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 on the consolidated statements of operations and comprehensive loss. |
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. The Company maintains an allowance for doubtful accounts, if needed, based on collection history. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In October 2020, the FASB issued ASU No. 2020-10, Codification Improvements . The amendments in this ASU affect a wide variety of topics in the Accounting Standards Codification by either clarifying the codification or correcting unintended application of guidance. The amendments do not change U.S. GAAP and, therefore, are not expected to result in a significant change in current accounting practice. The amendments in this ASU are effective for fiscal years beginning after December 15, 2020. The Company does not expect the adoption of this ASU to have a material effect on its consolidated financial statements and related disclosures. In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts indexed to and potentially settled in an entity’s own equity. The new guidance eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. As a result, in more cases, convertible debt will be accounted for as a single instrument. The guidance also removes certain conditions for equity classification related to contracts in an entity’s own equity and requires the application of the if-converted method for calculating diluted earnings per share. This ASU is effective for fiscal years beginning after December 15, 2021. Early adoption is permitted. The Company is evaluating the impact that this ASU will have on its consolidated financial statements and related disclosures. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . This ASU is intended to provide optional expedients and exceptions for applying U.S. GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, to ease the potential accounting and financial reporting burden associated with the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. This ASU may be applied as of the beginning of any interim period that includes its effective date (i.e., March 12, 2020) through December 31, 2022. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements and related disclosures. In January 2020, the FASB issued ASU No. 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 . ASU No. 2020-01 was issued to clarify the interaction of the accounting for equity securities under ASC 321 and investments accounted for under the equity method of accounting in ASC 323 and the accounting for certain forward contracts and purchased options accounted for under ASC 815. With respect to the interactions between ASC 321 and ASC 323, the amendments clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting when applying the measurement alternative in ASC 321, immediately before applying or discontinuing the equity method of accounting. The amendments in this ASU are effective for interim and annual reporting periods beginning after December 15, 2020. Early adoption is permitted, including adoption in any interim period. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements and related disclosures. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes , as part of its initiative to reduce complexity in the accounting standards. The amendments in the ASU include removal of certain exceptions to the general principles in Topic 740 related to recognizing deferred taxes for investments, performing intraperiod tax allocation and calculating income taxes in an interim period. The ASU also clarifies and simplifies other aspects of the accounting for income taxes, including the recognition of deferred tax liabilities for outside basis differences. The amendments in this ASU are effective for annual and interim periods in fiscal years beginning after December 15, 2020, with early adoption permitted. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements and related disclosures. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. ASU No. 2019-04 provides corrections, updates and clarifications to the previously issued updates of ASU No. 2016-01, ASU No. 2016-13 and ASU No. 2017-12. Various areas of the ASC were impacted by the update. This standard follows the effective dates of the previously issued ASUs, unless an entity has already early adopted the previous ASUs, in which case the effective date will vary according to each specific ASU adoption. The Company adopted the amendments related to ASU Nos. 2016-01 and 2016-13 on January 1, 2020 under the modified retrospective transition method, with the exception of the amendments related to equity securities without readily determinable fair values for which an entity elects the measurement alternative, which have been adopted prospectively. Adoption of these amendments did not have a material impact on the Company’s consolidated financial statements or related disclosures. Refer below for further discussion of ASU No. 2016-13. The amendments to ASU No. 2017-12 are not applicable to the Company. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . Subsequently, the FASB has issued the following standards related to ASU No. 2016-13: ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments—Credit Losses , ASU No. 2019-05, Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief ; ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments ; and ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses . ASU No. 2016-13 requires entities to measure all expected credit losses for most financial assets held at the reporting date based on an expected loss model, which includes historical experience, current conditions, and reasonable and supportable forecasts. Entities will now use forward-looking information to better form their credit loss estimates. ASU No. 2016-13 also requires enhanced disclosures to help financial statement users better understand assumptions used in estimating expected credit losses. The Company adopted this ASU and the related amendments on January 1, 2020 under the modified retrospective transition method, which resulted in no cumulative-effect adjustment to retained earnings. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Accounts receivable, allowance for credit loss | The following table presents the change in provision for credit losses on the Company’s consolidated balance sheets for the period indicated: Provision for Credit Losses (in thousands) Balance as of January 1, 2020 $ 1,331 Current period provision 4,642 Amounts written off (16) Other (21) Balance as of December 31, 2020 $ 5,936 |
Business Combination (Tables)
Business Combination (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Business Combinations [Abstract] | |
Schedule of estimated fair values of the assets acquired and liabilities assumed | The following table reflects the Company’s completed valuation of the assets acquired and liabilities assumed of Trilogy as of the date of the acquisition: Estimated Average Purchase Price (in thousands) Cash and cash equivalents $ 35,320 Current assets 30,081 Property and equipment, net 2,411 Other non-current assets 6,276 Amortizable intangible assets: Developed technology 3 48,096 Developed content 4 48,050 University client relationships 10 84,150 Trade names and domain names 5 7,100 Goodwill 425,346 Current liabilities (57,010) Non-current liabilities (21,224) $ 608,596 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment, net | The following table presents the components of property and equipment, net on the Company’s consolidated balance sheets as of each of the dates indicated. December 31, December 31, (in thousands) Computer hardware $ 9,053 $ 8,685 Furniture and office equipment 18,041 18,478 Leasehold improvements 58,443 50,461 Leasehold improvements in process 2,184 4,318 Total 87,721 81,942 Accumulated depreciation and amortization (34,987) (24,299) Property and equipment, net $ 52,734 $ 57,643 |
Goodwill and Amortizable Inta_2
Goodwill and Amortizable Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill | The following table presents the changes in the carrying amount of goodwill by reportable segment on the Company’s consolidated balance sheets for the periods indicated. Degree Program Segment Alternative Credential Segment Total (in thousands) Balance as of December 31, 2018 $ — $ 61,852 $ 61,852 Goodwill recognized in connection with business combination — 425,346 425,346 Impairment charge (cumulative) — (70,379) (70,379) Foreign currency translation adjustments — 1,531 1,531 Balance as of December 31, 2019 — 418,350 418,350 Foreign currency translation adjustments and other — (2,520) (2,520) Balance as of December 31, 2020 $ — $ 415,830 $ 415,830 |
Schedule of amortizable intangible assets | The following table presents the components of amortizable intangible assets, net on the Company’s consolidated balance sheets as of each of the dates indicated. December 31, 2020 December 31, 2019 Estimated Gross Accumulated Net Gross Accumulated Net (in thousands) Capitalized technology 3-5 $ 165,254 $ (75,822) $ 89,432 $ 142,712 $ (41,106) $ 101,606 Capitalized content development 4-5 208,170 (88,168) 120,002 167,758 (54,736) 113,022 University client relationships 9-10 109,498 (23,376) 86,122 110,344 (12,419) 97,925 Trade names and domain names 5-10 26,697 (9,483) 17,214 26,462 (5,940) 20,522 Total amortizable intangible assets, net $ 509,619 $ (196,849) $ 312,770 $ 447,276 $ (114,201) $ 333,075 |
