Cover Page
Cover Page - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Feb. 29, 2024 | Jun. 30, 2023 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2023 | ||
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 | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Document Financial Statement Error Correction | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 279,744,481 | ||
Entity Common Stock, Shares Outstanding (in shares) | 83,644,026 | ||
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 2024 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 | 2023 | ||
Document Fiscal Period Focus | FY | ||
Auditor Name | KPMG, LLP | ||
Auditor Location | McLean, VA |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2023 | |
Audit Information [Abstract] | |
Auditor Location | McLean, VA |
Auditor Firm ID | 185 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash and cash equivalents | $ 60,689 | $ 167,518 |
Restricted cash | 12,710 | 15,060 |
Accounts receivable, net | 115,944 | 62,826 |
Other receivables, net | 28,293 | 33,813 |
Prepaid expenses and other assets | 33,828 | 43,090 |
Total current assets | 251,464 | 322,307 |
Other receivables, net, non-current | 12,507 | 14,788 |
Property and equipment, net | 40,233 | 45,855 |
Right-of-use assets | 63,986 | 72,361 |
Goodwill | 651,498 | 734,620 |
Intangible assets, net | 371,198 | 549,755 |
Other assets, non-current | 68,797 | 71,173 |
Total assets | 1,459,683 | 1,810,859 |
Current liabilities | ||
Accounts payable and accrued expenses | 103,378 | 110,020 |
Deferred revenue | 81,949 | 90,161 |
Lease liability | 15,158 | 13,909 |
Accrued restructuring liability | 14,506 | 6,692 |
Other current liabilities | 44,348 | 58,210 |
Total current liabilities | 259,339 | 278,992 |
Long-term debt | 896,514 | 928,564 |
Deferred tax liabilities, net | 323 | 282 |
Lease liability, non-current | 83,297 | 99,709 |
Other liabilities, non-current | 1,165 | 1,796 |
Total liabilities | 1,240,638 | 1,309,343 |
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, 82,260,619 shares issued and outstanding as of December 31, 2023; 78,334,666 shares issued and outstanding as of December 31, 2022 | 83 | 78 |
Additional paid-in capital | 1,741,657 | 1,700,855 |
Accumulated deficit | (1,497,579) | (1,179,972) |
Accumulated other comprehensive loss | (25,116) | (19,445) |
Total stockholders’ equity | 219,045 | 501,516 |
Total liabilities and stockholders’ equity | $ 1,459,683 | $ 1,810,859 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2023 | Dec. 31, 2022 |
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) | 82,260,619 | 78,334,666 |
Common stock, shares outstanding (in shares) | 82,260,619 | 78,334,666 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Income Statement [Abstract] | |||
Revenue | $ 945,953 | $ 963,080 | $ 945,682 |
Costs and expenses | |||
Curriculum and teaching | 129,304 | 129,886 | 130,817 |
Servicing and support | 128,298 | 147,797 | 138,548 |
Technology and content development | 176,218 | 190,472 | 179,061 |
Marketing and sales | 372,129 | 422,147 | 456,096 |
General and administrative | 132,680 | 159,418 | 200,054 |
Restructuring charges | 36,256 | 33,239 | 8,544 |
Impairment charges | 196,871 | 138,291 | 0 |
Total costs and expenses | 1,171,756 | 1,221,250 | 1,113,120 |
Loss from operations | (225,803) | (258,170) | (167,438) |
Interest income | 1,961 | 1,165 | 1,475 |
Interest expense | (74,573) | (62,234) | (51,222) |
Debt modification expense and loss on debt extinguishment | (16,735) | 0 | (1,101) |
Other income (expense), net | (803) | (3,815) | 22,324 |
Loss before income taxes | (315,953) | (323,054) | (195,962) |
Income tax (expense) benefit | (1,654) | 903 | 1,196 |
Net loss | $ (317,607) | $ (322,151) | $ (194,766) |
Net loss per share, basic (in dollars per share) | $ (3.93) | $ (4.17) | $ (2.61) |
Net loss per share, diluted (in dollars per share) | $ (3.93) | $ (4.17) | $ (2.61) |
Weighted-average shares of common stock outstanding, basic (in shares) | 80,891,146 | 77,327,850 | 74,580,115 |
Weighted-average shares used in computing net loss per share, diluted (in shares) | 80,891,146 | 77,327,850 | 74,580,115 |
Other comprehensive income (loss) | |||
Foreign currency translation adjustments, net of tax of $0 for all periods presented | $ (5,671) | $ (3,534) | $ (6,127) |
Comprehensive loss | $ (323,278) | $ (325,685) | $ (200,893) |
Consolidated Statements of Op_2
Consolidated Statements of Operations and Comprehensive Loss (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
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 | Cumulative Effect, Period of Adoption, Adjustment | Common Stock | Additional Paid-In Capital | Additional Paid-In Capital Cumulative Effect, Period of Adoption, Adjustment | Accumulated Deficit | Accumulated Deficit Cumulative Effect, Period of Adoption, Adjustment | Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Cumulative Effect, Period of Adoption, Adjustment |
Balance (in shares) at Dec. 31, 2020 | 72,451,521 | ||||||||
Balance at Dec. 31, 2020 | $ 940,990 | $ 72 | $ 1,646,574 | $ (695,872) | $ (9,784) | ||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Issuance of common stock in connection with settlement of restricted stock units, net of withholdings (in shares) | 2,839,887 | ||||||||
Issuance of common stock in connection with settlement of restricted stock units, net of withholdings | (18,780) | $ 4 | (18,784) | ||||||
Exercise of stock options, net (in shares) | 312,570 | ||||||||
Exercise of stock options | 6,489 | 6,489 | |||||||
Issuance of common stock in connection with employee stock purchase plan (in shares) | 150,685 | ||||||||
Issuance of common stock in connection with employee stock purchase plan | 3,583 | 3,583 | |||||||
Stock-based compensation expense | 97,766 | 97,766 | |||||||
Net loss | (194,766) | (194,766) | |||||||
Foreign currency translation adjustment | (6,127) | (6,127) | |||||||
Balance (in shares) at Dec. 31, 2021 | 75,754,663 | ||||||||
Balance at Dec. 31, 2021 | $ 829,155 | $ (81,734) | $ 76 | 1,735,628 | $ (114,551) | (890,638) | $ 32,817 | (15,911) | $ 0 |
Increase (Decrease) in Stockholders' Equity | |||||||||
Accounting Standards Update [Extensible Enumeration] | Accounting Standards Update 2020-06 [Member] | ||||||||
Issuance of common stock in connection with settlement of restricted stock units, net of withholdings (in shares) | 2,118,999 | ||||||||
Issuance of common stock in connection with settlement of restricted stock units, net of withholdings | $ (2,850) | $ 2 | (2,852) | ||||||
Exercise of stock options, net (in shares) | 324,965 | ||||||||
Exercise of stock options | 1,128 | 1,128 | |||||||
Issuance of common stock in connection with employee stock purchase plan (in shares) | 136,039 | ||||||||
Issuance of common stock in connection with employee stock purchase plan | 1,282 | $ 1,300 | 1,282 | ||||||
Stock-based compensation expense | 80,220 | 80,220 | |||||||
Net loss | (322,151) | (322,151) | |||||||
Foreign currency translation adjustment | $ (3,534) | (3,534) | |||||||
Balance (in shares) at Dec. 31, 2022 | 78,334,666 | 78,334,666 | |||||||
Balance at Dec. 31, 2022 | $ 501,516 | $ 78 | 1,700,855 | (1,179,972) | (19,445) | ||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Issuance of common stock in connection with settlement of restricted stock units, net of withholdings (in shares) | 3,446,458 | ||||||||
Issuance of common stock in connection with settlement of restricted stock units, net of withholdings | $ (1,093) | $ 4 | (1,097) | ||||||
Exercise of stock options, net (in shares) | 17,166 | 17,166 | |||||||
Exercise of stock options | $ 110 | 110 | |||||||
Issuance of common stock in connection with employee stock purchase plan (in shares) | 462,329 | ||||||||
Issuance of common stock in connection with employee stock purchase plan | 2,102 | $ 1 | 2,101 | ||||||
Stock-based compensation expense | 39,688 | 39,688 | |||||||
Net loss | (317,607) | (317,607) | |||||||
Foreign currency translation adjustment | $ (5,671) | (5,671) | |||||||
Balance (in shares) at Dec. 31, 2023 | 82,260,619 | 82,260,619 | |||||||
Balance at Dec. 31, 2023 | $ 219,045 | $ 83 | $ 1,741,657 | $ (1,497,579) | $ (25,116) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Cash flows from operating activities | |||
Net loss | $ (317,607) | $ (322,151) | $ (194,766) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |||
Debt issuance costs | 13,652 | 19,835 | 25,403 |
Depreciation and amortization expense | 115,322 | 128,153 | 108,448 |
Stock-based compensation expense | 39,688 | 80,220 | 97,766 |
Operating lease expense | 17,404 | 21,020 | 18,933 |
Restructuring | 866 | 9,555 | 5,014 |
Provision for credit losses | 10,017 | 8,610 | 8,036 |
Impairment charges | 196,871 | 138,291 | 0 |
Loss on debt extinguishment | 12,123 | 0 | 1,101 |
Gain on sale of investment | 0 | 0 | (27,762) |
Other | 965 | 5,443 | 2,515 |
Changes in operating assets and liabilities, net of assets and liabilities acquired: | |||
Accounts receivable, net | (58,972) | (3,041) | (31,756) |
Other receivables | 2,980 | (517) | (27,001) |
Prepaid expenses and other assets | 13,504 | 4,833 | (7,636) |
Accounts payable and accrued expenses | (436) | (42,735) | 21,212 |
Deferred revenue | (8,657) | 5,326 | 9,388 |
Other liabilities, net | (41,151) | (41,915) | (26,969) |
Net cash (used in) provided by operating activities | (3,431) | 10,927 | (18,074) |
Cash flows from investing activities | |||
Purchase of a business, net of cash acquired | 0 | 5,010 | (761,118) |
Additions of amortizable intangible assets | (44,010) | (62,445) | (60,546) |
Purchases of property and equipment | (6,021) | (11,755) | (9,788) |
Purchase of investments | 0 | 0 | (1,000) |
Proceeds from investments | 0 | 0 | 38,818 |
Advances made to university clients | 0 | (310) | 0 |
Advances repaid by university clients | 200 | 200 | 200 |
Other | 0 | (50) | 0 |
Net cash used in investing activities | (49,831) | (69,350) | (793,434) |
Cash flows from financing activities | |||
Proceeds from debt | 329,223 | 696 | 569,477 |
Payments on debt | (375,283) | (7,181) | (4,334) |
Prepayment premium on extinguishment of senior secured term loan facility | (5,666) | 0 | 0 |
Payment of debt issuance costs | (4,411) | 0 | (11,575) |
Tax withholding payments associated with settlement of restricted stock units | (1,093) | (2,850) | (18,780) |
Proceeds from exercise of stock options | 110 | 1,128 | 6,489 |
Proceeds from employee stock purchase plan share purchases | 2,102 | 1,282 | 3,583 |
Net cash (used in) provided by financing activities | (55,018) | (6,925) | 544,860 |
Effect of exchange rate changes on cash | (899) | (1,983) | (2,309) |
Net decrease in cash, cash equivalents and restricted cash | (109,179) | (67,331) | (268,957) |
Cash, cash equivalents and restricted cash, beginning of period | 182,578 | 249,909 | 518,866 |
Cash, cash equivalents and restricted cash, end of period | $ 73,399 | $ 182,578 | $ 249,909 |
Organization
Organization | 12 Months Ended |
Dec. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization 2U, Inc. (together with its subsidiaries, the “Company”) is a leading online education platform company. The Company’s mission is to expand access to, high-quality education and unlock human potential. As a trusted partner to top-ranked nonprofit universities and other leading organizations, the Company delivers technology and services that enable its clients to bring their educational offerings online at scale. The Company provides 83 million people worldwide with access to world-class education in partnership with 260 top-ranked global universities and other leading organizations. Through edX, its education consumer marketplace, the Company offers more than 4,500 high-quality online learning opportunities, including open courses, executive education offerings, boot camps, professional certificates as well as undergraduate and graduate degree programs. The Company’s offerings cover a wide range of topics including artificial intelligence, business, healthcare, education, and social work, and provide learners with an affordable pathway to achieve both short-term and long-term professional and educational goals. The Company’s platform provides its clients with the digital infrastructure to launch world-class online education offerings and allow students to easily access high-quality, job-relevant education without the barriers of cost or location. 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. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2023 | |
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. Going Concern At each annual and interim period, the Company evaluates whether there are conditions or events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. The evaluation is based on relevant conditions or events that are known or reasonably knowable at the date that the consolidated financial statements are issued. Pursuant to the Second Amended Credit Agreement, as defined in Note 10, if more than $40 million of the Company’s 2025 Notes, as defined below, remain outstanding on January 30, 2025, the maturity date of the outstanding term loan balance of $372.4 million springs forward to January 30, 2025. The Second Amended Credit Agreement also contains a financial covenant that requires the Company to maintain $900 million minimum Recurring Revenues (as defined by the Second Amended Credit Agreement) as of the last day of any period of four consecutive fiscal quarters. As of December 31, 2023, the Company was in compliance with this covenant; however, management cannot provide assurance that minimum Recurring Revenues will be achieved by the Company in future periods. If the Company is unable to comply with this financial covenant and is otherwise unable to cure or obtain a waiver related to this covenant, the obligations under the Second Amended Credit Agreement could accelerate. Refer to Note 10 for further information about the Company’s debt. The Company’s ability to continue as a going concern is dependent on refinancing its debt or raising capital to reduce its debt in the short term. If it is unable to complete the foregoing, the Company likely would not have sufficient cash on hand or available liquidity to pay off the balance of the term loan on the accelerated maturity date. The Company is currently evaluating options to refinance its debt in the short term; however, there can be no assurance that such financing would be available to the Company on favorable terms or at all. Given these factors, substantial doubt exists about the Company’s ability to continue as a going concern within one year from the date that the consolidated financial statements are issued. The accompanying consolidated financial statements have been prepared on a going concern basis, which assumes the Company will be able to continue as a going concern and contemplates the realization of assets and satisfaction of liabilities in the normal course of business. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty, nor do they include adjustments to reflect the possible future effects of the recoverability and classification of recorded asset amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern. 