Schedule of estimated future amortization expense for amortizable intangible assets | The following table presents the estimated future amortization expense of the Company’s amortizable intangible assets placed in service as of December 31, 2020. Future Amortization Expense (in thousands) 2021 $ 81,927 2022 65,971 2023 48,928 2024 29,368 2025 16,434 Thereafter 31,477 Total $ 274,105 |
Accrued Expenses and Deferred_2
Accrued Expenses and Deferred Costs (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses | The following table presents the components of accounts payable and accrued expenses on the Company’s consolidated balance sheets as of each of the dates indicated. December 31, 2020 December 31, 2019 (in thousands) Accrued university and instructional staff compensation $ 27,371 $ 23,419 Accrued marketing costs 24,682 22,055 Accrued transaction, integration and restructuring-related costs* 3,492 4,459 Accrued compensation and related benefits 52,820 21,885 Accounts payable and other accrued expenses 22,309 15,448 Total accounts payable and accrued expenses $ 130,674 $ 87,266 * As of December 31, 2020 and 2019, accrued transaction, integration and restructuring-related costs included zero and $0.5 million, respectively, related to an employee termination benefits reserve for organizational restructuring. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum payments to university clients | The following table presents the estimated future minimum payments due to university clients as of December 31, 2020. Future Minimum Payments (in thousands) 2021 $ 1,625 2022 625 2023 625 2024 625 2025 625 Thereafter 2,525 Total future minimum payments to university clients $ 6,650 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Lease cost | The following table presents the components of lease expense on the Company’s consolidated statements of operations and comprehensive loss for each of the periods indicated. Year Ended 2020 2019 (in thousands) Operating lease expense $ 15,153 $ 11,725 Short-term lease expense 362 737 Variable lease expense 5,837 4,195 Sublease income (36) — Total lease expense $ 21,316 $ 16,657 |
Maturities of operating lease liabilities | The following table presents the maturities of the Company’s operating lease liabilities as of the date indicated, and excludes the impact of future sublease income totaling $0.7 million in aggregate. December 31, 2020 (in thousands) 2021 $ 19,847 2022 18,992 2023 18,774 2024 18,373 2025 14,347 Thereafter 48,965 Total lease payments 139,298 Less: imputed interest (46,046) Total lease liability $ 93,252 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | The following table presents the components of outstanding long-term debt on the Company’s consolidated balance sheets as of each of the dates indicated. December 31, 2020 December 31, 2019 (in thousands) Convertible senior notes $ 380,000 $ — Senior secured term loan facility — 250,000 Deferred government grant obligations 3,500 3,500 Other borrowings 1,343 998 Less: unamortized debt discount and issuance costs (111,043) (7,238) Total debt 273,800 247,260 Less: current portion of long-term debt (627) (640) Total long-term debt $ 273,173 $ 246,620 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule components of loss before income taxes | The following table presents the components of loss before income taxes on the Company’s consolidated statements of operations and comprehensive loss for each of the periods indicated. Year Ended December 31, 2020 2019 2018 (in thousands) Loss before income taxes: United States $ (204,522) $ (239,629) $ (33,339) Foreign (13,476) (15,453) (9,858) Total $ (217,998) $ (255,082) $ (43,197) |
Components of income tax (provision) benefit | The following table presents the components of the income tax benefit (provision) on the Company’s consolidated statements of operations and comprehensive loss for each of the periods indicated. Year Ended December 31, 2020 2019 2018 (in thousands) Current income tax (provision) benefit: United States federal and state $ (347) $ (97) $ — Foreign (249) 3 — Total current income tax provision $ (596) $ (94) $ — Deferred income tax benefit: United States federal and state $ — $ 17,459 $ 2,774 Foreign 2,110 2,495 2,093 Total deferred income tax benefit $ 2,110 $ 19,954 $ 4,867 Total income tax benefit $ 1,514 $ 19,860 $ 4,867 |
Schedule of reconciliation of the statutory federal income tax rate to the actual effective income tax rate | The following table presents a reconciliation between the Company’s statutory federal income tax rate and the effective tax rate for each of the periods indicated. Year Ended December 31, 2020 2019 2018 U.S. statutory federal income tax rate 21.0 % 21.0 % 21.0 % Increase (decrease) resulting from: U.S. state income taxes, net of federal benefits 5.0 4.2 0.9 Foreign tax rate differential 0.3 0.2 1.1 Non-deductible expenses (0.4) (0.7) (2.4) Non-deductible compensation (2.0) (0.4) (0.2) Stock-based compensation 0.7 0.5 30.0 Change in valuation allowance (23.9) (10.9) (39.3) Change in tax rate 0.1 — (0.1) Non-deductible impairment — (5.8) — Other (0.1) (0.3) 0.3 Effective tax rate 0.7 % 7.8 % 11.3 % |
Schedule of significant components of deferred tax assets and liabilities | The following table presents the significant components of deferred tax assets and liabilities on the Company’s consolidated balance sheets as of each of the dates indicated. As of December 31, 2020 2019 (in thousands) Deferred tax assets: Accrued expenses and other $ 8,772 $ 3,037 Accrued compensation and related benefits 12,552 2,779 Stock-based compensation 18,811 14,546 Deferred income 1,113 345 Lease liability 24,775 19,538 Interest expense carryforwards 5,393 2,059 Foreign net operating loss carryforwards 3,499 3,171 U.S. net operating loss carryforwards 186,089 164,854 Valuation allowance (137,767) (116,244) Total deferred tax assets $ 123,237 $ 94,085 Deferred tax liabilities: Prepaid expenses and other $ (197) $ (142) Property and equipment (1,684) (3,056) Right-of-use assets (16,116) (11,321) Intangibles (79,164) (84,025) Deferred rent (912) (674) Nondeductible interest on debt discount (27,974) — Total deferred tax liabilities (126,047) (99,218) Net deferred tax liabilities $ (2,810) $ (5,133) |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Schedule of shares of common stock reserved for future issuance | Shares Reserved for Future Issuance Outstanding restricted stock units 3,010,019 Outstanding performance restricted stock units 1,355,296 Outstanding stock options 3,916,867 Reserved for convertible senior notes 17,140,242 Total shares of common stock reserved for future issuance 25,422,424 |
Schedule of stock-based compensation expense included in the consolidated statements of operations and comprehensive loss | The following table presents stock-based compensation expense related to the Stock Plans and the ESPP, contained on the following line items on the Company’s consolidated statements of operations and comprehensive loss for each of the periods indicated. Year Ended December 31, 2020 2019 2018 (in thousands) Curriculum and teaching $ 230 $ 45 $ 14 Servicing and support 14,033 8,915 4,764 Technology and content development 12,014 8,241 4,094 Marketing and sales 8,217 7,021 2,743 General and administrative 47,548 27,282 19,795 Total stock-based compensation expense $ 82,042 $ 51,504 $ 31,410 |
Schedule of restricted and performance restricted stock unit activity | The following table presents a summary of the Company’s RSU activity for the period indicated. Number of Weighted-Average Outstanding balance as of December 31, 2019 2,281,142 $ 40.49 Granted 1,936,788 20.85 Vested (923,375) 38.97 Forfeited (284,536) 28.99 Outstanding balance as of December 31, 2020 3,010,019 $ 29.41 Number of Weighted-Average Outstanding balance as of December 31, 2019 1,413,773 $ 28.12 Granted 1,042,106 21.83 Vested (807,514) 20.86 Forfeited (293,069) 47.10 Outstanding balance as of December 31, 2020 1,355,296 $ 23.51 |
Schedule of assumptions used for estimating the fair value of the stock options granted | The following table summarizes the assumptions used for estimating the fair values of the PRSUs subject to market-based vesting conditions that were granted for the periods presented. Year Ended December 31, 2020 2019 Risk-free interest rate 1.5% 1.5% - 1.7% Expected term (years) 1.00 1.00 - 3.00 Expected volatility 75% 74% - 75% Dividend yield 0% 0% Year Ended December 31, 2020 2019 2018 Risk-free interest rate 1.5% 1.6% - 2.6% 2.3% - 3.0% Expected term (years) 6.04 5.96 - 6.08 5.97 - 6.77 Expected volatility 64% 45% - 64% 44% - 45% Dividend yield 0% 0% 0% |
Schedule of stock option activity | The following table presents a summary of the Company’s stock option activity for the period indicated. Number of Weighted-Average Weighted-Average Aggregate Outstanding balance as of December 31, 2019 4,373,895 $ 34.24 5.88 $ 28,736 Granted 8,597 19.61 9.08 Exercised (353,480) 11.82 2.29 Forfeited (58,155) 57.42 Expired (53,990) 52.95 Outstanding balance as of December 31, 2020 3,916,867 35.63 5.08 59,906 Exercisable as of December 31, 2020 3,213,131 $ 28.48 4.47 59,011 |
Net Loss per Share (Tables)
Net Loss per Share (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of potential dilutive securities that would have been anti-dilutive due to 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 each of the periods indicated. Year Ended December 31, 2020 2019 2018 Stock options 3,916,867 4,373,895 4,057,788 Restricted stock units 3,010,019 2,281,142 1,139,045 Performance restricted stock units 1,355,296 1,413,773 — Shares related to convertible senior notes 3,432,837 — — Total antidilutive securities 11,715,019 8,068,810 5,196,833 |
Schedule of calculation of basic and diluted net loss per share | The following table presents the calculation of the Company’s basic and diluted net loss per share for each of the periods indicated. The calculation of diluted net loss per share reflects the Company’s intent to settle conversions of the Notes through a combination settlement, which contemplates repayment in cash of the principal amount and repayment in shares of the Company’s common stock of any excess of the conversion value over the principal amount. Year Ended December 31, 2020 2019 2018 Numerator (in thousands): Net loss $ (216,484) $ (235,222) $ (38,330) Denominator: Weighted-average shares of common stock outstanding, basic and diluted 67,142,976 61,393,666 55,833,492 Net loss per share, basic and diluted $ (3.22) $ (3.83) $ (0.69) |
Segment and Geographic Inform_2
Segment and Geographic Information (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
Schedule of revenue, segment profitability and segment profitability margin by segment | The following table presents financial information regarding each of the Company’s reportable segment’s results of operations for each of the periods indicated. Year Ended December 31, 2020 2019 2018 (in thousands) Revenue by segment* Degree Program Segment $ 486,676 $ 417,206 $ 348,361 Alternative Credential Segment 287,857 157,465 63,408 Total revenue $ 774,533 $ 574,671 $ 411,769 Segment profitability** Degree Program Segment $ 49,607 $ 5,770 $ 16,839 Alternative Credential Segment (33,534) (29,716) 816 Total segment profitability $ 16,073 $ (23,946) $ 17,655 Segment profitability margin*** Degree Program Segment 10.2 % 1.4 % 4.8 % Alternative Credential Segment (11.6) (18.9) 1.3 Total segment profitability margin 2.1 % (4.2) % 4.3 % * The Company has excluded immaterial amounts of intersegment revenues from the years ended December 31, 2020, 2019 and 2018. ** The Company defines segment profitability as net income or net loss, as applicable, before net interest income (expense), foreign currency gains or losses, taxes, depreciation and amortization expense, deferred revenue fair value adjustments, transaction costs, integration costs, restructuring-related costs, stockholder activism costs, certain litigation-related costs, consisting of fees for certain non-ordinary course litigation and other proceedings, impairment charges, losses on debt extinguishment, 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 the respective segment’s revenue. |
Schedule of reconciliation of net loss to total segment profitability | The following table presents a reconciliation of the Company’s total segment profitability to net loss for each of the periods indicated. Year Ended December 31, 2020 2019 2018 (in thousands) Net loss $ (216,484) $ (235,222) $ (38,330) Adjustments: Stock-based compensation expense 82,042 51,504 31,410 Foreign currency loss 1,429 707 1,722 Net interest expense (income) 25,963 7,619 (5,065) Income tax benefit (1,514) (19,860) (4,867) Depreciation and amortization expense 96,469 69,843 32,785 Loss on debt extinguishment 11,671 — — Impairment charge — 70,379 — Other* 16,497 31,084 — Total adjustments 232,557 211,276 55,985 Total segment profitability $ 16,073 $ (23,946) $ 17,655 * Includes (i) transaction and integration costs of $2.3 million and $8.0 million for the years ended December 31, 2020 and 2019, respectively, (ii) restructuring-related costs of $6.8 million and $10.8 million for the years ended December 31, 2020 and 2019, respectively, (iii) stockholder activism and litigation-related costs of $7.4 million and $1.0 million for the years ended December 31, 2020 and 2019, respectively, and (iv) deferred revenue fair value adjustments of $11.2 million for the year ended December 31, 2019. |
Schedule of total assets by segment | The following table presents the Company’s total assets by segment as of each of the dates indicated. December 31, December 31, (in thousands) Total assets Degree Program Segment $ 830,706 $ 507,187 Alternative Credential Segment 713,558 679,643 Total assets $ 1,544,264 $ 1,186,830 |
Segment trade accounts receivable and contract liabilities | The following table presents the Company’s trade accounts receivable and contract liabilities in each segment as of each of the dates indicated. December 31, December 31, (in thousands) Trade accounts receivable Degree Program Segment accounts receivable $ 16,424 $ 3,454 Degree Program Segment unbilled revenue 6,072 12,123 Alternative Credential Segment accounts receivable 29,717 19,408 Provision for credit losses (5,936) (1,330) Total trade accounts receivable $ 46,277 $ 33,655 Contract liabilities Degree Program Segment deferred revenue $ 1,714 $ 2,210 Alternative Credential Segment deferred revenue 73,779 46,623 Total contract liabilities $ 75,493 $ 48,833 |
Quarterly Financial Informati_2
Quarterly Financial Information (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of unaudited quarterly results | The following tables presents certain unaudited quarterly financial data for 2020 and 2019. 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 $ 175,479 $ 182,687 $ 201,073 $ 215,294 Costs and expenses Curriculum and teaching 20,478 26,256 30,153 31,081 Servicing and support 30,533 30,294 32,536 32,488 Technology and content development 35,510 37,307 40,223 42,909 Marketing and sales 99,215 98,341 100,068 92,550 General and administrative 43,653 39,554 44,000 46,319 Total costs and expenses 229,389 231,752 246,980 245,347 Loss from operations (53,910) (49,065) (45,907) (30,053) Interest income 513 154 713 (26) Interest expense (5,493) (6,518) (7,564) (7,742) Loss on debt extinguishment — (11,671) — — Other (expense) income, net (2,271) 570 42 230 Loss before income taxes (61,161) (66,530) (52,716) (37,591) Income tax benefit (expense) 1,055 363 162 (66) Net loss $ (60,106) $ (66,167) $ (52,554) $ (37,657) Net loss per share, basic and diluted $ (0.94) $ (1.03) $ (0.77) $ (0.52) Weighted-average shares used in computing net loss per share, basic and diluted 63,626,333 64,075,405 68,580,439 72,228,308 Three Months Ended March 31, June 30, September 30, December 31, (in thousands, except share and per share amounts) Revenue $ 122,234 $ 135,461 $ 153,798 $ 163,178 Costs and expenses Curriculum and teaching 6,701 13,308 21,336 21,925 Servicing and support 20,174 23,993 27,351 27,372 Technology and content development 19,794 26,043 34,132 35,504 Marketing and sales 76,961 89,749 93,521 82,164 General and administrative 23,023 28,408 42,040 37,549 Impairment charge — — 70,379 — Total costs and expenses 146,653 181,501 288,759 204,514 Loss from operations (24,419) (46,040) (134,961) (41,336) Interest income 2,349 1,814 924 713 Interest expense (55) (2,424) (5,651) (5,289) Other (expense) income, net (370) (13) (710) 386 Loss before income taxes (22,495) (46,663) (140,398) (45,526) Income tax benefit (expense) 941 18,691 (714) 942 Net loss $ (21,554) $ (27,972) $ (141,112) $ (44,584) Net loss per share, basic and diluted $ (0.37) $ (0.46) $ (2.23) $ (0.70) Weighted-average shares used in computing net loss per share, basic and diluted 58,138,692 60,516,662 63,358,890 63,481,130 |
Organization (Details)
Organization (Details) | 12 Months Ended |
Dec. 31, 2020segmentoffering | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of educational offerings (more than) | offering | 500 |
Number of reportable segments (in segments) | segment | 2 |
Significant Accounting Polici_4
Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Apr. 30, 2020 | Apr. 23, 2020 | |
Revenue Recognition, Accounts Receivable and Provision for Credit Losses | ||||
Financing receivables | $ 25,400,000 | $ 3,900,000 | ||
Non-Cash Long-Lived Asset Additions | ||||
Capital asset additions during the period | 3,300,000 | 3,100,000 | ||
Additional cash classified as cash flows from financing activities | 2,200,000 | |||
Equity Interests | ||||
Equity securities | $ 10,000,000 | $ 10,000,000 | ||
The Notes | Convertible Debt | ||||
Convertible Senior Notes | ||||
Interest rate | 2.25% | 2.25% | ||
Aggregate principal amount | $ 380,000,000 | $ 380,000,000 | ||
Minimum | ||||
Amortizable Intangible Assets | ||||
Estimated useful life of intangible assets | 3 years | |||
Maximum | ||||
Amortizable Intangible Assets | ||||
Estimated useful life of intangible assets | 10 years | |||
Internally-developed software | Minimum | ||||
Amortizable Intangible Assets | ||||
Estimated useful life of intangible assets | 3 years | |||
Internally-developed software | Maximum | ||||
Amortizable Intangible Assets | ||||
Estimated useful life of intangible assets | 5 years | |||
Capitalized content development | Minimum | ||||
Amortizable Intangible Assets | ||||