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 items subject to such estimates include, but are not limited to, the measurement of provisions for credit losses, implied price concessions, acquired intangible assets, the recoverability of goodwill and indefinite-lived intangible assets, deferred tax assets, and the fair value of the convertible senior notes. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in those estimates. The Company evaluates its estimates and assumptions on an ongoing basis. Revenue Recognition, Receivables 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 our technology and services. 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 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 Company’s contracts to provide its entire bundle of services generally have 10 to 15 year terms and the contracts to provide services under the flexible degree model generally have terms of five years or more. 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 tuition charged and 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 executive education programs and boot camps. The Company’s executive education programs run between two 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 and other services that the university agrees to provide. These amounts are recognized as curriculum and teaching expenses on the Company’s consolidated statements of operations and comprehensive loss. The Company’s contracts with university clients in this segment typically have a shorter duration 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, other receivables, 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. 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. Other receivables, net are comprised of amounts due under tuition payment plans with extended payment terms from students enrolled in certain of the Company’s alternative credential offerings. These plans, which are managed and serviced by third-party providers, are designed to assist students with covering tuition costs after all other student financial assistance and scholarships have been applied. The associated receivables generally have payment terms that range from 12 to 42 months and are recorded net of any implied pricing concessions, which are determined based on our collections history, market data and any time value of money component. There are no fees or origination costs included in these receivables. 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, 2023, 2022 and 2021, 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 on the date of grant. The Company uses a Monte Carlo valuation 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. The Company accounts for forfeitures as they occur. 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 13 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. Derecognition 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, receivables, 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, receivables, accounts payable and debt. The carrying values for such financial instruments, other than the Company’s convertible senior notes, each approximated their fair values as of December 31, 2023 and 2022. Refer to Note 10 for more information regarding the Company’s convertible senior notes. 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 Definite-lived Intangible Assets. The Company capitalizes purchased intangible assets, such as software, websites, trade names 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 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 technology with 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 amounts 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 expenses 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 begins. The capitalized costs for each offering are recorded on a course-by-course basis and included in 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, capitalized content development 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, the amounts 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 $0.8 million and $1.2 million in property and equipment, during the years ended December 31, 2023 and 2022, respectively. 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. Goodwill and Other Indefinite-lived Intangible Assets The Company reviews goodwill and other indefinite-lived intangible assets for impairment annually, as of October 1, and more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of goodwill or an indefinite-lived asset below its carrying value. 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, Trilogy in May 2019 and edX in November 2021. 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. During the second quarter of 2023, the Company completed an update of its internal financial reporting structure to better align with the executive structure following the 2022 Strategic Realignment Plan. As a result of this update, the Company’s three reporting units within the Alternative Credential Segment (Executive Education, Boot Camp, and Open Courses) were combined into a single reporting unit (Alternative Credential). The Degree Program Segment continues to have one reporting unit (Degree Program). The Company performed impairment assessments before and after the change in reporting units. Refer to the Interim Impairment Assessments section below for further information regarding the results of these assessments. 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, discount rates, terminal growth rates, and forecasts of revenue and margins. 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. Other Indefinite-lived Intangible Assets In November 2021, the Company acquired an indefinite-lived intangible asset, which represented the established edX trade name. The Company concluded that due to changes in facts and circumstances, effective July 1, 2023, the edX trade name should no longer have an indefinite useful life. The Company began amortizing the edX trade name on a straight-line basis over its estimated remaining useful life of 25 years. The impact of this change in accounting estimate was immaterial to the Company’s consolidated statements of operations for the year ended December 31, 2023. The Company expects the impact to be immaterial in future periods. The Company determined the fair value of its indefinite-lived asset utilizing the income-based approach. The income-based approach requires the Company to make significant assumptions and estimates. These assumptions and estimates primarily include, but are not limited to, discount rates, terminal growth rates, forecasts of revenue and margins, and royalty rates. When determining these assumptions and preparing these estimates, the Company considers 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, the continued efforts of competitors to gain market share and prospective student enrollment patterns. Impairment Assessments During both the first and third quarter of 2022, the Company experienced a significant decline in its market capitalization. Management deemed these declines triggering events related to the Company’s goodwill and indefinite-lived intangible asset. The Company performed interim impairment assessments as of March 1, 2022 and September 30, 2022. For the quantitative interim impairment assessment performed as of March 1, 2022, management determined the carrying value of the Open Courses reporting unit and the carrying value of an indefinite-lived intangible asset, both within the Alternative Credential Segment, exceeded their respective estimated fair value. As a result, during the three months ended March 31, 2022, the Company recorded impairment charges of |
Business Combination
Business Combination | 12 Months Ended |
Dec. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Combination | Business Combination On November 16, 2021, pursuant to the Membership Interest Purchase Agreement, dated June 28, 2021 (the “Purchase Agreement”), by and among the Company, edX Inc., a Massachusetts nonprofit corporation (“edX Inc.”) and edX LLC (f/k/a Circuit Sub LLC), a Delaware limited liability company and a wholly owned subsidiary of edX Inc. (“edX”), edX Inc. contributed substantially all of its assets to edX and the Company acquired 100% of the outstanding membership interests of edX (the “edX Acquisition”) including the edX brand, website, and marketplace. The total preliminary purchase price was $773.0 million in cash consideration, of which $23.0 million was distributed to an escrow account to satisfy indemnification claims and purchase price adjustments, as applicable. As of December 31, 2023, $3.4 million remained in escrow. During the year ended December 31, 2022, the Company recorded working capital adjustments of $5.0 million, reducing the final purchase price to $768.0 million. The transaction was accounted for under the acquisition method of accounting and revenue and operating expense have been included in the Company’s consolidated statement of operations since the date of acquisition. The Company recorded $14.8 million and $0.3 million of acquisition costs in general and administrative expense related to this acquisition during the years ended December 31, 2021 and 2020, respectively. Under the acquisition method of accounting, the total preliminary purchase price was allocated to edX’s net tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of November 16, 2021. The following table summarizes the final purchase price allocation based on the estimated fair value of the assets acquired and liabilities assumed and reflects the measurement period adjustments recorded during the year ended December 31, 2022. Estimated Purchase Price (in thousands) Cash and cash equivalents $ 11,901 Accounts receivable 6,608 Prepaid expenses and other assets 13,098 Property and equipment, net 529 Right-of-use assets 2,355 Other assets, non-current 572 Accounts payable and accrued expenses (10,057) Deferred revenue (16,408) Lease liability (2,512) Other liabilities (32,981) Intangible assets: Developed technology 3 15,400 University client relationships 10 104,000 Enterprise client relationships 10 14,300 Trade names indefinite* 255,000 Goodwill 406,204 $ 768,009 * In 2023, the Company began amortizing the trade name on a straight-line basis over its estimated useful life of 25 years. Refer to Note 5 for further information about the change in estimated useful life. The estimated values of the definite-lived intangibles are being amortized on a straight-line basis over the estimated useful lives. The methodologies utilized to determine the estimated fair values of the acquired intangible assets are Level 3 measurements. The acquired indefinite-lived intangible asset represents the established edX trade name that the Company expects to be the primary brand for the Company’s marketplace, educational offerings and services. The Company concluded that due to changes in facts and circumstances, effective July 1, 2023, the edX trade name should no longer have an indefinite useful life. The Company began amortizing the edX trade name on a straight-line basis over its estimated remaining useful life of 25 years. Acquired client relationships represent agreements with existing clients as of the acquisition date. The fair values of the trade name and the client relationships were determined using the discounted cash flow method. Under this method, the Company’s significant assumptions and estimates included expected future cash flows and the weighted-average cost of capital. The acquired developed technology represents technology that had reached technological feasibility and for which development had been completed as of the date of the edX Acquisition. The Company utilized the relief-from-royalty valuation method to value the acquired technology. Under this method, the Company’s significant assumptions and estimates included an estimated market royalty rate, remaining useful life, future revenue, and a rate of return utilized in the determination of a discounted present value. 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 edX. The goodwill is expected to be deductible for tax purposes. Refer to Note 5 for details. |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2023 | |
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 $ 6,747 $ 8,392 Furniture and office equipment 8,725 9,453 Leasehold improvements 72,165 67,188 Leasehold improvements in process 76 4,631 Total 87,713 89,664 Accumulated depreciation and amortization (47,480) (43,809) Property and equipment, net $ 40,233 $ 45,855 Depreciation expense of property and equipment was $10.6 million, $11.3 million and $12.5 million for the years ended December 31, 2023, 2022 and 2021, respectively. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets The following tables present the changes in the carrying amount of goodwill by reportable segment on the Company’s consolidated balance sheets for the periods indicated. Balance as of December 31, 2021 Allocations Adjustments Impairment Charges Foreign Currency Translation Adjustments Balance as of December 31, 2022 (in thousands) Degree Program Segment Gross goodwill $ — $ 198,378 $ (5,919) $ — $ — $ 192,459 Accumulated impairments — — — — — — Net goodwill — 198,378 (5,919) — — 192,459 Alternative Credential Segment Gross goodwill $ 481,366 $ 225,174 $ (11,429) $ — $ (3,580) $ 691,531 Accumulated impairments (70,379) — — (78,991) — (149,370) Net goodwill 410,987 225,174 (11,429) (78,991) (3,580) 542,161 Unallocated goodwill $ 423,552 $ (423,552) $ — $ — $ — $ — Total Gross goodwill $ 904,918 $ — $ (17,348) $ — $ (3,580) $ 883,990 Accumulated impairments (70,379) — — (78,991) — (149,370) Net goodwill $ 834,539 $ — $ (17,348) $ (78,991) $ (3,580) $ 734,620 During the first quarter of 2022, the Company completed the allocation of the preliminary goodwill balance resulting from the edX Acquisition to the Company’s reporting units. Refer to Note 3 for further information about the edX Acquisition. The goodwill was assigned to the reporting units that were expected to drive synergies from the acquisition, which was each of the Company’s reporting units. In addition, during the year ended December 31, 2022, the Company recorded working capital adjustments of $5.0 million, adjustments to the preliminary valuation of acquired assets and assumed liabilities of edX of $12.3 million, and goodwill impairment charges of $79.0 million. Refer to Note 2 for further information about the goodwill impairment charges. Balance as of December 31, 2022 Impairment Charges* Foreign Currency Translation Adjustments Balance as of December 31, 2023 (in thousands) Degree Program Segment Gross goodwill $ 192,459 $ — $ — $ 192,459 Accumulated impairments — — — — Net goodwill 192,459 — — 192,459 Alternative Credential Segment Gross goodwill $ 691,531 $ — $ (3,651) $ 687,880 Accumulated impairments (149,370) (79,471) — (228,841) Net goodwill 542,161 (79,471) (3,651) 459,039 Total Gross goodwill $ 883,990 $ — $ (3,651) $ 880,339 Accumulated impairments (149,370) (79,471) — (228,841) Net goodwill $ 734,620 $ (79,471) $ (3,651) $ 651,498 Refer to Note 2 for further information about the goodwill impairment charges. The following table presents the components of intangible assets, net on the Company’s consolidated balance sheets as of each of the dates indicated. December 31, 2023 December 31, 2022 Estimated Gross Accumulated Net Gross Accumulated Net (in thousands) Capitalized technology 3-5 $ 245,867 $ (159,155) $ 86,712 $ 226,761 $ (132,621) $ 94,140 Capitalized content development 4-5 233,592 (176,374) 57,218 261,844 (177,154) 84,690 University client relationships 9-10 208,823 (75,849) 132,974 210,138 (55,556) 154,582 Enterprise client relationships 10 14,300 (3,039) 11,261 14,300 (1,609) 12,691 Trade names and domain names* 5-25 284,810 (201,777) 83,033 284,701 (81,049) 203,652 Total intangible assets $ 987,392 $ (616,194) $ 371,198 $ 997,744 $ (447,989) $ 549,755 * The Company concluded that due to changes in facts and circumstances, the edX trade name, which was classified as indefinite-lived as of June 30, 2023, is now finite-lived. In the third quarter of 2023, the Company began amortizing the trade name on a straight-line basis over its estimated useful life. The gross carrying amount of the edX trade name was $255.0 million as of both December 31, 2023 and December 31, 2022. Accumulated amortization and impairments include $176.7 million and $59.3 million of impairment charges related to the edX trade name as of December 31, 2023 and December 31, 2022, respectively. Refer to Note 2 for further information about these impairment charges. The amounts presented in the table above include $43.4 million and $53.9 million of in process capitalized technology and content development as of December 31, 2023 and December 31, 2022, respectively. The Company recorded amortization expense related to amortizable intangible assets of $104.7 million, $116.9 million and $95.9 million for the years ended December 31, 2023, 2022 and 2021, respectively. The following table presents the estimated future amortization expense of the Company’s amortizable intangible assets placed in service as of December 31, 2023. Future Amortization Expense (in thousands) 2024 $ 76,084 2025 56,310 2026 41,557 2027 29,563 2028 25,800 Thereafter 98,483 Total $ 327,797 |
Other Balance Sheet Details
Other Balance Sheet Details | 12 Months Ended |
Dec. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Other Balance Sheet Details | Other Balance Sheet Details Prepaid Expenses and Other Assets As of December 31, 2023 and 2022, the Company had balances of $19.8 million and $20.5 million, respectively, of prepaid assets within prepaid expenses and other assets on the consolidated balance sheets. Other Assets, Non-current As of December 31, 2023 and 2022, the Company had balances of $13.6 million and $9.3 million, respectively, of deferred expenses incurred to integrate the software associated with its cloud computing arrangements, within other assets, non-current on the consolidated balance sheets. Such expenses are subject to amortization over the remaining contractual term of the associated cloud computing arrangement, with a useful life of between three Accounts Payable and 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, 2023 December 31, 2022 (in thousands) Accrued university and instructional staff compensation $ 28,339 $ 30,807 Accrued marketing expenses 19,652 15,988 Accrued compensation and related benefits 9,870 16,213 Accounts payable and other accrued expenses 45,517 47,012 Total accounts payable and accrued expenses $ 103,378 $ 110,020 Other Current Liabilities As of December 31, 2023 and 2022, the Company had balances of $10.5 million and $14.7 million, respectively, within other current liabilities on the consolidated balance sheets, which represent proceeds received from students enrolled in certain of the Company’s alternative credential offerings that are payable to an associated university client. As of December 31, 2023 and 2022, the Company had accrued interest balances of $13.6 million and $11.2 million, respectively, within other current liabilities on the consolidated balance sheets. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2023 | |
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 matters 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. Favell, et al. v. University of Southern California and 2U, Inc. Consumer Class Action On December 20, 2022, Plaintiffs Iola Favell, Sue Zarnowski, and Mariah Cummings filed a putative class action in the Superior Court of the State of California, County of Los Angeles, against the University of Southern California (“USC”) and the Company on behalf of “[a]ll students who were enrolled in an online graduate degree program at USC Rossier, from April 1, 2009 through April 27, 2022.” (“Favell I”) Compl. ¶ 135. Plaintiffs purported to allege violations of California’s False Advertising Law (“FAL”), Cal. Civ. Code § 17500, California’s Unfair Competition Law (“UCL”), Cal. Civ. Code § 17200, California’s Consumers Legal Remedies Act (“CLRA”), Cal. Civ. Code § 1770, as well as for unjust enrichment related to the use of USC Rossier’s rankings in certain marketing materials. On February 3, 2023, the Company removed the case to the United States District Court for the Central District of California. Then, on March 8, 2023, the Company filed a motion to dismiss the lawsuit, arguing, among other things, that all of Plaintiffs’ allegations lacked merit and that certain claims for relief could not be brought in federal court in light of other allegations Plaintiffs had made. On March 28, 2023, before the court could rule on that motion, Plaintiffs filed an amended complaint (the “First Amended Complaint”), dropping the challenged claims for relief and instead asserting only a single cause of action under the CLRA. The First Amended Complaint is based on the same factual allegations as the original complaint but seeks declaratory relief, actual damages, incidental damages, consequential damages, compensatory damages, punitive damages, and attorneys’ fees and costs in connection with their CLRA claim. On March 28, 2023, Plaintiffs also filed a separate class action lawsuit in the Superior Court of the State of California, County of Los Angeles, reasserting the FAL, UCL, and CLRA claims they dropped from the federal lawsuit (“Favell II”). The state court lawsuit is based on the same factual allegations as the federal lawsuit. Plaintiffs seek declaratory and injunctive relief, restitution, and attorneys’ fees and costs in connection with the claims in state court. On April 17, 2023, the Company moved to dismiss the First Amended Complaint in Favell I in its entirety, arguing that all of Plaintiffs’ claims lack merit. On May 4, 2023, the Company removed the Favell II lawsuit from state court to the United States District Court for the Central District of California, and Plaintiffs later filed a motion to remand it back to state court. On July 6, 2023, the Court held a hearing on the Company’s motion to dismiss the First Amended Complaint in Favell I and the Plaintiffs’ motion to remand in Favell II, and issued a ruling granting the Company’s motion to dismiss with leave to amend and denying Plaintiffs’ motion to remand. On July 28, 2023, Plaintiffs filed amended complaints in both Favell I and Favell II, adding an additional plaintiff and more detailed allegations but otherwise reasserting the same claims in each case. 2U moved to dismiss the amended complaints on August 31, 2023, and a hearing was held on November 16, 2023. On January 23, 2024, the Court issued an order dismissing Plaintiffs’ amended complaints in both Favell I and II, but granting Plaintiffs leave to amend within twenty-one days of the order. Plaintiffs did not file an amended complaint within twenty-one days of the order. Therefore, there are no active claims against 2U in the matter any longer. The Company has always maintained that both lawsuits’ claims against 2U were meritless. 2U, Inc., et al. v. Cardona, et al. On April 4, 2023, the Company filed a lawsuit on behalf of itself and its South African subsidiary, Get Educated International Proprietary Ltd., against the Department of Education (the “Department”) and Secretary of Education Miguel Cardona. The suit challenges a Dear Colleague Letter issued by the Department that would treat the Company and other Online Program Managers (OPMs) as highly regulated “Third-Party Servicers” for purposes of the Higher Education Act (“HEA”). The Company contends that the Department has exceeded its authority by seeking to expand the definition of “Third-Party Servicer” contained in the HEA, 20 U.S.C. § 1088(c), as well as in the Department’s regulations and longstanding guidance documents. The Company also argues that the Department violated both the HEA and the Administrative Procedure Act in issuing its new understanding of Third-Party Servicer without following required rulemaking procedures. The case is now pending in the District of D.C., under case number 1:23-cv-00925. On April 7, 2023, the Company filed a motion for a stay and preliminary injunction to block the new Dear Colleague Letter to take effect as planned on September 1, 2023. On April 11, 2023, the Department announced that it would suspend the September 1, 2023 effective date and consider changes to the Dear Colleague Letter. The Department indicated that when it finalizes an updated version of the Dear Colleague Letter, the updated version will not go into effect for at least six months, to give regulated entities sufficient time to comply. Given these developments, the Company withdrew its motion for a stay and preliminary injunction and the court stayed the litigation pending the release of the finalized Dear Colleague Letter. On December 19, 2023, the parties filed a joint status report to the court, in which the government indicated that it was still in the process of developing an updated guidance, and that it did not anticipate issuing an updated guidance in the next 90 days. The Company believes that it has a meritorious claim and intends to vigorously pursue its challenge against the Department if the Department continues seeking to treat the Company as a Third-Party Servicer. Due to the complex nature of the legal issues involved, the outcome of this matter is not presently determinable. Francis v. 2U, Inc. et al; Privacy Class Action On October 10, 2023, plaintiff Chad Francis filed a putative class action against the Company and edX LLC in the United States District Court for the District of Massachusetts, alleging violations of the federal Video Privacy Protection Act. The plaintiff, who seeks to represent a class of individuals who viewed a video on edX while they had a Facebook account, alleges that 2U and edX disclosed his personal viewing information to Facebook without his consent. Plaintiff seeks damages of $2,500 for each violation, punitive damages, injunctive relief and attorney fees. On December 15, 2023, the Company and edX filed a motion to dismiss the complaint for failure to state a claim. The plaintiff filed a response on February 12, 2024, and the Company and edX’s reply is due on March 13, 2024. The Company intends to vigorously defend against these claims. However, due to the complex nature of the legal and factual issues involved, the outcome of the 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. Other Vendor Commitments In September 2023, as part of an effort to consolidate vendors to reduce the cost of launching programs, the Company entered into an agreement with an existing vendor to purchase content development and other services at more favorable pricing, with a total minimum commitment of $30.0 million through December 31, 2026. 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. 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. The following table presents the estimated future minimum payments due to university clients as of December 31, 2023. Future Minimum Payments (in thousands) 2024 $ 3,569 2025 3,500 2026 3,500 2027 3,500 2028 3,500 Thereafter — Total future minimum payments to university clients $ 17,569 Contingent Payments |
Restructuring Charges
Restructuring Charges | 12 Months Ended |
Dec. 31, 2023 | |
Restructuring and Related Activities [Abstract] | |
Restructuring Charges | Restructuring Charges During the second quarter of 2022, the Company accelerated its planned transition to a platform company (the “2022 Strategic Realignment Plan”). The plan was designed to reorient the Company around a single platform allowing it to pursue a portfolio-based marketing strategy that drives traffic to the edX marketplace. As part of the plan, the Company simplified its executive structure, reduced employee headcount, rationalized its real estate footprint and implemented steps to optimize marketing spend. During the third quarter of 2022, the Company completed the planned headcount reductions and consolidated its in-person operations to its offices in Lanham, Maryland and Cape Town, South Africa. In furtherance of the 2022 Strategic Realignment Plan, the Company reduced employee headcount during the third quarter of 2023. The Company anticipates that it will incur aggregate restructuring charges associated with the 2022 Strategic Realignment Plan of approximately $70 million to $75 million. The Company recorded $24.9 million in restructuring charges related to the 2022 Strategic Realignment Plan for the year ended December 31, 2023. The Company recorded $24.9 million and $30.7 million in restructuring charges related to the 2022 Strategic Realignment Plan for the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, we incurred cumulative restructuring charges of $55.7 million related to the 2022 Strategic Realignment Plan. The majority of the estimated remaining restructuring charges relate to leased facilities and will be recognized as expense over the remaining lease terms, ranging from 1 to 9 years. In late 2023, the Company announced leadership changes and commenced a comprehensive performance improvement exercise aimed at, among other things, further improving its profitability and optimizing its operating model. Part of this exercise includes headcount reductions associated with implementing changes to the Company’s organizational structure, as management works to align staffing levels with business priorities across functional areas. The following table presents restructuring charges by reportable segment on the Company’s consolidated statements of operations for the periods indicated. Year Ended Year Ended Degree Program Segment Alternative Credential Segment Degree Program Segment Alternative Credential Segment Leadership and organizational structure changes Severance and severance-related costs $ 9,486 $ 293 $ — $ — 2022 Strategic Realignment Plan Severance and severance-related costs 11,980 195 8,993 6,431 Lease and lease-related charges* 9,098 2,594 11,215 1,061 Professional and other fees relating to restructuring activities 1,009 — 2,013 — Other** 46 — 7 1,008 22,133 2,789 22,228 8,500 Other restructuring charges*** 1,508 47 2,300 211 Total restructuring charges $ 33,127 $ 3,129 $ 24,528 $ 8,711 * For the years ended December 31, 2023, and 2022, includes $0.7 million and $8.5 million, respectively, of accelerated amortization of right-of-use assets and accelerated depreciation of leasehold improvements related to updates to the estimated useful lives of certain leased facilities and $10.9 million and $3.7 million, respectively, in rent expense associated with these facilities, including amortization of the right-of-use asset and accretion of the operating lease liability, sublease income, and other variable lease costs. The liabilities associated with these leases continue to be presented within lease liability and lease liability, non-current on the Company’s consolidated balance sheets. ** Includes the acceleration of certain technology and content development costs. *** Includes severance and severance-related costs and lease-related charges. Summary of Accrued Restructuring Liability The following table presents the additions and adjustments to the accrued restructuring liability on the Company’s consolidated balance sheets for the periods indicated. Balance as of December 31, 2021 Additional Costs Cash Payments Balance as of December 31, 2022 Additional Costs Cash Payments Balance as of December 31, 2023 (in thousands) Leadership and organizational structure changes Severance and severance-related costs $ — $ — $ — $ — $ 9,779 $ — $ 9,779 2022 Strategic Realignment Plan Severance and severance-related costs — 14,762 (9,537) 5,225 11,312 (12,444) 4,093 Professional and other fees relating to restructuring activities — 1,777 (854) 923 1,465 (2,025) 363 Lease and lease-related charges — 3,351 (3,268) 83 12,865 (12,920) 28 Other severance and severance-related costs 1,735 728 (2,002) 461 512 (730) 243 Total restructuring $ 1,735 $ 20,618 $ (15,661) $ 6,692 $ 35,933 $ (28,119) $ 14,506 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2023 | |