Estimated useful life of intangible assets | 4 years | |||
Capitalized content development | Maximum | ||||
Amortizable Intangible Assets | ||||
Estimated useful life of intangible assets | 5 years | |||
Computer hardware | Minimum | ||||
Property and Equipment | ||||
Useful lives | 3 years | |||
Computer hardware | Maximum | ||||
Property and Equipment | ||||
Useful lives | 5 years | |||
Furniture and office equipment | Minimum | ||||
Property and Equipment | ||||
Useful lives | 5 years | |||
Furniture and office equipment | Maximum | ||||
Property and Equipment | ||||
Useful lives | 7 years | |||
Leasehold improvements | Minimum | ||||
Property and Equipment | ||||
Useful lives | 4 years | |||
Leasehold improvements | Maximum | ||||
Property and Equipment | ||||
Useful lives | 11 years | |||
Degree Program Segment | ||||
Revenue Recognition, Accounts Receivable and Provision for Credit Losses | ||||
Revenue, performance obligation, description of timing | The Company’s contracts with university clients in this segment typically have terms of 10 to 15 years and have a single performance obligation, as the promises to provide a platform of tightly integrated technology and services that university clients need to attract, enroll, educate and support students are not distinct within the context of the contracts. | |||
Alternative Credential Segment | ||||
Revenue Recognition, Accounts Receivable and Provision for Credit Losses | ||||
Revenue, performance obligation, description of timing | The Company’s short courses run between six and 16 weeks, while boot camps run between 12 and 24 weeks. |
Significant Accounting Polici_5
Significant Accounting Policies - Change in Provision for Credit Losses (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |||
Balance as of January 1, 2020 | $ 1,331 | ||
Current period provision | 4,642 | $ 1,425 | $ 0 |
Amounts written off | (16) | ||
Other | (21) | ||
Balance as of December 31, 2020 | $ 5,936 | $ 1,331 |
Business Combination - (Details
Business Combination - (Details) - USD ($) $ / shares in Units, $ in Millions | May 22, 2019 | Dec. 31, 2019 |
Business Acquisition [Line Items] | ||
Business acquisition, pro forma revenue | $ 624.8 | |
Business acquisition, pro forma net income (loss) | $ (268.9) | |
Pro forma net loss per share, diluted (in dollars per share) | $ (4.38) | |
Pro forma net loss per share, basic (in dollars per share) | $ (4.38) | |
Trilogy Education Services, Inc. | ||
Business Acquisition [Line Items] | ||
Net purchase price | $ 608.6 | |
Par value of common stock (in dollars per share) | $ 0.001 | |
Trilogy Education Services, Inc. | Equity Incentive Plan 2014 | ||
Business Acquisition [Line Items] | ||
Vesting period | 18 months |
Business Combination - Estimate
Business Combination - Estimated Fair Value (Details) - USD ($) $ in Thousands | May 22, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Acquisition | ||||
Goodwill | $ 415,830 | $ 418,350 | $ 61,852 | |
Trilogy Education Services, Inc. | ||||
Acquisition | ||||
Cash and cash equivalents | $ 35,320 | |||
Current assets | 30,081 | |||
Property and equipment, net | 2,411 | |||
Other non-current assets | 6,276 | |||
Goodwill | 425,346 | |||
Current liabilities | (57,010) | |||
Non-current liabilities | (21,224) | |||
Total | $ 608,596 | |||
Trilogy Education Services, Inc. | Developed technology | ||||
Acquisition | ||||
Estimated useful life of intangible assets | 3 years | |||
Amortizable intangible assets | $ 48,096 | |||
Trilogy Education Services, Inc. | Developed content | ||||
Acquisition | ||||
Estimated useful life of intangible assets | 4 years | |||
Amortizable intangible assets | $ 48,050 | |||
Trilogy Education Services, Inc. | University client relationships | ||||
Acquisition | ||||
Estimated useful life of intangible assets | 10 years | |||
Amortizable intangible assets | $ 84,150 | |||
Trilogy Education Services, Inc. | Trade names and domain names | ||||
Acquisition | ||||
Estimated useful life of intangible assets | 5 years | |||
Amortizable intangible assets | $ 7,100 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Property and Equipment, Net | |||
Property and equipment, gross | $ 87,721 | $ 81,942 | |
Accumulated depreciation and amortization | (34,987) | (24,299) | |
Property and equipment, net | 52,734 | 57,643 | |
Depreciation expense | 13,400 | 11,600 | $ 8,900 |
Computer hardware | |||
Property and Equipment, Net | |||
Property and equipment, gross | 9,053 | 8,685 | |
Furniture and office equipment | |||
Property and Equipment, Net | |||
Property and equipment, gross | 18,041 | 18,478 | |
Leasehold improvements | |||
Property and Equipment, Net | |||
Property and equipment, gross | 58,443 | 50,461 | |
Leasehold improvements in process | |||
Property and Equipment, Net | |||
Property and equipment, gross | $ 2,184 | $ 4,318 |
Goodwill and Amortizable Inta_3
Goodwill and Amortizable Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Goodwill [Line Items] | ||||||
Goodwill | $ 61,852 | $ 418,350 | $ 61,852 | |||
Goodwill recognized in connection with business combination | 425,346 | |||||
Impairment charge (cumulative) | $ 0 | $ (70,379) | $ 0 | 0 | (70,379) | |
Foreign currency translation adjustments and other | (2,520) | 1,531 | ||||
Goodwill | 418,350 | 415,830 | 418,350 | |||
Degree Program Segment | ||||||
Goodwill [Line Items] | ||||||
Goodwill | 0 | 0 | 0 | |||
Goodwill recognized in connection with business combination | 0 | |||||
Impairment charge (cumulative) | 0 | |||||
Foreign currency translation adjustments and other | 0 | 0 | ||||
Goodwill | 0 | 0 | 0 | |||
Alternative Credential Segment | ||||||
Goodwill [Line Items] | ||||||
Goodwill | $ 61,852 | 418,350 | 61,852 | |||
Goodwill recognized in connection with business combination | 425,346 | |||||
Impairment charge (cumulative) | (70,379) | |||||
Foreign currency translation adjustments and other | (2,520) | 1,531 | ||||
Goodwill | $ 418,350 | $ 415,830 | $ 418,350 |
Goodwill and Amortizable Inta_4
Goodwill and Amortizable Intangible Assets - Amortizable Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Goodwill and Amortizable Intangible Assets | ||
Gross Carrying Amount | $ 509,619 | $ 447,276 |
Accumulated Amortization | (196,849) | (114,201) |
Net Carrying Amount | $ 312,770 | 333,075 |
Minimum | ||
Goodwill and Amortizable Intangible Assets | ||
Estimated Average Useful Life (in years) | 3 years | |
Maximum | ||
Goodwill and Amortizable Intangible Assets | ||
Estimated Average Useful Life (in years) | 10 years | |
Capitalized technology | ||
Goodwill and Amortizable Intangible Assets | ||
Gross Carrying Amount | $ 165,254 | 142,712 |
Accumulated Amortization | (75,822) | (41,106) |
Net Carrying Amount | $ 89,432 | 101,606 |
Capitalized technology | Minimum | ||
Goodwill and Amortizable Intangible Assets | ||
Estimated Average Useful Life (in years) | 3 years | |
Capitalized technology | Maximum | ||
Goodwill and Amortizable Intangible Assets | ||
Estimated Average Useful Life (in years) | 5 years | |
Capitalized content development | ||
Goodwill and Amortizable Intangible Assets | ||
Gross Carrying Amount | $ 208,170 | 167,758 |
Accumulated Amortization | (88,168) | (54,736) |
Net Carrying Amount | $ 120,002 | 113,022 |
Capitalized content development | Minimum | ||
Goodwill and Amortizable Intangible Assets | ||
Estimated Average Useful Life (in years) | 4 years | |
Capitalized content development | Maximum | ||
Goodwill and Amortizable Intangible Assets | ||
Estimated Average Useful Life (in years) | 5 years | |
University client relationships | ||
Goodwill and Amortizable Intangible Assets | ||
Gross Carrying Amount | $ 109,498 | 110,344 |
Accumulated Amortization | (23,376) | (12,419) |
Net Carrying Amount | $ 86,122 | 97,925 |
University client relationships | Minimum | ||
Goodwill and Amortizable Intangible Assets | ||
Estimated Average Useful Life (in years) | 9 years | |
University client relationships | Maximum | ||
Goodwill and Amortizable Intangible Assets | ||
Estimated Average Useful Life (in years) | 10 years | |
Trade names and domain names | ||
Goodwill and Amortizable Intangible Assets | ||
Gross Carrying Amount | $ 26,697 | 26,462 |
Accumulated Amortization | (9,483) | (5,940) |
Net Carrying Amount | $ 17,214 | $ 20,522 |
Trade names and domain names | Minimum | ||
Goodwill and Amortizable Intangible Assets | ||
Estimated Average Useful Life (in years) | 5 years | |
Trade names and domain names | Maximum | ||
Goodwill and Amortizable Intangible Assets | ||
Estimated Average Useful Life (in years) | 10 years |
Goodwill and Amortizable Inta_5
Goodwill and Amortizable Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Finite-Lived Intangible Assets [Line Items] | |||||||
Impairment charge | $ 0 | $ 70,379 | $ 0 | $ 0 | $ 70,379 | ||
In process capitalized technology and content development | 333,075 | $ 312,770 | 333,075 | ||||
Amortization of intangible assets | 83,100 | 58,300 | $ 23,900 | ||||
In Process Capitalized Technology And Content Development | |||||||
Finite-Lived Intangible Assets [Line Items] | |||||||
In process capitalized technology and content development | $ 30,700 | $ 38,600 | $ 30,700 |
Goodwill and Amortizable Inta_6
Goodwill and Amortizable Intangible Assets - Estimated Future Amortization Expense and License agreement (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Future Amortization Expense | ||