Leases [Abstract] | |
Leases | Leases The Company leases facilities under non-cancellable operating leases primarily in the United States, South Africa, and the United Kingdom. The Company’s operating leases have remaining lease terms of between less than one In August 2021, the Company entered into an agreement with an unrelated party to sublease a portion of the Company’s office space in Denver, Colorado, as part of its overall real estate management strategy. As of December 31, 2023, this sublease was classified as an operating lease and had a remaining term of 0.9 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 master lease. In connection with the execution of this agreement, the Company recognized a non-cash loss on sublease of $4.8 million in the third quarter of 2021. 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 2023 2022 (in thousands) Operating lease expense $ 17,423 $ 20,943 Short-term lease expense 183 470 Variable lease expense 6,588 6,877 Sublease income (2,021) (1,310) Total lease expense $ 22,173 $ 26,980 As of December 31, 2023, for the Company’s operating leases, the weighted-average remaining lease term was 6.2 years and the weighted-average discount rate was 10.8%. For the years ended December 31, 2023 and 2022, cash paid for amounts included in the measurement of operating lease liabilities was $24.4 million and $24.5 million, respectively. There were no lease liabilities arising from obtaining right-of-use assets for the year ended December 31, 2023. There were no lease liabilities arising from obtaining right-of-use assets for the year ended December 31, 2023. For the year ended December 31, 2022, lease liabilities arising from obtaining right-of-use assets were $15.5 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 $4.7 million in aggregate. December 31, 2023 (in thousands) 2024 $ 24,305 2025 20,530 2026 21,086 2027 21,666 2028 17,191 Thereafter 32,917 Total lease payments 137,695 Less: imputed interest (39,240) Total lease liability $ 98,455 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2023 | |
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, 2023 December 31, 2022 (in thousands) Term loan facilities $ 376,200 $ 566,622 Revolving facility 40,000 — Convertible senior notes 527,000 380,000 Deferred government grant obligations 3,500 3,500 Other borrowings 1,699 3,688 Less: unamortized debt discount and issuance costs (43,670) (17,666) Total debt 904,729 936,144 Less: current portion of long-term debt (8,215) (7,580) Total long-term debt $ 896,514 $ 928,564 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 2025 Notes, which had an estimated fair value of $191.7 million and $241.6 million as of December 31, 2023 and 2022, respectively, and the 2030 Notes, which had an estimated fair value of $55.0 million as of December 31, 2023. The 2030 Notes, described below, were issued in January 2023. Each of the Company’s long-term debt instruments were classified as Level 2 within the fair value hierarchy. The Company’s cash interest payments, net of amounts capitalized, were $61.2 million, $43.8 million and $25.5 million for the years ended December 31, 2023, 2022 and 2021, respectively. Term Loan Credit and Guaranty Agreement On January 9, 2023, the Company entered into an Extension Amendment, Second Amendment and First Incremental Agreement to Credit and Guaranty Agreement, dated as of January 9, 2023 (the “Second Amended Credit Agreement”), which amended the Company’s existing term loan facilities, previously referred to as the Amended Term Loan Facilities. The provisions of the Second Amended Credit Agreement became effective upon the satisfaction of certain conditions set for therein, including, without limitation, the funding of the 2030 Notes referenced below and the prepayment of certain existing term loans to reduce the outstanding principal amount of term loans outstanding under the Amended Term Loan Facilities from $567 million to $380 million. Pursuant to the Second Amended Credit Agreement, the lenders thereunder agreed to, among other amendments, extend the maturity date of the term loans thereunder from December 28, 2024 to December 28, 2026 (or, if more than $40 million of the Company’s 2025 Notes remain outstanding on January 30, 2025, January 30, 2025) and to provide a senior secured first lien revolving loan facility to the Company in the principal amount of $40 million (the “Revolving Loan Facility”). The termination date for such revolving loans will be June 28, 2026 (or, if more than $50 million of the Company’s 2025 Notes remain outstanding on January 1, 2025, January 1, 2025). If the Company does not refinance or raise capital to reduce its debt in the short term, and in the event that the maturity date of the outstanding term loan balance of $372.4 million springs forward to January 30, 2025, the Company’s liquidity may not be sufficient to pay off the balance on the accelerated maturity date if the Company does not otherwise sufficiently increase revenues, realize additional operating efficiencies and reduce its expenses. As of December 31, 2023, outstanding borrowings under the Revolving Loan Facility were $40 million. In addition, our Second Amended Credit Agreement includes a financial covenant that requires the Company to maintain $900 million minimum Recurring Revenues (as defined by the Second Amended Credit Agreement) as of the last day of any period of four consecutive fiscal quarters, commencing with the fiscal quarter ending September 30, 2021 through the maturity date. Failure to maintain this minimum Recurring Revenue may result in a default under the aforementioned financing facilities and therefore result in the acceleration of due dates. Loans under the Second Amended Credit Agreement will bear interest at a per annum rate equal to (i) with respect to term loans, a base rate or the Term SOFR (as defined in the Second Amended Credit Agreement) rate, as applicable, plus a margin of 5.50% in the case of the base rate loans and 6.50% in the case of Term SOFR loans and (ii) with respect to revolving loans, a base rate or the Term SOFR rate, as applicable, plus a margin of 4.50% in the case of the base rate loans and 5.50% in the case of Term SOFR loans. If the term loans under the Second Amended Credit Agreement are prepaid or amended prior to the six month anniversary of the Second Amended Credit Agreement in connection with a Repricing Event (as defined in the Second Amended Credit Agreement), the Company shall pay a prepayment premium of 1.0% of the amount of the loans so prepaid. Prior to the amendment, loans under the Amended Term Loan Facilities bore interest at a per annum rate equal to a base rate or adjusted Eurodollar rate, as applicable, plus the applicable margin of 4.75% in the case of the base rate loans and 5.75% in the case of the Eurodollar loans. The Company is required to make quarterly principal repayments equal to 0.25% of the aggregate principal amount. The obligations under the Second Amended Credit Agreement are guaranteed by certain of the Company’s subsidiaries (the Company and the guarantors, collectively, the “Credit Parties”). The obligations under the Second Amended Credit Agreement are secured, subject to customary permitted liens and other agreed-upon exceptions, by a perfected security interest in all tangible and intangible assets of the Credit Parties, except for certain customary excluded assets. The Second Amended Credit Agreement contains customary affirmative covenants, including, among others, the provision of annual and quarterly financial statements and compliance certificates, maintenance of property, insurance, compliance with laws and environmental matters. The Second Amended Credit Agreement contains customary negative covenants, including, among others, restrictions on the incurrence of indebtedness, granting of liens, making investments and acquisitions, paying dividends, repurchases of equity interests in the Company and entering into affiliate transactions and asset sales. The Second Amended Credit Agreement contains (i) a financial covenant for the benefit of the lenders that requires the Company to maintain minimum Recurring Revenues (as defined in the Second Amended Credit Agreement) as of the last day of any period of four consecutive fiscal quarters of the Company commencing with fiscal quarter ending September 30, 2021 through the maturity date and (ii) three financial covenants solely for the benefit of the revolving lenders, in respect of a maximum consolidated senior secured net leverage ratio, a maximum consolidated total net leverage ratio, and a minimum consolidated fixed charge coverage ratio. The Second Amended Credit Agreement also provides for customary events of default, including, among others: non-payment of obligations; bankruptcy or insolvency event; failure to comply with covenants; breach of representations or warranties; defaults on other material indebtedness; impairment of any lien on any material portion of the Collateral (as defined in the Second Amended Credit Agreement); failure of any material provision of the Second Amended Credit Agreement or any guaranty to remain in full force and effect; a change of control of the Company; and material judgment defaults. The occurrence of an event of default could result in the acceleration of obligations under the Second Amended Credit Agreement. As of both December 31, 2023 and 2022, the Company was in compliance with the covenants under the Second Amended Credit Agreement. If an event of default under the Second Amended Credit Agreement occurs and is continuing, then, at the request (or with the consent) of the lenders holding the applicable requisite amount of commitments and loans under the Second Amended Credit Agreement, upon notice by the administrative agent to the borrowers, the obligations under the Second Amended Credit Agreement shall become immediately due and payable. In addition, if the Credit Parties become the subject of voluntary or involuntary proceedings under any bankruptcy, insolvency or similar law, then any outstanding obligations under the Second Amended Credit Agreement will automatically become immediately due and payable. As of December 31, 2023 and 2022, the balance of unamortized debt discount and issuance costs related to the term loan under the Second Amended Credit Agreement was $21.7 million and $12.8 million, respectively. For the years ended December 31, 2023 and 2022, the associated effective interest rate for the term loan under the Second Amended Credit Agreement was approximately 14.4% and 9.1%, respectively. For the year ended December 31, 2023 the associated interest rate for the revolving loan under the Second Amended Credit Agreement was approximately 10.7%. For the years ended December 31, 2023 and 2022, the associated interest expense for these facilities was approximately $54.9 million and $51.2 million, respectively. Convertible Senior Notes 2025 Notes In April 2020, the Company issued the 2025 Notes in an aggregate principal amount of $380 million, including the exercise by the initial purchasers of an option to purchase additional 2025 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 2025 Notes were approximately $369.6 million after deducting the initial purchasers’ discounts, commissions and offering expenses payable by the Company. The 2025 Notes are governed by an indenture (the “2025 Indenture”) between the Company and Wilmington Trust, National Association, as trustee. The 2025 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 2025 Notes will mature on May 1, 2025, unless earlier repurchased, redeemed or converted and contain a cross-acceleration provision tied to the acceleration of the Second Amended Credit Agreement. The 2025 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 2025 Notes, effectively subordinated to the Company’s senior secured indebtedness (including indebtedness under the Second Amended Credit Agreement), 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. The net carrying amount of the 2025 Notes consists of the following as of each of the dates indicated: December 31, 2023 December 31, 2022 (in thousands) Principal $ 380,000 $ 380,000 Unamortized issuance costs (2,807) (4,898) Net carrying amount $ 377,193 $ 375,102 Issuance costs are being amortized to interest expense over the contractual term of the 2025 Notes. Subsequent to the adoption of ASU 2020-06 in the first quarter of 2022, the effective interest rate used to amortize the issuance costs was 2.8%. The interest expense related to the 2025 Notes for the years ended December 31, 2023 and 2022 was $10.6 million and $10.6 million, respectively. Holders may convert their 2025 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 2025 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 2025 Indenture; • if the Company calls such 2025 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 2025 Notes is 35.3773 shares of the Company’s common stock per $1,000 principal amount of 2025 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 2025 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. In the event of the Company calling the 2025 Notes for redemption or the holders of the 2025 Notes electing to convert their 2025 Notes, the Company will determine whether to settle in cash, common stock or a combination thereof. Upon the occurrence of a “make-whole fundamental change” (as defined in the 2025 Indenture), the Company will in certain circumstances increase the conversion rate for a specified period of time. As of December 31, 2023, the if-converted value of the 2025 Notes did not exceed the principal amount. In addition, upon the occurrence of a “fundamental change” (as defined in the 2025 Indenture), holders of the 2025 Notes may require the Company to repurchase their 2025 Notes at a cash repurchase price equal to the principal amount of the 2025 Notes to be repurchased, plus accrued and unpaid interest, if any. The 2025 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 2025 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 2025 Notes. As of December 31, 2023, the conditions allowing holders of the 2025 Notes to convert had not been met and the Company has the right under the 2025 Indenture to determine the method of settlement at the time of conversion. Therefore, the 2025 Notes are classified as non-current on the consolidated balance sheets. In connection with the 2025 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 2025 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted 2025 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 2025 Notes to repay in full all amounts outstanding, and discharge all obligations in respect of, the $250 million senior secured term loan facility. The Company intends to use the remaining net proceeds from the sale of the 2025 Notes for working capital or other general corporate purposes, which may include capital expenditures, potential acquisitions and strategic transactions. 2030 Notes On January 11, 2023, the Company issued the 2030 Notes in an aggregate principal amount of $147.0 million. The 2030 Notes are governed by an indenture (the “2030 Indenture”) between the Company and Wilmington Trust, National Association, as trustee. The 2030 Notes bear interest at a rate of 4.50% per annum, payable semi-annually in arrears on February 1 and August 1 of each year, beginning on August 1, 2023. The 2030 Notes mature on February 1, 2030, unless earlier redeemed or repurchased by the Company or converted and contain a cross-acceleration provision tied to the acceleration of the Second Amended Credit Agreement. The net proceeds from the issuance of the 2030 Notes was $127.1 million. The 2030 Notes are the senior, unsecured obligations of the Company and are equal in right of payment with the Company’s senior indebtedness, senior in right of payment to the Company’s indebtedness that is expressly subordinated to the 2030 Notes, effectively subordinated to the Company’s senior secured indebtedness, 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. The net carrying amount of the 2030 Notes consist of the following as of the date indicated: December 31, 2023 (in thousands) Principal $ 147,000 Unamortized debt discount and issuance costs (19,136) Net carrying amount $ 127,864 Issuance costs are being amortized to interest expense over the contractual term of the 2030 Notes. The effective interest rate used to amortize the issuance costs was 7.4% for year ended December 31, 2023. The interest expense related to the 2030 Notes for the year ended December 31, 2023 was $9.1 million. Holders may convert their 2030 Notes at their option in the following circumstances: • at any time from, and after January 11, 2023 until the close of business on the second scheduled trading day immediately before the maturity date; • upon the occurrence of certain corporate events or distributions on the Common Stock as provided in the Indenture; • if the Company calls such 2030 Notes for redemption; subject to the right of certain holders to elect a delayed conversion period for any such 2030 Notes called for redemption that would cause such holders to beneficially own shares of Common Stock, in excess of the Ownership Cap (as defined below), over which threshold a settlement of such conversion could be made in cash; and • upon the occurrence of a default with regard to the Company’s financial covenants under the Indenture. The initial conversion rate for the 2030 Notes is 111.1111 shares of Common Stock per $1,000 principal amount of 2030 Notes, which represents an initial conversion price of approximately $9.00 per share, and is subject to adjustment upon the occurrence of certain specified events as set forth in the 2030 Indenture. Upon conversion, the Company will pay or deliver, as applicable, cash, shares of Common Stock or a combination of cash and shares of Common Stock, at the Company’s election (subject to aforementioned Ownership Cap). Upon the occurrence of a “Make-Whole Fundamental Change” (as defined in the 2030 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 2030 Indenture), holders of the 2030 Notes may require the Company to repurchase their 2030 Notes at a cash repurchase price equal to the principal amount of the 2030 Notes to be repurchased, plus accrued and unpaid interest, if any. The 2030 Notes are redeemable, in whole or in part, at the Company’s option at any time, and from time to time, subject to limited exceptions with respect to 2030 Notes that cannot be immediately physically settled due to the Ownership Cap, on or after January 11, 2026 and on or before the 30th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the 2030 Notes to be redeemed, plus accrued and unpaid interest, if any, but only if the last reported sale price per share of Common Stock exceeds 130% of the conversion price on 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. 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 2030 Notes. The Company used cash on hand and the proceeds from the offering of the 2030 Notes to repay a portion of the amounts outstanding under the Amended Term Loan Facilities. The Company has the right under the 2030 Indenture to determine the method of settlement at the time of conversion. Therefore, the 2030 Notes are classified as non-current on the consolidated balance sheets. Deferred Government Grant Obligations The Company has 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. The conditional loan with Prince George’s County has a maturity date of June 22, 2027 and the conditional loan agreement with the State of Maryland has a maturity date of June 30, 2028. The interest expense related to these loans for each of the years ended December 31, 2023 and 2022 was immaterial. 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, 2023, the Company has entered into standby letters of credit totaling $12.1 million as security deposits for the applicable leased facilities and in connection with the deferred government grant obligations. 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. Future Principal Payments Future principal payments for the term loan under the Second Amended Credit Agreement, the 2025 Notes, the 2030 Notes, and the government grants, as of the date indicated are as follows: December 31, 2023 (in thousands) 2024* $ 7,300 2025 383,800 2026 368,600 2027 — 2028 — Thereafter 147,000 Total future principal payments $ 906,700 * Amounts due in 2024 include $1.5 million and $2.0 million of conditional loan obligations that may be forgiven, provided that the Company attains certain conditions related to employment levels at 2U’s Lanham, Maryland headquarters. |
Other Income (Expense)
Other Income (Expense) | 12 Months Ended |
Dec. 31, 2023 | |
Other Income and Expenses [Abstract] | |
Other Income (Expense) | Other Income (Expense) The following table presents the components of other income (expense) on the Company’s consolidated statements of operations and comprehensive loss for each of the periods indicated. Year Ended December 31, 2023 2022 2021 (in thousands) Other income (expense): Gain on sale of investment $ — $ — $ 27,762 Foreign currency loss (803) (4,205) (2,491) Other — 390 (2,947) Total $ (803) $ (3,815) $ 22,324 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2023 | |
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, 2023 2022 2021 (in thousands) Loss before income taxes: United States $ (301,687) $ (302,541) $ (172,856) Foreign (14,266) (20,513) (23,106) Total $ (315,953) $ (323,054) $ (195,962) The following table presents the components of the income tax (provision) benefit on the Company’s consolidated statements of operations and comprehensive loss for each of the periods indicated. Year Ended December 31, 2023 2022 2021 (in thousands) Current income tax (provision) benefit: United States federal and state $ (419) $ (393) $ (240) Foreign (29) (224) (636) Total current income tax provision $ (448) $ (617) $ (876) Deferred income tax (provision) benefit: United States federal and state $ — $ 389 $ (389) Foreign (1,206) 1,131 2,461 Total deferred income tax (provision) benefit $ (1,206) $ 1,520 $ 2,072 Total income tax (provision) benefit $ (1,654) $ 903 $ 1,196 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, 2023 2022 2021 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 4.4 4.3 4.4 Foreign tax rate differential 0.2 0.1 0.1 Non-deductible compensation (0.1) (0.5) (6.7) Stock-based compensation (1.6) (1.1) 6.7 Change in valuation allowance (18.9) (20.2) (26.5) Non-deductible impairment (3.2) (0.1) — Other (2.3) (3.2) 1.6 Effective tax rate (0.5) % 0.3 % 0.6 % 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, 2023 2022 (in thousands) Deferred tax assets: Accrued expenses and other $ 10,804 $ 12,217 Accrued compensation and related benefits 3,331 3,253 Property and equipment 1,545 676 Stock-based compensation 12,269 19,644 Deferred income 1,223 1,343 Lease liability 21,178 24,865 Intangible assets 21,193 — Interest expense carryforwards 46,800 27,405 Foreign net operating loss carryforwards 10,750 8,480 U.S. net operating loss carryforwards 220,449 218,319 Valuation allowance (337,836) (277,840) Total deferred tax assets $ 11,706 $ 38,362 Deferred tax liabilities: Right-of-use assets $ (12,001) $ (14,097) Intangible assets — (22,957) Deferred rent (28) (383) Total deferred tax liabilities (12,029) (37,437) Net deferred tax (liabilities) assets $ (323) $ 925 As of December 31, 2023, the Company had a U.S. net operating loss (“NOL”) carryforward of approximately $829.7 million, of which $264.0 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 $565.7 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 has an NOL carryforward of $42.4 million in its foreign jurisdictions, of which $0.4 million begins to expire in 2038 and the remainder will 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 $60.0 million for the year ended December 31, 2023. 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. As of December 31, 2023 and 2022, 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 2020, 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 2023. Another significant section of the Tax Act, the Base Erosion Anti-Abuse Tax (“BEAT”), did not apply to the Company’s 2023 tax year as the Company’s base erosion payments are less than 3% of the Company’s total deductions. As these taxes may become applicable in the future, the Company will continue to monitor the potential impact. On August 16, 2022, the U.S. enacted the Inflation Reduction Act of 2022, which, among other things, implements a 15% minimum tax on book income of certain large corporations, a 1% excise tax on net stock repurchases and several tax incentives to promote clean energy. Currently, the Company does not expect this legislation will have a material impact on its consolidated financial statements. In 2021, the Organization of Economic Cooperation and Development introduced its Pillar Two Framework Model Rules ("Pillar 2"), which is designed to impose a 15% global minimum tax on adjusted financial results. Certain aspects of Pillar 2 took effect on January 1, 2024, while other aspects go into effect on January 1, 2025. The Company will continue to monitor the potential impact of Pillar 2 on its business, as the countries in which it operates are enacting legislation implementing Pillar 2. While many aspects of the application of Pillar 2 remain to be clarified, the Company does not expect Pillar 2 to materially impact its tax liability. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2023 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Common Stock As of December 31, 2023, 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, 2023, there were 82,260,619 shares of common stock outstanding, and the Company had reserved a total of 47,216,572 of its authorized shares of common stock for future issuance as follows: Shares Reserved for Future Issuance Outstanding restricted stock units 4,595,630 Outstanding performance restricted stock units 1,404,125 Outstanding stock options 4,103,758 Reserved for convertible senior notes 37,113,059 Total shares of common stock reserved for future issuance 47,216,572 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 4,113,030 and 3,916,733 on January 1, 2024 and 2023, 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, 2023, the Company had 6,904,662 shares available for issuance under the 2014 Plan. Further, as of December 31, 2023, under the 2014 Plan, options to purchase 4,103,758 shares of the Company’s common stock were outstanding at a weighted-average exercise price of $27.79 per share, and 4,595,630 RSUs and 1,404,125 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, 2023, no options to purchase shares of the Company’s common stock were outstanding under the 2008 Plan. 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. During the second quarter of 2023, shares available for purchase under the ESPP increased by 2,000,000 shares, pursuant to an amendment to the Company’s ESPP to increase the number of authorized shares available under such plan. As of December 31, 2023, 1,917,341 shares remained available for purchase under the ESPP, subject to adjustments for certain capital transactions. During the years ended December 31, 2023 and 2022, an aggregate of 462,329 and 136,039 shares, respectively, of the Company’s common stock were purchased in accordance with the ESPP. Net proceeds from the issuance of these shares were $2.1 million and $1.3 million for the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, 1,917,341 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, 2023 2022 2021 (in thousands) Curriculum and teaching $ 132 $ 208 $ 69 Servicing and support 10,084 15,543 15,352 Technology and content development 5,518 9,534 11,832 Marketing and sales 5,402 6,319 6,711 General and administrative 18,552 48,616 63,802 Total stock-based compensation expense $ 39,688 $ 80,220 $ 97,766 Restricted Stock Units The 2014 Plan provides for the issuance of RSUs to eligible participants. Throughout 2023, 2022 and 2021, 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 quarterly or annual tranches, generally over a period of three years. 