Net Carrying Amount | $ 312,770 | $ 333,075 |
Excluding In Process Capitalized Technology and Content Development | ||
Future Amortization Expense | ||
2021 | 81,927 | |
2022 | 65,971 | |
2023 | 48,928 | |
2024 | 29,368 | |
2025 | 16,434 | |
Thereafter | 31,477 | |
Net Carrying Amount | $ 274,105 |
Accrued Expenses and Deferred_3
Accrued Expenses and Deferred Costs - Accounts Payable and Accrued Expenses (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Accrued university and instructional staff compensation | $ 27,371,000 | $ 23,419,000 |
Accrued marketing costs | 24,682,000 | 22,055,000 |
Accrued transaction, integration and restructuring-related costs | 3,492,000 | 4,459,000 |
Accrued compensation and related benefits | 52,820,000 | 21,885,000 |
Accounts payable and other accrued expenses | 22,309,000 | 15,448,000 |
Total accounts payable and accrued expenses | 130,674,000 | 87,266,000 |
Employee termination benefits reserve | $ 0 | $ 500,000 |
Accrued Expenses and Deferred_4
Accrued Expenses and Deferred Costs - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||
Accrued payroll taxes CARES Act | $ 11.3 | |
Capitalized software implementation costs | 6.3 | $ 3.1 |
Amortization of capitalized software implementation costs | $ 1.3 | $ 0.3 |
Minimum | ||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||
Estimated useful life of intangible assets | 3 years | |
Minimum | Capitalized technology | ||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||
Estimated useful life of intangible assets | 3 years | |
Maximum | ||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||
Estimated useful life of intangible assets | 10 years | |
Maximum | Capitalized technology | ||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||
Estimated useful life of intangible assets | 5 years |
Commitments and Contingencies -
Commitments and Contingencies - Future Minimum Payments Due to University Clients (Details) $ in Thousands | Dec. 31, 2020USD ($) |
Future Minimum Payments | |
2021 | $ 1,625 |
2022 | 625 |
2023 | 625 |
2024 | 625 |
2025 | 625 |
Thereafter | 2,525 |
Total future minimum payments to university clients | $ 6,650 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) $ in Millions | Dec. 31, 2020USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Additional investment In educational technology, contingent payment | $ 5 |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Lessee, Lease, Description [Line Items] | |||
Renewal term (in years) | 5 years | ||
Option to terminate, term (in years) | 1 year | ||
Remaining lease term | 2 years 9 months 18 days | ||
Weighted average remaining lease term (in years) | 7 years 4 months 24 days | ||
Weighted average discount rate | 11.40% | ||
Operating lease payments | $ 17.3 | $ 13.5 | |
Lease liability, leases not yet commenced | $ 51.2 | ||
Forecast | |||
Lessee, Lease, Description [Line Items] | |||
Sublease income | $ 0.7 | ||
Minimum | |||
Lessee, Lease, Description [Line Items] | |||
Contract term (in years) | 1 year | ||
Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Contract term (in years) | 11 years | ||
Term of leases not yet commenced | 12 years |
Leases - Lease Cost (Details)
Leases - Lease Cost (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Leases [Abstract] | ||
Operating lease expense | $ 15,153 | $ 11,725 |
Short-term lease expense | 362 | 737 |
Variable lease expense | 5,837 | 4,195 |
Sublease income | (36) | 0 |
Total lease expense | $ 21,316 | $ 16,657 |
Leases - Maturities of Operatin
Leases - Maturities of Operating Lease Liabilities (Details) $ in Thousands | Dec. 31, 2020USD ($) |
Future minimum lease payments | |
2021 | $ 19,847 |
2022 | 18,992 |
2023 | 18,774 |
2024 | 18,373 |
2025 | 14,347 |
Thereafter | 48,965 |
Total lease payments | 139,298 |
Less: imputed interest | (46,046) |
Total lease liability | $ 93,252 |
Debt - Long-Term Debt (Details)
Debt - Long-Term Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Less: unamortized debt discount and issuance costs | $ (111,043) | $ (7,238) |
Total debt | 273,800 | 247,260 |
Less: current portion of long-term debt | (627) | (640) |
Total long-term debt | 273,173 | 246,620 |
Convertible senior notes | ||
Debt Instrument [Line Items] | ||
Long-term debt | 380,000 | 0 |
Senior secured term loan facility | ||
Debt Instrument [Line Items] | ||
Long-term debt | 0 | 250,000 |
Deferred government grant obligations | ||
Debt Instrument [Line Items] | ||
Long-term debt | 3,500 | 3,500 |
Other borrowings | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 1,343 | $ 998 |
Debt - Narrative (Details)
Debt - Narrative (Details) | Jun. 25, 2020USD ($) | Apr. 23, 2020USD ($)day$ / shares | Dec. 31, 2020USD ($)agreement | Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Dec. 31, 2020USD ($)agreement | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Apr. 30, 2020USD ($) | May 22, 2019USD ($) |
Debt Instrument [Line Items] | |||||||||||
Proceeds from debt | $ 371,681,000 | $ 244,724,000 | $ 0 | ||||||||
Debt instrument, convertible, conversion ratio | 0.0353773 | ||||||||||
Purchases of capped calls in connection with convertible senior notes | 50,540,000 | ||||||||||
Loss on debt extinguishment | $ 11,700,000 | $ 0 | $ 0 | $ 11,671,000 | $ 0 | $ 11,671,000 | 0 | $ 0 | |||
Number of contracts (in contracts) | agreement | 2 | 2 | |||||||||
Standby Letters of Credit | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Maximum borrowing capacity | $ 17,400,000 | $ 17,400,000 | |||||||||
Prince Georges County Maryland | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Interest rate | 3.00% | 3.00% | |||||||||
Convertible senior notes | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Long-term debt, fair value | $ 616,600,000 | $ 616,600,000 | |||||||||
Long-term debt | 380,000,000 | 380,000,000 | 0 | ||||||||
Convertible senior notes | The Notes | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Aggregate principal amount | 380,000,000 | $ 380,000,000 | |||||||||
Proceeds from debt | $ 369,600,000 | ||||||||||
Interest rate | 2.25% | 2.25% | |||||||||
Debt issuance costs | $ 19,800,000 | ||||||||||
Debt instrument, effective interest rate percentage | 10.90% | ||||||||||
Debt instrument, convertible, carrying amount | $ 117,800,000 | ||||||||||
Debt instrument, convertible, threshold percentage of stock price trigger | 130.00% | ||||||||||
Debt instrument, convertible, threshold trading days | day | 20 | ||||||||||
Debt instrument, convertible, threshold consecutive trading days | day | 30 | ||||||||||
Debt instrument, convertible, threshold consecutive trading days, sale price per share | day | 5 | ||||||||||
Debt instrument, convertible, measurement period | day | 10 | ||||||||||
Debt instrument, threshold percentage of sales price per share | 98.00% | ||||||||||
Debt instrument, convertible, conversion price (in dollars per share) | $ / shares | $ 28.27 | ||||||||||
Capped call, cap price (in dollars per share) | $ / shares | $ 44.34 | ||||||||||
Purchases of capped calls in connection with convertible senior notes | $ 50,500,000 | ||||||||||
Convertible senior notes | The Notes | Measurement Input, Discount Rate | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument, discount rate | 0.103 | ||||||||||
Letter of Credit | Credit Agreement | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Aggregate principal amount | $ 250,000,000 | ||||||||||
Maximum borrowing capacity | $ 50,000,000 | ||||||||||
Debt instrument, principal amount of the lenders' commitments, maximum | $ 100,000,000 | ||||||||||
Outstanding amount under credit agreement | 0 | $ 0 | |||||||||
Repayments of debt | $ 250,000,000 | ||||||||||
Interest payable | 1,300,000 | ||||||||||
Deferred financing costs | 9,200,000 | ||||||||||
Prepayment premium | $ 2,500,000 | ||||||||||
Letter of Credit | Credit Agreement | Base Rate | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Variable rate, applicable margin | 2.75% | ||||||||||
Letter of Credit | Credit Agreement | LIBOR | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Variable rate, applicable margin | 3.75% | ||||||||||
Letter of Credit | Credit Agreement | LIBOR | Minimum | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Variable rate, applicable margin | 0.00% | ||||||||||
Deferred government grant obligations | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Interest payable | 400,000 | 400,000 | 300,000 | ||||||||
Long-term debt | $ 3,500,000 | $ 3,500,000 | $ 3,500,000 |
Income Taxes - Other (Details)
Income Taxes - Other (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Components of loss before income taxes | |||||||||||
United States | $ (204,522) | $ (239,629) | $ (33,339) | ||||||||
Foreign | (13,476) | (15,453) | (9,858) | ||||||||
Loss before income taxes | $ (37,591) | $ (52,716) | $ (66,530) | $ (61,161) | $ (45,526) | $ (140,398) | $ (46,663) | $ (22,495) | $ (217,998) | $ (255,082) | $ (43,197) |
Income Taxes - Components of in
Income Taxes - Components of income tax (provision) benefit (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Current income tax (provision) benefit: | |||||||||||
United States federal and state | $ (347) | $ (97) | $ 0 | ||||||||
Foreign | (249) | 3 | 0 | ||||||||