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, 2022 4,739,861 $ 14.24 Granted* 4,182,872 6.34 Vested (3,373,076) 14.08 Forfeited (954,027) 9.79 Outstanding balance as of December 31, 2023 4,595,630 $ 8.09 * Includes 215,054 RSUs issued pursuant to an inducement award outside of the 2014 Plan. The total fair value of RSUs vested during the years ended December 31, 2023, 2022 and 2021, was $17.3 million, $33.9 million, and $57.8 million, respectively. The total compensation cost related to the unvested RSUs not yet recognized as of December 31, 2023 was $24.8 million and will be recognized over a weighted-average period of approximately 1.7 years. Performance Restricted Stock Units The 2014 Plan provides for the issuance of PRSUs to eligible participants. PRSUs generally include both service conditions and market conditions related to total shareholder return (“TSR”) targets relative to that of companies comprising the Russell 3000 Index and/or conditions based on the Company’s internal financial performance achieving predetermined targets. The terms of the performance 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. During the first quarter of 2021, as part of its annual equity awards cycle, the Company awarded 0.4 million PRSUs with an aggregate intrinsic value of $20.0 million. The PRSU award agreements provided that the quantity of units subject to vesting may range from 200% to 0% of the granted quantities depending on the achievement of internal financial performance-based targets, which were established annually. Certain of these PRSUs vested at the end of all three one-year performance periods, while others vested at the end of each of three one-year performance periods. Of the PRSUs awarded, 0.1 million were granted in March 2021 with a weighted-average grant date fair value per share of $40.69, 0.1 million were granted in March 2022 with a weighted-average grant date fair value per share of $10.77, and 0.1 million were granted in February 2023 with a weighted-average grant date fair value per share of $11.13. The expense recognized each period was estimated at the time of grant and was subject to fluctuation due to the achievement of internal financial performance-based targets. For the first, second, and third performance periods, which ended on December 31, 2021, 2022 and 2023, respectively, 112.7%, 100%, and 27.8%, of the eligible PRSUs were earned, respectively. During the first quarter of 2021, as part of its annual equity awards cycle, the Company granted 0.2 million PRSUs with an aggregate intrinsic value of $9.1 million and a weighted-average grant date fair value of $61.94. These PRSU awards were eligible to vest at the end of a single three-year period, which concluded on December 31, 2023, based on the Company’s stock price achieving predetermined TSR targets relative to that of companies comprising the Russell 3000 Index. The PRSU award agreements provided that the quantity of units subject to vesting may range from 200% to 0% of the granted quantities for the performance period, depending on the achievement of market-based targets. The expense recognized each period was determined at the time of grant and was not subject to fluctuation due to the achievement of market-based targets. None of the eligible PRSUs were earned. During the first quarter of 2022, as part of its annual equity awards cycle, the Company awarded 1.7 million PRSUs with an aggregate intrinsic value of $20.4 million. 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 internal financial performance-based targets, which are established annually. Certain of these PRSUs vest at the end of all three one-year performance periods, while others vest at the end of each of three one-year performance periods. Of the PRSUs awarded, 0.6 million were granted in March 2022 with a weighted-average grant date fair value per share of $10.77 and 0.6 million were granted in February 2023 with a weighted-average grant date fair value per share of $11.13. The expense recognized each period is estimated at the time of grant and is subject to fluctuation due to the achievement of internal financial performance-based targets. For the first and second performance periods, 100% and 27.8% of the eligible PRSUs were earned, respectively. During the first quarter of 2022, as part of its annual equity awards cycle, the Company granted 0.7 million PRSUs with an aggregate intrinsic value of $8.9 million and a weighted-average grant date fair value of $14.53. These PRSU awards are eligible to vest at the end of a single three-year period, which ends on December 31, 2024, 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 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. During the first quarter of 2023, as part of its annual equity award cycle, the Company awarded 1.4 million PRSUs with an aggregate intrinsic value of $12.2 million. The PRSU award agreements provide that the quantity of units subject to vesting may range from 150% to 0% of the granted quantities. For the first performance period, which began on January 1, 2023 and ends on December 31, 2023, the quantity of units eligible to be earned ranges from 130% to 0% depending on the achievement of internal financial performance-based targets, which are established annually. Additionally, the actual number of PRSUs earned may be adjusted upward or downward by 20% based upon the Company’s TSR performance compared to the Russell 3000 Index’s TSR performance over the same period. If the Company’s absolute TSR is negative, the TSR multiplier cannot exceed 0% and the achievement percentage based up on the internal financial performance-based targets is capped at 125%. Of the PRSUs awarded, 0.5 million were granted in March 2023, with a weighted-average grant date fair value per share of $7.15. This includes the fair value of the TSR-performance component of the award, which was determined using a Monte Carlo valuation model, and was $0.39 per share. The Company uses a Monte Carlo valuation model to estimate the value of PRSUs, and components of PRSUs, that are subject to market-based vesting conditions. The Monte Carlo valuation model requires the input of subjective assumptions, including the risk-free interest rate, expected life, 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 performance period. The expected life is consistent with the performance period of the awards. Expected volatility is based on the historical volatility of the Company’s common stock over the estimated expected life. 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 tables present a summary of (i) for the year ended December 31, 2023, the assumptions used for estimating the fair value of the TSR-performance component of the PRSUs, and (ii) for the years ended December 31, 2022 and 2021, the assumptions used for estimating the fair values of the PRSUs subject to market-based vesting conditions. As of December 31, 2023, 2022 and 2021 there were 1.2 million, 1.0 million, and 1.0 million outstanding PRSUs for which the performance metrics has not been defined as of each respective date. Accordingly, such awards are not considered granted for accounting purposes as of December 31, 2023, 2022 and 2021, and have been excluded from the tables below. Year Ended December 31, 2023 Risk-free interest rate 4.68% Expected term (years) 1.00 Expected volatility 108% Dividend yield 0% Year Ended December 31, 2022 2021 Risk-free interest rate 0.39% – 1.88% 0.10% – 0.26% Expected term (years) 1.00 – 3.00 1.00 – 3.00 Expected volatility 49% – 97% 85% – 89% 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, 2022 1,651,864 $ 22.74 Granted 1,182,620 9.57 Vested (179,886) 20.57 Forfeited (1,250,473) 23.18 Outstanding balance as of December 31, 2023 1,404,125 $ 11.15 The total fair value of PRSUs vested during the years ended December 31, 2023, 2022 and 2021, was $0.2 million, $1.9 million, and $71.9 million, respectively. The total compensation cost related to the unvested PRSUs not yet recognized as of December 31, 2023 was $2.0 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 eligible participants. Stock options issued under the Stock Plans generally are exercisable for periods not to exceed 10 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 three 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. No stock options were granted during the year ended December 31, 2021. Year Ended December 31, 2023 2022 Risk-free interest rate 3.6% 1.9% – 4.2% Expected term (years) 5.69 5.63 – 5.78 Expected volatility 87% 75% – 81% Dividend yield 0% 0% Weighted-average grant date fair value per share $4.93 $6.98 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, 2022 5,195,538 $ 25.28 5.88 $ 78 Granted 66,910 6.76 6.05 Exercised (17,166) 6.38 0.48 Forfeited (331,684) 10.74 Expired (809,840) 17.44 Outstanding balance as of December 31, 2023 4,103,758 27.79 4.63 — Exercisable as of December 31, 2023 3,229,631 $ 31.66 3.85 $ — The aggregate intrinsic value of options exercised during the years ended December 31, 2023, 2022 and 2021 was $0.1 million, $3.3 million and $6.8 million, respectively. The total unrecognized compensation cost related to the unvested options as of December 31, 2023 was $4.6 million and will be recognized over a weighted-average period of approximately 1.1 years. |
Net Loss per Share
Net Loss per Share | 12 Months Ended |
Dec. 31, 2023 | |
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, 2023 2022 2021 Stock options 4,103,758 5,195,538 3,477,439 Restricted stock units 4,595,630 4,739,861 2,613,063 Performance restricted stock units 1,404,125 1,651,864 1,121,277 Shares related to convertible senior notes 29,776,706 13,443,374 13,443,374 Total antidilutive securities 39,880,219 25,030,637 20,655,153 The following table presents the calculation of the Company’s basic and diluted net loss per share for each of the periods indicated. Year Ended December 31, 2023 2022 2021 Numerator (in thousands): Net loss $ (317,607) $ (322,151) $ (194,766) Denominator: Weighted-average shares of common stock outstanding, basic and diluted 80,891,146 77,327,850 74,580,115 Net loss per share, basic and diluted $ (3.93) $ (4.17) $ (2.61) |
Segment and Geographic Informat
Segment and Geographic Information | 12 Months Ended |
Dec. 31, 2023 | |
Segment Reporting [Abstract] | |
Segment and Geographic Information | Segment and Geographic Information The Company has two reportable segments: the Degree 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 executive education programs and technical skills-based boot camps provided through relationships with nonprofit colleges, universities, and other leading organizations. Significant Customers For the years ended December 31, 2023, 2022 and 2021, no university clients accounted for 10% or more of the Company’s consolidated revenue. As of December 31, 2023, two university clients in the Degree Program Segment accounted for 10% or more of the Company’s consolidated accounts receivable, net balance, as follows: $36.4 million and $14.3 million which equaled 31% and 12% of the Company’s consolidated accounts receivable, net balance, respectively. As of December 31, 2022, one university client in the Degree Program Segment accounted for 10% or more of the Company’s consolidated accounts receivable, net balance, with $7.3 million, or approximately 12% of the Company’s consolidated accounts receivable, net balance. 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, 2023 2022 2021 (in thousands) Revenue by segment* Degree Program Segment $ 561,044 $ 571,608 $ 592,288 Alternative Credential Segment 384,909 391,472 353,394 Total revenue $ 945,953 $ 963,080 $ 945,682 Segment profitability** Degree Program Segment $ 214,699 $ 180,727 $ 126,141 Alternative Credential Segment (43,903) (55,646) (59,564) Total segment profitability $ 170,796 $ 125,081 $ 66,577 Segment profitability margin*** Degree Program Segment 38 % 32 % 21 % Alternative Credential Segment (11) % (14) % (17) % Total segment profitability margin 18 % 13 % 7 % * The Company has excluded immaterial amounts of intersegment revenues from each of the years ended December 31, 2023, 2022 and 2021. ** The Company defines segment profitability as net income or net loss, as applicable, before net interest income (expense), other income (expense), net, taxes, depreciation and amortization expense, 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, debt modification expense and 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, 2023 2022 2021 (in thousands) Net loss $ (317,607) $ (322,151) $ (194,766) Adjustments: Stock-based compensation expense 39,688 80,220 97,766 Other (income) expense, net 803 3,815 (22,324) Net interest expense 72,612 61,069 49,747 Income tax expense (benefit) 1,654 (903) (1,196) Depreciation and amortization expense 115,322 128,153 108,448 Debt modification expense and loss on debt extinguishment 16,735 — 1,101 Impairment charges 196,871 138,291 — Restructuring charges 36,256 33,239 8,544 Other* 8,462 3,348 19,257 Total adjustments 488,403 447,232 261,343 Total segment profitability $ 170,796 $ 125,081 $ 66,577 * Includes (i) transaction and integration costs of $3.6 million, $3.6 million and $16.9 million for the years ended December 31, 2023, 2022 and 2021, respectively, and (ii) stockholder activism and litigation-related (recoveries) costs of $4.9 million, $(0.3) million and $2.4 million for the years ended December 31, 2023, 2022 and 2021, respectively. 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 $ 377,395 $ 459,252 Alternative Credential Segment 1,082,288 1,351,607 Total assets $ 1,459,683 $ 1,810,859 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 $116.9 million, $107.2 million and $98.5 million for the years ended December 31, 2023, 2022 and 2021, 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, 2023 and 2022 totaled approximately $3.5 million and $4.5 million, respectively. |
Receivables and Contract Liabil
Receivables and Contract Liabilities | 12 Months Ended |
Dec. 31, 2023 | |
Receivables And Contract Liabilities Disclosure [Abstract] | |