Total current income tax provision | (596) | (94) | 0 | ||||||||
Deferred income tax benefit: | |||||||||||
United States federal and state | 0 | 17,459 | 2,774 | ||||||||
Foreign | 2,110 | 2,495 | 2,093 | ||||||||
Total deferred income tax benefit | 2,110 | 19,954 | 4,867 | ||||||||
Total income tax benefit | $ (66) | $ 162 | $ 363 | $ 1,055 | $ 942 | $ (714) | $ 18,691 | $ 941 | $ 1,514 | $ 19,860 | $ 4,867 |
Income Taxes - Statutory federa
Income Taxes - Statutory federal income tax rate and the effective tax rate (Details) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||
U.S. statutory federal income tax rate | 21.00% | 21.00% | 21.00% |
U.S. state income taxes, net of federal benefits | 5.00% | 4.20% | 0.90% |
Foreign tax rate differential | 0.30% | 0.20% | 1.10% |
Non-deductible expenses | (0.40%) | (0.70%) | (2.40%) |
Non-deductible compensation | (2.00%) | (0.40%) | (0.20%) |
Stock-based compensation | 0.70% | 0.50% | 30.00% |
Change in valuation allowance | (23.90%) | (10.90%) | (39.30%) |
Change in tax rate | 0.10% | 0.00% | (0.10%) |
Non-deductible impairment | 0.00% | (5.80%) | 0.00% |
Other | (0.10%) | (0.30%) | 0.30% |
Effective tax rate | 0.70% | 7.80% | 11.30% |
Income Taxes - Components of de
Income Taxes - Components of deferred tax assets and liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax assets: | ||
Accrued expenses and other | $ 8,772 | $ 3,037 |
Accrued compensation and related benefits | 12,552 | 2,779 |
Stock-based compensation | 18,811 | 14,546 |
Deferred income | 1,113 | 345 |
Lease liability | 24,775 | 19,538 |
Interest expense carryforwards | 5,393 | 2,059 |
Foreign net operating loss carryforwards | 3,499 | 3,171 |
U.S. net operating loss carryforwards | 186,089 | 164,854 |
Valuation allowance | (137,767) | (116,244) |
Total deferred tax assets | 123,237 | 94,085 |
Deferred tax liabilities: | ||
Prepaid expenses and other | (197) | (142) |
Property and equipment | (1,684) | (3,056) |
Right-of-use assets | (16,116) | (11,321) |
Intangibles | (79,164) | (84,025) |
Deferred rent | (912) | (674) |
Nondeductible interest on debt discount | (27,974) | 0 |
Total deferred tax liabilities | (126,047) | (99,218) |
Net deferred tax liabilities | $ (2,810) | $ (5,133) |
Income Taxes - Carryforwards (D
Income Taxes - Carryforwards (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Increase in valuation allowance | $ 21,500,000 | |
Tax benefit related to acquisition of Trilogy | $ 17,500,000 | |
Income tax returns currently under examination | 0 | |
U.S. | ||
Operating loss carryforwards | 706,000,000 | |
Operating loss carryforward, subject to expiration | 265,000,000 | |
Operating loss carryforward, not subject to expiration | 441,000,000 | |
Foreign | ||
Operating loss carryforwards | $ 15,200,000 |
Stockholders' Equity - Common S
Stockholders' Equity - Common Stock and Stock-based Compensation (Details) $ in Thousands | Aug. 06, 2020shares | May 22, 2019shares | May 22, 2018USD ($)shares | Dec. 31, 2020USD ($)planshares | Dec. 31, 2019USD ($)shares | Dec. 31, 2018USD ($)shares | Jan. 01, 2020shares | Dec. 31, 2017shares |
Stockholders' Equity | ||||||||
Capital stock shares, authorized (in shares) | 205,000,000 | |||||||
Authorized shares of common stock (in shares) | 200,000,000 | 200,000,000 | ||||||
Authorized shares of preferred stock (in shares) | 5,000,000 | 5,000,000 | ||||||
Common stock, shares issued (in shares) | 72,451,521 | 63,569,109 | ||||||
Common stock, shares outstanding (in shares) | 72,451,521 | 63,569,109 | ||||||
Common stock reserved for issuance (in shares) | 25,422,424 | |||||||
Proceeds from issuance of common stock, net of offering costs | $ | $ 330,900 | $ 299,796 | $ 0 | $ 330,901 | ||||
Number of stock-based compensation plans | plan | 2 | |||||||
Issuance of common stock in connection with employee stock purchase plan | $ | $ 3,960 | $ 3,382 | $ 3,121 | |||||
Equity Incentive Plan 2014 | ||||||||
Stockholders' Equity | ||||||||
Common stock reserved for issuance (in shares) | 6,214,809 | |||||||
Increase in shares in available for future issuance (in shares) | 3,175,011 | |||||||
Restricted stock units | ||||||||
Stockholders' Equity | ||||||||
Common stock reserved for issuance (in shares) | 3,010,019 | |||||||
Performance restricted stock units | ||||||||
Stockholders' Equity | ||||||||
Common stock reserved for issuance (in shares) | 1,355,296 | |||||||
Stock options | ||||||||
Stockholders' Equity | ||||||||
Common stock reserved for issuance (in shares) | 3,916,867 | |||||||
Shares related to convertible senior notes | ||||||||
Stockholders' Equity | ||||||||
Common stock reserved for issuance (in shares) | 17,140,242 | |||||||
Employee Stock | ||||||||
Stockholders' Equity | ||||||||
Common stock reserved for issuance (in shares) | 666,394 | |||||||
Common Stock | ||||||||
Stockholders' Equity | ||||||||
Common stock, shares outstanding (in shares) | 72,451,521 | 63,569,109 | 57,968,493 | 52,505,856 | ||||
Sale of common stock (in shares) | 6,800,000 | |||||||
Issuance of common stock in connection with business combination, net of offering costs (in shares) | 4,608,101 | 3,833,334 | 6,800,000 | 4,608,101 | 3,833,334 | |||
Issuance of common stock in connection with employee stock purchase plan (in shares) | 146,570 | 123,365 | 63,671 | |||||
Issuance of common stock in connection with employee stock purchase plan | $ | $ 4,000 | $ 3,400 | ||||||
Common Stock | Underwriters' over-allotment option | ||||||||
Stockholders' Equity | ||||||||
Issuance of common stock in connection with business combination, net of offering costs (in shares) | 500,000 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | ||||||
Mar. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Jan. 01, 2021 | Jan. 01, 2020 | Jan. 30, 2014 | |
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ||||||||
Common stock reserved for issuance (in shares) | 25,422,424 | |||||||
Restricted stock units | ||||||||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ||||||||
Common stock reserved for issuance (in shares) | 3,010,019 | |||||||
Restricted stock units outstanding (in shares) | 2,281,142 | 3,010,019 | 2,281,142 | |||||
Total unrecognized compensation cost related to unvested RSUs | $ 59.3 | |||||||
Unrecognized compensation cost period expected to be realized | 1 year 10 months 24 days | |||||||
Granted (in shares) | 1,936,788 | |||||||
Performance Restricted Stock Units | ||||||||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ||||||||
Common stock reserved for issuance (in shares) | 1,355,296 | |||||||
Restricted stock units outstanding (in shares) | 1,413,773 | 1,355,296 | 1,413,773 | |||||
Vesting period | 1 year | 3 years | ||||||
Total unrecognized compensation cost related to unvested RSUs | $ 8.8 | |||||||
Unrecognized compensation cost period expected to be realized | 1 year 3 months 18 days | |||||||
Granted (in shares) | 1,900,000 | 1,300,000 | 1,042,106 | |||||
Aggregate weighted average grant date fair value for PRSU (in dollars per share) | $ 22.94 | |||||||
PRSU award vesting percentage | 200.00% | 200.00% | ||||||
Aggregate grant date fair value of awards | $ 37.8 | |||||||
Aggregate intrinsic value of employee options exercised | $ 0.6 | |||||||
Stock options | ||||||||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ||||||||
Common stock reserved for issuance (in shares) | 3,916,867 | |||||||
Option to purchase common stock, outstanding (in shares) | 4,373,895 | 3,916,867 | 4,373,895 | |||||
Weighted average exercise price (in dollars per share) | $ 34.24 | $ 35.63 | $ 34.24 | |||||
Vesting period | 4 years | |||||||
Aggregate intrinsic value of employee options exercised | $ 8.7 | $ 15.4 | $ 54 | |||||
Expiration period | 10 years | |||||||
Weighted average grant date fair value (in dollars per share) | $ 11.48 | $ 28.49 | $ 39.66 | |||||
Compensation cost related to the nonvested awards not yet recognized | $ 19.9 | |||||||
Weighted average period for recognition of compensation cost | 2 years 3 months 18 days | |||||||
Minimum | Restricted stock units | ||||||||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ||||||||
Vesting period | 3 years | |||||||
Minimum | Performance Restricted Stock Units | ||||||||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ||||||||
PRSU award vesting percentage | 0.00% | 0.00% | ||||||
Maximum | Restricted stock units | ||||||||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ||||||||
Vesting period | 4 years | |||||||
Maximum | Performance Restricted Stock Units | ||||||||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ||||||||
PRSU award vesting percentage | 200.00% | 200.00% | ||||||
Equity Incentive Plan 2014 | ||||||||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ||||||||
Shares authorized under the plan (in shares) | 2,800,000 | |||||||
Number of shares that may be added to the 2014 Plan (in shares) | 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% | |||||||
Increase in shares in available for future issuance (in shares) | 3,175,011 | |||||||
Common stock reserved for issuance (in shares) | 6,214,809 | |||||||
Option to purchase common stock, outstanding (in shares) | 2,960,275 | |||||||
Weighted average exercise price (in dollars per share) | $ 45.21 | |||||||
Equity Incentive Plan 2014 | Subsequent Event | ||||||||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ||||||||
Increase in shares in available for future issuance (in shares) | 3,619,344 | |||||||
Equity Incentive Plan 2014 | Restricted stock units | ||||||||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ||||||||
Restricted stock units outstanding (in shares) | 3,010,019 | |||||||
Equity Incentive Plan 2014 | Performance Restricted Stock Units | ||||||||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ||||||||
Restricted stock units outstanding (in shares) | 1,355,296 | |||||||
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 (in shares) | 5,943,348 | |||||||
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 (in shares) | 0 | |||||||
Option to purchase common stock, outstanding (in shares) | 956,592 | |||||||
Weighted average exercise price (in dollars per share) | $ 6 |
Stockholders' Equity - Stock-ba
Stockholders' Equity - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | |||
Total stock-based compensation expense | $ 82,042 | $ 51,504 | $ 31,410 |
Curriculum and teaching | |||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | |||
Total stock-based compensation expense | 230 | 45 | 14 |
Servicing and support | |||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | |||
Total stock-based compensation expense | 14,033 | 8,915 | 4,764 |
Technology and content development | |||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | |||
Total stock-based compensation expense | 12,014 | 8,241 | 4,094 |
Marketing and sales | |||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | |||
Total stock-based compensation expense | 8,217 | 7,021 | 2,743 |
General and administrative | |||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | |||
Total stock-based compensation expense | $ 47,548 | $ 27,282 | $ 19,795 |
Stockholders' Equity - Fair Val
Stockholders' Equity - Fair Value Assumptions (Details) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Performance Restricted Stock Units | |||
Fair value assumptions and methodology | |||
Risk-free interest rate | 1.50% | ||
Risk-free interest rate minimum | 1.50% | ||
Risk-free interest rate maximum | 1.70% | ||
Expected term (years) | 1 year | ||
Expected volatility | 75.00% | ||
Expected volatility minimum | 74.00% | ||
Expected volatility maximum | 75.00% | ||
Dividend yield | 0.00% | 0.00% | |
Performance Restricted Stock Units | Minimum | |||
Fair value assumptions and methodology | |||
Expected term (years) | 1 year | ||
Performance Restricted Stock Units | Maximum | |||
Fair value assumptions and methodology | |||
Expected term (years) | 3 years | ||
Stock options | |||
Fair value assumptions and methodology | |||
Risk-free interest rate | 1.50% | ||
Risk-free interest rate minimum | 1.60% | 2.30% | |
Risk-free interest rate maximum | 2.60% | 3.00% | |
Expected term (years) | 6 years 14 days | ||
Expected volatility | 64.00% | ||
Expected volatility minimum | 45.00% | 44.00% | |
Expected volatility maximum | 64.00% | 45.00% | |
Dividend yield | 0.00% | 0.00% | 0.00% |
Stock options | Minimum | |||
Fair value assumptions and methodology | |||
Expected term (years) | 5 years 11 months 15 days | 5 years 11 months 19 days | |
Stock options | Maximum | |||
Fair value assumptions and methodology | |||
Expected term (years) | 6 years 29 days | 6 years 9 months 7 days |
Stockholders' Equity - Restrict
Stockholders' Equity - Restricted and Performance Restricted Stock Units (Details) - $ / shares | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | |
Restricted Stock Units (RSUs) | |||
Restricted Stock Units [Roll Forward] | |||
Outstanding balance at the beginning of the period (in shares) | 2,281,142 | 2,281,142 | |
Granted (in shares) | 1,936,788 | ||
Vested (in shares) | (923,375) | ||
Forfeited (in shares) | (284,536) | ||
Outstanding balance at the end of the period (in shares) | 2,281,142 | 3,010,019 | |
Grant Date Fair Value [Roll Forward] | |||
Outstanding at the beginning of the period (in dollars per share) | $ 40.49 | $ 40.49 | |
Granted (in dollars per share) | 20.85 | ||
Vested (in dollars per share) | 38.97 | ||
Forfeited (in dollars per share) | 28.99 | ||
Outstanding at the end of the period (in dollars per share) | $ 40.49 | $ 29.41 | |
Performance Restricted Stock Units | |||
Restricted Stock Units [Roll Forward] | |||
Outstanding balance at the beginning of the period (in shares) | 1,413,773 | 1,413,773 | |
Granted (in shares) | 1,900,000 | 1,300,000 | 1,042,106 |
Vested (in shares) | (807,514) | ||
Forfeited (in shares) | (293,069) | ||
Outstanding balance at the end of the period (in shares) | 1,413,773 | 1,355,296 | |
Grant Date Fair Value [Roll Forward] | |||
Outstanding at the beginning of the period (in dollars per share) | $ 28.12 | $ 28.12 | |
Granted (in dollars per share) | $ 22.45 | 21.83 | |
Vested (in dollars per share) | 20.86 | ||
Forfeited (in dollars per share) | 47.10 | ||
Outstanding at the end of the period (in dollars per share) | $ 28.12 | $ 23.51 |
Stockholders' Equity - Stock Op
Stockholders' Equity - Stock Options (Details) - Stock options - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Number of Options | ||
Outstanding balance at the beginning of the period (in shares) | 4,373,895 | |
Granted (in shares) | 8,597 | |
Exercised (in shares) | (353,480) | |
Forfeited (in shares) | (58,155) | |
Expired (in shares) | (53,990) | |
Outstanding balance at the end of the period (in shares) | 3,916,867 | 4,373,895 |
Exercisable at the end of the period (in shares) | 3,213,131 | |
Weighted-Average Exercise Price per Share | ||
Outstanding balance at the beginning of the period (in dollars per share) | $ 34.24 | |
Granted (in dollars per share) | 19.61 | |
Exercised (in dollars per share) | 11.82 | |
Forfeited (in dollars per share) | 57.42 | |
Expired (in dollars per share) | 52.95 | |
Outstanding balance at the end of the period (in dollars per share) | 35.63 | $ 34.24 |
Exercisable at the end of the period (in dollars per share) | $ 28.48 | |
Weighted Average Remaining Contractual Term | ||
Outstanding balance (in years) | 5 years 29 days | 5 years 10 months 17 days |
Granted (in years) | 9 years 29 days | |
Exercised (in years) | 2 years 3 months 14 days | |
Weighted-average remaining contractual term of options exercisable at the end of the period (in years) | 4 years 5 months 19 days | |
Aggregate Intrinsic Value | ||
Outstanding balance at the end of the period | $ 59,906 | $ 28,736 |
Exercisable at the end of the period | $ 59,011 |
Stockholders' Equity - Employee
Stockholders' Equity - Employee Stock Purchase Plan (Details) | Jun. 05, 2017USD ($)shares | Dec. 31, 2020USD ($)offeringshares | Dec. 31, 2019USD ($)shares | Dec. 31, 2018USD ($)shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of offering periods | offering | 2 | |||
Percentage of purchase price to fair market value | 85.00% | |||
Maximum payroll deduction amount per calendar year | $ | $ 25,000 | |||
Issuance of common stock in connection with employee stock purchase plan | $ | $ 3,960,000 | $ 3,382,000 | $ 3,121,000 | |
Common stock reserved for issuance (in shares) | 25,422,424 | |||
Employee Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Common stock reserved for issuance (in shares) | 666,394 | |||
Common Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Issuance of common stock in connection with employee stock purchase plan (in shares) | 146,570 | 123,365 | 63,671 | |
Issuance of common stock in connection with employee stock purchase plan | $ | $ 4,000,000 | $ 3,400,000 | ||
Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Percentage of payroll deduction | 1.00% | |||
Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Percentage of payroll deduction | 15.00% | |||
Issuance of common stock in connection with employee stock purchase plan (in shares) | 1,000,000 |
Net Loss per Share (Details)
Net Loss per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Potential dilutive securities that would have been anti-dilutive | |||||||||||
Potential dilutive securities that would have been anti-dilutive due to net loss (in shares) | 11,715,019 | 8,068,810 | 5,196,833 | ||||||||
Numerator | |||||||||||
Net loss | $ (216,484) | $ (235,222) | $ (38,330) | ||||||||
Denominator: | |||||||||||
Weighted-average shares of common stock outstanding, basic and diluted (in shares) | 72,228,308 | 68,580,439 | 64,075,405 | 63,626,333 | 63,481,130 | 63,358,890 | 60,516,662 | 58,138,692 | 67,142,976 | 61,393,666 | 55,833,492 |
Net loss per share, basic and diluted (in dollars per share) | $ (0.52) | $ (0.77) | $ (1.03) | $ (0.94) | $ (0.70) | $ (2.23) | $ (0.46) | $ (0.37) | $ (3.22) | $ (3.83) | $ (0.69) |
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) | 3,916,867 | 4,373,895 | 4,057,788 | ||||||||
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) | 3,010,019 | 2,281,142 | 1,139,045 | ||||||||
Performance 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) | 1,355,296 | 1,413,773 | 0 | ||||||||
Shares related to convertible senior notes | |||||||||||
Potential dilutive securities that would have been anti-dilutive | |||||||||||
Potential dilutive securities that would have been anti-dilutive due to net loss (in shares) | 3,432,837 | 0 | 0 |
Segment and Geographic Inform_3
Segment and Geographic Information - Narrative (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020USD ($)segment | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Segment Reporting Information [Line Items] | |||