Receivables and Contract Liabilities | Receivables and Contract Liabilities Trade Accounts Receivable The Company’s trade accounts receivable balances relate to amounts due from students or customers occurring in the normal course of business. Trade accounts receivable balances have a term of less than one year and are included in accounts receivable, net on the Company’s consolidated balance sheets. The following table presents the Company’s trade accounts receivable in each segment as of each of the dates indicated. December 31, 2023 December 31, 2022 (in thousands) Degree Program Segment accounts receivable $ 3,207 $ 14,212 Degree Program Segment unbilled revenue 72,525 14,896 Alternative Credential Segment accounts receivable 47,455 51,360 Total 123,187 80,468 Less: Provision for credit losses (7,243) (17,642) Trade accounts receivable, net $ 115,944 $ 62,826 The Company regularly reviews its portfolio of offerings for alignment with its business objectives, including cost to operate, expected enrollments, and other factors, and from time to time, the Company has entered into, and may in the future enter into, agreements to strategically exit certain programs. As of December 31, 2023 and December 31, 2022, the Company had balances of $68.2 million and $6.4 million, respectively, of unbilled revenue associated with portfolio management activities within accounts receivable, net on the consolidated balance sheets. In addition, as of December 31, 2023 and December 31, 2022, the Company had balances of $16.9 million and $6.3 million, respectively, of non-current accounts receivable associated with portfolio management activities within other assets, non-current on the consolidated balance sheets. These non-current accounts receivable are typically due within 12 to 24 months. In January 2024, the Company entered into a receivables factoring transaction whereby a counterparty has committed to purchase up to $86.2 million of receivables owing to the company related to portfolio management activities at a purchase rate of 88%. The following table presents the change in provision for credit losses for trade accounts receivable on the Company’s consolidated balance sheets for the period indicated. Provision for Credit Losses (in thousands) Balance as of December 31, 2022 $ 17,642 Current period provision 5,038 Amounts written off (15,442) Foreign currency translation adjustments 5 Other — Balance as of December 31, 2023 $ 7,243 Other Receivables The Company’s other receivables are comprised of amounts due under tuition payment plans with extended payment terms from students enrolled in certain of the Company’s alternative credential offerings. These payment plans, which are managed and serviced by third-party providers, are designed to assist students with paying tuition costs after all other student financial assistance and scholarships have been applied. The associated receivables generally have payment terms that range from 12 to 42 months and are recorded net of any implied pricing concessions, which are determined based on collections history, market data and any time value of money component. There are no fees or origination costs included in these receivables. The carrying value of these receivable balances approximate their fair value. The following table presents the components of the Company’s other receivables, net, as of each of the dates indicated. December 31, 2023 December 31, 2022 (in thousands) Other receivables, amortized cost 49,358 $ 52,180 Less: Provision for credit losses (8,558) (3,579) Other receivables, net $ 40,800 $ 48,601 Other receivables, net, current $ 28,293 $ 33,813 Other receivables, net, non-current $ 12,507 $ 14,788 The following table presents the change in provision for credit losses for other receivables on the Company’s consolidated balance sheets for the period indicated. Provision for Credit Losses (in thousands) Balance as of December 31, 2022 $ 3,579 Current period provision 4,979 Other — Balance as of December 31, 2023 $ 8,558 The Company considers receivables to be past due when amounts contractually due under the extended payment plans have not been paid. As of December 31, 2023, 76% of other receivables, net due under extended payment plans were current. At the time of origination, the Company categorizes its other receivables using a credit quality indicator based on the credit tier rankings obtained from the third-party providers that manage and service the payment plans. The third-party providers utilize credit rating agency data to determine the credit tier rankings. The Company monitors the collectability of its other receivables on an ongoing basis. The adequacy of the allowance for credit losses is determined through analysis of multiple factors, including industry trends, portfolio performance, and delinquency rates. The following tables present other receivables, at amortized cost including interest accretion, by credit quality indicator and year of origination, as of the dates indicated. December 31, 2023 Year of Origination 2023 2022 2021 2020 2019 and Prior Total (in thousands) Credit Quality Tier High $ 12,744 $ 1,229 $ 404 $ 311 205 $ 14,893 Mid 13,178 3,067 2,614 735 674 20,268 Low 7,658 2,464 2,684 734 657 14,197 Total $ 33,580 $ 6,760 $ 5,702 $ 1,780 $ 1,536 $ 49,358 December 31, 2022 Year of Origination 2022 2021 2020 2019 2018 Total (in thousands) Credit Quality Tier High $ 15,737 $ 2,285 $ 48 18 115 $ 18,203 Mid 14,005 3,773 1,239 1,363 392 20,772 Low 6,160 3,099 1,677 1,939 330 13,205 Total $ 35,902 $ 9,157 $ 2,964 $ 3,320 $ 837 $ 52,180 Contract Liabilities 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. The following table presents the Company’s contract liabilities in each segment as of each of the dates indicated. December 31, December 31, (in thousands) Degree Program Segment deferred revenue $ 1,735 $ 1,245 Alternative Credential Segment deferred revenue 80,214 88,916 Total contract liabilities $ 81,949 $ 90,161 For the Degree Program Segment, revenue recognized during the years ended December 31, 2023 and 2022 that was included in the deferred revenue balance that existed at the end of each preceding year was $1.2 million and $1.5 million, respectively. For the Alternative Credential Segment, revenue recognized during the years ended December 31, 2023 and 2022 that was included in the deferred revenue balance that existed at the end of each preceding year was $73.4 million and $77.9 million, respectively. Contract Acquisition Costs The Degree Program Segment had $1.0 million and $0.5 million of net capitalized contract acquisition costs recorded primarily within other assets, non-current on the Company’s consolidated balance sheets as of December 31, 2023 and 2022, respectively. For the years ended December 31, 2023 and 2022, the Company capitalized an immaterial amount of contract acquisition costs and recorded an immaterial amount of associated amortization expense in the Degree Program Segment. |
Retirement Plan
Retirement Plan | 12 Months Ended |
Dec. 31, 2023 | |
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 100% of the first 2% of each employee’s contribution, and 50% of the next 4% of each employee’s contribution, each plan year. For the years ended December 31, 2023, 2022 and 2021, the Company made employer contributions of $8.9 million, $9.7 million and $7.8 million, respectively. |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2023 | |
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 Provision for credit losses for trade accounts receivable: Year ended December 31, 2023 $ 17,642 $ 5,038 $ (15,437) $ 7,243 Year ended December 31, 2022 11,686 6,393 (437) 17,642 Year ended December 31, 2021 $ 5,936 $ 6,794 $ (1,044) $ 11,686 Balance at Beginning of Period Additions Deductions Balance at End of Period Income tax valuation allowance: Year ended December 31, 2023 $ 277,840 $ 59,996 $ — $ 337,836 Year ended December 31, 2022 190,779 87,061 — 277,840 Year ended December 31, 2021 $ 137,767 $ 53,012 $ — $ 190,779 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Pay vs Performance Disclosure | |||
Net loss | $ (317,607) | $ (322,151) | $ (194,766) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Dec. 31, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
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. |
Going Concern | Going Concern At each annual and interim period, the Company evaluates whether there are conditions or events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. The evaluation is based on relevant conditions or events that are known or reasonably knowable at the date that the consolidated financial statements are issued. Pursuant to the Second Amended Credit Agreement, as defined in Note 10, if more than $40 million of the Company’s 2025 Notes, as defined below, remain outstanding on January 30, 2025, the maturity date of the outstanding term loan balance of $372.4 million springs forward to January 30, 2025. The Second Amended Credit Agreement also contains a financial covenant that requires the Company to maintain $900 million minimum Recurring Revenues (as defined by the Second Amended Credit Agreement) as of the last day of any period of four consecutive fiscal quarters. As of December 31, 2023, the Company was in compliance with this covenant; however, management cannot provide assurance that minimum Recurring Revenues will be achieved by the Company in future periods. If the Company is unable to comply with this financial covenant and is otherwise unable to cure or obtain a waiver related to this covenant, the obligations under the Second Amended Credit Agreement could accelerate. Refer to Note 10 for further information about the Company’s debt. The Company’s ability to continue as a going concern is dependent on refinancing its debt or raising capital to reduce its debt in the short term. If it is unable to complete the foregoing, the Company likely would not have sufficient cash on hand or available liquidity to pay off the balance of the term loan on the accelerated maturity date. The Company is currently evaluating options to refinance its debt in the short term; however, there can be no assurance that such financing would be available to the Company on favorable terms or at all. Given these factors, substantial doubt exists about the Company’s ability to continue as a going concern within one year from the date that the consolidated financial statements are issued. The accompanying consolidated financial statements have been prepared on a going concern basis, which assumes the Company will be able to continue as a going concern and contemplates the realization of assets and satisfaction of liabilities in the normal course of business. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty, nor do they include adjustments to reflect the possible future effects of the recoverability and classification of recorded asset amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern. |
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 items subject to such estimates include, but are not limited to, the measurement of provisions for credit losses, implied price concessions, acquired intangible assets, the recoverability of goodwill and indefinite-lived intangible assets, deferred tax assets, and the fair value of the convertible senior notes. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in those estimates. The Company evaluates its estimates and assumptions on an ongoing basis. |
Revenue Recognition, Receivable and Provision for Credit Losses | Revenue Recognition, Receivables 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 our technology and services. 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 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 Company’s contracts to provide its entire bundle of services generally have 10 to 15 year terms and the contracts to provide services under the flexible degree model generally have terms of five years or more. 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 tuition charged and 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 executive education programs and boot camps. The Company’s executive education programs run between two 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 and other services that the university agrees to provide. These amounts are recognized as curriculum and teaching expenses on the Company’s consolidated statements of operations and comprehensive loss. The Company’s contracts with university clients in this segment typically have a shorter duration 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, other receivables, 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. 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. Other receivables, net are comprised of amounts due under tuition payment plans with extended payment terms from students enrolled in certain of the Company’s alternative credential offerings. These plans, which are managed and serviced by third-party providers, are designed to assist students with covering tuition costs after all other student financial assistance and scholarships have been applied. The associated receivables generally have payment terms that range from 12 to 42 months and are recorded net of any implied pricing concessions, which are determined based on our collections history, market data and any time value of money component. There are no fees or origination costs included in these receivables. 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, 2023, 2022 and 2021, 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 | 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 on the date of grant. The Company uses a Monte Carlo valuation 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. The Company accounts for forfeitures as they occur. 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. Derecognition 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, receivables, 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, receivables, accounts payable and debt. The carrying values for such financial instruments, other than the Company’s convertible senior notes, each approximated their fair values as of December 31, 2023 and 2022. |
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 Definite-lived Intangible Assets. The Company capitalizes purchased intangible assets, such as software, websites, trade names 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 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 technology with 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 amounts 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, capitalized content development 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, the amounts 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 |
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. 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. |
Goodwill and Other Indefinite-lived Intangible Assets | 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, Trilogy in May 2019 and edX in November 2021. 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. During the second quarter of 2023, the Company completed an update of its internal financial reporting structure to better align with the executive structure following the 2022 Strategic Realignment Plan. As a result of this update, the Company’s three reporting units within the Alternative Credential Segment (Executive Education, Boot Camp, and Open Courses) were combined into a single reporting unit (Alternative Credential). The Degree Program Segment continues to have one reporting unit (Degree Program). The Company performed impairment assessments before and after the change in reporting units. Refer to the Interim Impairment Assessments section below for further information regarding the results of these assessments. 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, discount rates, terminal growth rates, and forecasts of revenue and margins. 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. |
Other Indefinite-lived Intangible Assets | Other Indefinite-lived Intangible Assets |
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 | Convertible Senior Notes In April 2020, the Company issued 2.25% convertible senior notes due May 1, 2025 (the “2025 Notes”) in an aggregate principal amount of $380 million, including the exercise by the initial purchasers of an option to purchase additional 2025 Notes, in a private offering. Refer to Note 10 for more information regarding the 2025 Notes. In January 2023, the Company issued 4.50% convertible senior notes due February 1, 2030 (the “2030 Notes”) in an aggregate principal amount of $147.0 million in a private offering. Refer to Note 10 for more information regarding the 2030 Notes. Pursuant to ASU No. 2020-06, the Company’s convertible senior notes are accounted for as a single instrument. Debt Issuance Costs |
Leases | Leases 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. |