Number of reportable segments (in segments) | segment | 2 | ||
Revenue | $ 774,533 | $ 574,671 | $ 411,769 |
Accounts receivable, net | 46,663 | 33,655 | |
Long-lived assets | 1,544,264 | 1,186,830 | |
Degree Program Segment | |||
Segment Reporting Information [Line Items] | |||
Revenue | 486,676 | 417,206 | 348,361 |
Deferred revenue, recognized during period | 2,200 | 2,400 | |
Net capitalized contract acquisition costs | 500 | 500 | |
Long-lived assets | 830,706 | 507,187 | |
Degree Program Segment | Customer concentration risk | University client 1 | Sales Revenue, Net | |||
Segment Reporting Information [Line Items] | |||
Revenue | $ 74,600 | $ 83,500 | $ 86,900 |
Percentage of concentration of credit risk | 10.00% | 15.00% | 21.00% |
Degree Program Segment | Customer concentration risk | University client 2 | Sales Revenue, Net | |||
Segment Reporting Information [Line Items] | |||
Revenue | $ 54,200 | ||
Percentage of concentration of credit risk | 13.00% | ||
Degree Program Segment | Customer concentration risk | University client 3 | Sales Revenue, Net | |||
Segment Reporting Information [Line Items] | |||
Revenue | $ 42,700 | ||
Percentage of concentration of credit risk | 10.00% | ||
Degree Program Segment | Credit concentration risk | University client 1 | Accounts receivable | |||
Segment Reporting Information [Line Items] | |||
Percentage of concentration of credit risk | 12.00% | 18.00% | |
Accounts receivable, net | $ 5,800 | $ 6,100 | |
Degree Program Segment | Credit concentration risk | University client 2 | Accounts receivable | |||
Segment Reporting Information [Line Items] | |||
Percentage of concentration of credit risk | 11.00% | 15.00% | |
Accounts receivable, net | $ 5,200 | $ 4,900 | |
Alternative Credential Segment | |||
Segment Reporting Information [Line Items] | |||
Revenue | 287,857 | 157,465 | $ 63,408 |
Deferred revenue, recognized during period | 46,600 | 5,400 | |
Long-lived assets | 713,558 | 679,643 | |
Alternative Credential Segment | Non-US | |||
Segment Reporting Information [Line Items] | |||
Revenue | 73,000 | 40,800 | $ 33,900 |
Long-lived assets | $ 1,600 | $ 2,700 |
Segment and Geographic Inform_4
Segment and Geographic Information - Segment Results of Operations (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Segment Reporting Information [Line Items] | |||
Total revenue | $ 774,533 | $ 574,671 | $ 411,769 |
Total segment profitability | $ 16,073 | $ (23,946) | $ 17,655 |
Total segment profitability margin | 2.10% | (4.20%) | 4.30% |
Degree Program Segment | |||
Segment Reporting Information [Line Items] | |||
Total revenue | $ 486,676 | $ 417,206 | $ 348,361 |
Total segment profitability | $ 49,607 | $ 5,770 | $ 16,839 |
Total segment profitability margin | 10.20% | 1.40% | 4.80% |
Alternative Credential Segment | |||
Segment Reporting Information [Line Items] | |||
Total revenue | $ 287,857 | $ 157,465 | $ 63,408 |
Total segment profitability | $ (33,534) | $ (29,716) | $ 816 |
Total segment profitability margin | (11.60%) | (18.90%) | 1.30% |
Segment and Geographic Inform_5
Segment and Geographic Information - Reconciliation of Net Loss to Total Segment Profitability (Details) - USD ($) $ in Thousands | Apr. 23, 2020 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Segment Reporting [Abstract] | ||||||||||||
Net loss | $ (37,657) | $ (52,554) | $ (66,167) | $ (60,106) | $ (44,584) | $ (141,112) | $ (27,972) | $ (21,554) | $ (216,484) | $ (235,222) | $ (38,330) | |
Adjustments: | ||||||||||||
Stock-based compensation expense | 82,042 | 51,504 | 31,410 | |||||||||
Foreign currency loss | 1,429 | 707 | 1,722 | |||||||||
Net interest expense (income) | 25,963 | 7,619 | (5,065) | |||||||||
Income tax benefit | 66 | (162) | (363) | (1,055) | $ (942) | $ 714 | $ (18,691) | $ (941) | (1,514) | (19,860) | (4,867) | |
Depreciation and amortization expense | 96,469 | 69,843 | 32,785 | |||||||||
Loss on debt extinguishment | $ 11,700 | $ 0 | $ 0 | $ 11,671 | $ 0 | 11,671 | 0 | 0 | ||||
Impairment charge | 0 | 70,379 | 0 | |||||||||
Other | 16,497 | 31,084 | 0 | |||||||||
Total adjustments | 232,557 | 211,276 | 55,985 | |||||||||
Total segment profitability | 16,073 | (23,946) | $ 17,655 | |||||||||
Transaction costs | 2,300 | 8,000 | ||||||||||
Restructuring charges | 6,800 | 10,800 | ||||||||||
Stockholder activism costs | $ 7,400 | 1,000 | ||||||||||
Fair value adjustment | $ 11,200 |
Segment and Geographic Inform_6
Segment and Geographic Information - Total Assets by Segment (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Segment Reporting Information [Line Items] | ||
Total assets | $ 1,544,264 | $ 1,186,830 |
Degree Program Segment | ||
Segment Reporting Information [Line Items] | ||
Total assets | 830,706 | 507,187 |
Alternative Credential Segment | ||
Segment Reporting Information [Line Items] | ||
Total assets | $ 713,558 | $ 679,643 |
Segment and Geographic Inform_7
Segment and Geographic Information - Trade Accounts Receivable and Contract Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Segment Reporting Information [Line Items] | ||
Total trade accounts receivable | $ 46,277 | $ 33,655 |
Contract liabilities | 75,493 | 48,833 |
Degree Program Segment | ||
Segment Reporting Information [Line Items] | ||
Accounts receivable, before allowance for credit loss, current | 16,424 | 3,454 |
Degree Program Segment unbilled revenue | 6,072 | 12,123 |
Contract liabilities | 1,714 | 2,210 |
Alternative Credential Segment | ||
Segment Reporting Information [Line Items] | ||
Accounts receivable, before allowance for credit loss, current | 29,717 | 19,408 |
Provision for credit losses | (5,936) | (1,330) |
Contract liabilities | $ 73,779 | $ 46,623 |
Retirement Plan (Details)
Retirement Plan (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Retirement Benefits [Abstract] | |||
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 | $ 3.6 | $ 3 | $ 2.1 |
Quarterly Financial Informati_3
Quarterly Financial Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | Apr. 23, 2020 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Quarterly Financial Information Disclosure [Abstract] | ||||||||||||
Revenue | $ 215,294 | $ 201,073 | $ 182,687 | $ 175,479 | $ 163,178 | $ 153,798 | $ 135,461 | $ 122,234 | ||||
Costs and expenses | ||||||||||||
Curriculum and teaching | 31,081 | 30,153 | 26,256 | 20,478 | 21,925 | 21,336 | 13,308 | 6,701 | $ 107,968 | $ 63,270 | $ 23,290 | |
Servicing and support | 32,488 | 32,536 | 30,294 | 30,533 | 27,372 | 27,351 | 23,993 | 20,174 | 125,851 | 98,890 | 67,203 | |
Technology and content development | 42,909 | 40,223 | 37,307 | 35,510 | 35,504 | 34,132 | 26,043 | 19,794 | 155,949 | 115,473 | 63,812 | |
Marketing and sales | 92,550 | 100,068 | 98,341 | 99,215 | 82,164 | 93,521 | 89,749 | 76,961 | 390,174 | 342,395 | 221,015 | |
General and administrative | 46,319 | 44,000 | 39,554 | 43,653 | 37,549 | 42,040 | 28,408 | 23,023 | 173,526 | 131,020 | 82,989 | |
Impairment charge | 0 | 70,379 | 0 | 0 | 70,379 | |||||||
Total costs and expenses | 245,347 | 246,980 | 231,752 | 229,389 | 204,514 | 288,759 | 181,501 | 146,653 | 953,468 | 821,427 | 458,309 | |
Loss from operations | (30,053) | (45,907) | (49,065) | (53,910) | (41,336) | (134,961) | (46,040) | (24,419) | (178,935) | (246,756) | (46,540) | |
Interest income | (26) | 713 | 154 | 513 | 713 | 924 | 1,814 | 2,349 | 1,354 | 5,800 | 5,173 | |
Interest expense | (7,742) | (7,564) | (6,518) | (5,493) | (5,289) | (5,651) | (2,424) | (55) | (27,317) | (13,419) | (108) | |
Loss on debt extinguishment | $ (11,700) | 0 | 0 | (11,671) | 0 | (11,671) | 0 | 0 | ||||
Other (expense) income, net | 230 | 42 | 570 | (2,271) | 386 | (710) | (13) | (370) | (1,429) | (707) | (1,722) | |
Loss before income taxes | (37,591) | (52,716) | (66,530) | (61,161) | (45,526) | (140,398) | (46,663) | (22,495) | (217,998) | (255,082) | (43,197) | |
Income tax benefit (expense) | (66) | 162 | 363 | 1,055 | 942 | (714) | 18,691 | 941 | 1,514 | 19,860 | 4,867 | |
Net loss | $ (37,657) | $ (52,554) | $ (66,167) | $ (60,106) | $ (44,584) | $ (141,112) | $ (27,972) | $ (21,554) | $ (216,484) | $ (235,222) | $ (38,330) | |
Net loss per share, basic and diluted (in dollars per share) | $ (0.52) | $ (0.77) | $ (1.03) | $ (0.94) | $ (0.70) | $ (2.23) | $ (0.46) | $ (0.37) | $ (3.22) | $ (3.83) | $ (0.69) | |
Weighted-average shares of common stock outstanding, basic and diluted (in shares) | 72,228,308 | 68,580,439 | 64,075,405 | 63,626,333 | 63,481,130 | 63,358,890 | 60,516,662 | 58,138,692 | 67,142,976 | 61,393,666 | 55,833,492 |
Schedule II - Valuation and Q_2
Schedule II - Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Allowance for doubtful accounts: | |||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Period | $ 1,331 | $ 257 | $ 287 |
Additions Charged to Expense/Against Revenue | 4,642 | 1,425 | 571 |
Deductions | (37) | (351) | (601) |
Balance at End of Period | 5,936 | 1,331 | 257 |
Income tax valuation allowance: | |||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Period | 116,244 | 88,061 | 71,101 |
Additions Charged to Expense/Against Revenue | 21,523 | 45,642 | 16,960 |
Deductions | 0 | (17,459) | 0 |
Balance at End of Period | $ 137,767 | $ 116,244 | $ 88,061 |