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 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. On December 21, 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 . This ASU defers the sunset date from December 31, 2022 to December 31, 2024 and is effective immediately. The Company will adopt the standard when LIBOR is discontinued and does not expect the adoption of this standard to have a material impact on its consolidated financial statements and related disclosures. In March 2022, the FASB issued ASU No 2022-02, Financial Instruments - Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures . This ASU eliminates the accounting guidance for troubled debt restructurings by creditors that have adopted ASU 2016-13 and enhances the disclosure requirements for certain loan refinancings when borrowers are experiencing financial difficulty. In addition, the ASU requires the disclosure of current-period gross write-offs for financing receivables by year of origination in the vintage disclosures. This ASU is effective for fiscal years beginning after December 15, 2022. The Company adopted this ASU in the first quarter of 2023. Adoption of this standard did not have a material impact on the Company’s consolidated financial statements and related disclosures. In November 2023, the FASB issued ASU No 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . This ASU requires annual and interim disclosures that are expected to improve reportable segment disclosures, primarily through enhanced disclosures about significant segment expenses. This ASU is effective for fiscal years beginning after December 15, 2023 and should be adopted on a retrospective basis. Early adoption is permitted. The Company is currently evaluating the impact of adoption of this standard on its consolidated financial statements and related disclosures. In December 2023, the FASB issued ASU No 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires new disclosures about income taxes, primarily focused on the disclosure of income taxes paid and the rate reconciliation table. The ASU is effective for annual periods beginning after December 15, 2024 and should be applied on a prospective basis, with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of adoption of this standard on its consolidated financial statements and related disclosures. |
Business Combination (Tables)
Business Combination (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule Of Estimated Fair Values Of The Assets Acquired And Liabilities Assumed | The following table summarizes the final purchase price allocation based on the estimated fair value of the assets acquired and liabilities assumed and reflects the measurement period adjustments recorded during the year ended December 31, 2022. Estimated Purchase Price (in thousands) Cash and cash equivalents $ 11,901 Accounts receivable 6,608 Prepaid expenses and other assets 13,098 Property and equipment, net 529 Right-of-use assets 2,355 Other assets, non-current 572 Accounts payable and accrued expenses (10,057) Deferred revenue (16,408) Lease liability (2,512) Other liabilities (32,981) Intangible assets: Developed technology 3 15,400 University client relationships 10 104,000 Enterprise client relationships 10 14,300 Trade names indefinite* 255,000 Goodwill 406,204 $ 768,009 * In 2023, the Company began amortizing the trade name on a straight-line basis over its estimated useful life of 25 years. Refer to Note 5 for further information about the change in estimated useful life. |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
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 $ 6,747 $ 8,392 Furniture and office equipment 8,725 9,453 Leasehold improvements 72,165 67,188 Leasehold improvements in process 76 4,631 Total 87,713 89,664 Accumulated depreciation and amortization (47,480) (43,809) Property and equipment, net $ 40,233 $ 45,855 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule Of Goodwill | The following tables present the changes in the carrying amount of goodwill by reportable segment on the Company’s consolidated balance sheets for the periods indicated. Balance as of December 31, 2021 Allocations Adjustments Impairment Charges Foreign Currency Translation Adjustments Balance as of December 31, 2022 (in thousands) Degree Program Segment Gross goodwill $ — $ 198,378 $ (5,919) $ — $ — $ 192,459 Accumulated impairments — — — — — — Net goodwill — 198,378 (5,919) — — 192,459 Alternative Credential Segment Gross goodwill $ 481,366 $ 225,174 $ (11,429) $ — $ (3,580) $ 691,531 Accumulated impairments (70,379) — — (78,991) — (149,370) Net goodwill 410,987 225,174 (11,429) (78,991) (3,580) 542,161 Unallocated goodwill $ 423,552 $ (423,552) $ — $ — $ — $ — Total Gross goodwill $ 904,918 $ — $ (17,348) $ — $ (3,580) $ 883,990 Accumulated impairments (70,379) — — (78,991) — (149,370) Net goodwill $ 834,539 $ — $ (17,348) $ (78,991) $ (3,580) $ 734,620 Balance as of December 31, 2022 Impairment Charges* Foreign Currency Translation Adjustments Balance as of December 31, 2023 (in thousands) Degree Program Segment Gross goodwill $ 192,459 $ — $ — $ 192,459 Accumulated impairments — — — — Net goodwill 192,459 — — 192,459 Alternative Credential Segment Gross goodwill $ 691,531 $ — $ (3,651) $ 687,880 Accumulated impairments (149,370) (79,471) — (228,841) Net goodwill 542,161 (79,471) (3,651) 459,039 Total Gross goodwill $ 883,990 $ — $ (3,651) $ 880,339 Accumulated impairments (149,370) (79,471) — (228,841) Net goodwill $ 734,620 $ (79,471) $ (3,651) $ 651,498 |
Schedule Of Amortizable Intangible Assets | The following table presents the components of intangible assets, net on the Company’s consolidated balance sheets as of each of the dates indicated. December 31, 2023 December 31, 2022 Estimated Gross Accumulated Net Gross Accumulated Net (in thousands) Capitalized technology 3-5 $ 245,867 $ (159,155) $ 86,712 $ 226,761 $ (132,621) $ 94,140 Capitalized content development 4-5 233,592 (176,374) 57,218 261,844 (177,154) 84,690 University client relationships 9-10 208,823 (75,849) 132,974 210,138 (55,556) 154,582 Enterprise client relationships 10 14,300 (3,039) 11,261 14,300 (1,609) 12,691 Trade names and domain names* 5-25 284,810 (201,777) 83,033 284,701 (81,049) 203,652 Total intangible assets $ 987,392 $ (616,194) $ 371,198 $ 997,744 $ (447,989) $ 549,755 * The Company concluded that due to changes in facts and circumstances, the edX trade name, which was classified as indefinite-lived as of June 30, 2023, is now finite-lived. In the third quarter of 2023, the Company began amortizing the trade name on a straight-line basis over its estimated useful life. The gross carrying amount of the edX trade name was $255.0 million as of both December 31, 2023 and December 31, 2022. Accumulated amortization and impairments include $176.7 million and $59.3 million of impairment charges related to the edX trade name as of December 31, 2023 and December 31, 2022, respectively. Refer to Note 2 for further information about these impairment charges. |
Schedule Of Indefinite-lived Intangible Assets | The following table presents the components of intangible assets, net on the Company’s consolidated balance sheets as of each of the dates indicated. December 31, 2023 December 31, 2022 Estimated Gross Accumulated Net Gross Accumulated Net (in thousands) Capitalized technology 3-5 $ 245,867 $ (159,155) $ 86,712 $ 226,761 $ (132,621) $ 94,140 Capitalized content development 4-5 233,592 (176,374) 57,218 261,844 (177,154) 84,690 University client relationships 9-10 208,823 (75,849) 132,974 210,138 (55,556) 154,582 Enterprise client relationships 10 14,300 (3,039) 11,261 14,300 (1,609) 12,691 Trade names and domain names* 5-25 284,810 (201,777) 83,033 284,701 (81,049) 203,652 Total intangible assets $ 987,392 $ (616,194) $ 371,198 $ 997,744 $ (447,989) $ 549,755 * The Company concluded that due to changes in facts and circumstances, the edX trade name, which was classified as indefinite-lived as of June 30, 2023, is now finite-lived. In the third quarter of 2023, the Company began amortizing the trade name on a straight-line basis over its estimated useful life. The gross carrying amount of the edX trade name was $255.0 million as of both December 31, 2023 and December 31, 2022. Accumulated amortization and impairments include $176.7 million and $59.3 million of impairment charges related to the edX trade name as of December 31, 2023 and December 31, 2022, respectively. Refer to Note 2 for further information about these impairment charges. |
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, 2023. Future Amortization Expense (in thousands) 2024 $ 76,084 2025 56,310 2026 41,557 2027 29,563 2028 25,800 Thereafter 98,483 Total $ 327,797 |
Other Balance Sheet Details (Ta
Other Balance Sheet Details (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule Of Accounts Payable And 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, 2023 December 31, 2022 (in thousands) Accrued university and instructional staff compensation $ 28,339 $ 30,807 Accrued marketing expenses 19,652 15,988 Accrued compensation and related benefits 9,870 16,213 Accounts payable and other accrued expenses 45,517 47,012 Total accounts payable and accrued expenses $ 103,378 $ 110,020 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
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, 2023. Future Minimum Payments (in thousands) 2024 $ 3,569 2025 3,500 2026 3,500 2027 3,500 2028 3,500 Thereafter — Total future minimum payments to university clients $ 17,569 |
Restructuring Charges (Tables)
Restructuring Charges (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Restructuring and Related Activities [Abstract] | |
Schedule Of Restructuring Charges By Reportable Segment | The following table presents restructuring charges by reportable segment on the Company’s consolidated statements of operations for the periods indicated. Year Ended Year Ended Degree Program Segment Alternative Credential Segment Degree Program Segment Alternative Credential Segment Leadership and organizational structure changes Severance and severance-related costs $ 9,486 $ 293 $ — $ — 2022 Strategic Realignment Plan Severance and severance-related costs 11,980 195 8,993 6,431 Lease and lease-related charges* 9,098 2,594 11,215 1,061 Professional and other fees relating to restructuring activities 1,009 — 2,013 — Other** 46 — 7 1,008 22,133 2,789 22,228 8,500 Other restructuring charges*** 1,508 47 2,300 211 Total restructuring charges $ 33,127 $ 3,129 $ 24,528 $ 8,711 * For the years ended December 31, 2023, and 2022, includes $0.7 million and $8.5 million, respectively, of accelerated amortization of right-of-use assets and accelerated depreciation of leasehold improvements related to updates to the estimated useful lives of certain leased facilities and $10.9 million and $3.7 million, respectively, in rent expense associated with these facilities, including amortization of the right-of-use asset and accretion of the operating lease liability, sublease income, and other variable lease costs. The liabilities associated with these leases continue to be presented within lease liability and lease liability, non-current on the Company’s consolidated balance sheets. ** Includes the acceleration of certain technology and content development costs. *** Includes severance and severance-related costs and lease-related charges. |
Schedule Of Adjustments To The Accrued Restructuring Liability | The following table presents the additions and adjustments to the accrued restructuring liability on the Company’s consolidated balance sheets for the periods indicated. Balance as of December 31, 2021 Additional Costs Cash Payments Balance as of December 31, 2022 Additional Costs Cash Payments Balance as of December 31, 2023 (in thousands) Leadership and organizational structure changes Severance and severance-related costs $ — $ — $ — $ — $ 9,779 $ — $ 9,779 2022 Strategic Realignment Plan Severance and severance-related costs — 14,762 (9,537) 5,225 11,312 (12,444) 4,093 Professional and other fees relating to restructuring activities — 1,777 (854) 923 1,465 (2,025) 363 Lease and lease-related charges — 3,351 (3,268) 83 12,865 (12,920) 28 Other severance and severance-related costs 1,735 728 (2,002) 461 512 (730) 243 Total restructuring $ 1,735 $ 20,618 $ (15,661) $ 6,692 $ 35,933 $ (28,119) $ 14,506 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Leases [Abstract] | |
Schedule Of 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 2023 2022 (in thousands) Operating lease expense $ 17,423 $ 20,943 Short-term lease expense 183 470 Variable lease expense 6,588 6,877 Sublease income (2,021) (1,310) Total lease expense $ 22,173 $ 26,980 |
Schedule Of 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 $4.7 million in aggregate. December 31, 2023 (in thousands) 2024 $ 24,305 2025 20,530 2026 21,086 2027 21,666 2028 17,191 Thereafter 32,917 Total lease payments 137,695 Less: imputed interest (39,240) Total lease liability $ 98,455 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
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, 2023 December 31, 2022 (in thousands) Term loan facilities $ 376,200 $ 566,622 Revolving facility 40,000 — Convertible senior notes 527,000 380,000 Deferred government grant obligations 3,500 3,500 Other borrowings 1,699 3,688 Less: unamortized debt discount and issuance costs (43,670) (17,666) Total debt 904,729 936,144 Less: current portion of long-term debt (8,215) (7,580) Total long-term debt $ 896,514 $ 928,564 The net carrying amount of the 2025 Notes consists of the following as of each of the dates indicated: December 31, 2023 December 31, 2022 (in thousands) Principal $ 380,000 $ 380,000 Unamortized issuance costs (2,807) (4,898) Net carrying amount $ 377,193 $ 375,102 The net carrying amount of the 2030 Notes consist of the following as of the date indicated: December 31, 2023 (in thousands) Principal $ 147,000 Unamortized debt discount and issuance costs (19,136) Net carrying amount $ 127,864 |
Schedule Of Maturities Of Long-term Debt | Future principal payments for the term loan under the Second Amended Credit Agreement, the 2025 Notes, the 2030 Notes, and the government grants, as of the date indicated are as follows: December 31, 2023 (in thousands) 2024* $ 7,300 2025 383,800 2026 368,600 2027 — 2028 — Thereafter 147,000 Total future principal payments $ 906,700 * Amounts due in 2024 include $1.5 million and $2.0 million of conditional loan obligations that may be forgiven, provided that the Company attains certain conditions related to employment levels at 2U’s Lanham, Maryland headquarters. |
Other Income (Expense) (Tables)
Other Income (Expense) (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Other Income and Expenses [Abstract] | |
Schedule Of Components Of Other Income (Expense) | The following table presents the components of other income (expense) on the Company’s consolidated statements of operations and comprehensive loss for each of the periods indicated. Year Ended December 31, 2023 2022 2021 (in thousands) Other income (expense): Gain on sale of investment $ — $ — $ 27,762 Foreign currency loss (803) (4,205) (2,491) Other — 390 (2,947) Total $ (803) $ (3,815) $ 22,324 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
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, 2023 2022 2021 (in thousands) Loss before income taxes: United States $ (301,687) $ (302,541) $ (172,856) Foreign (14,266) (20,513) (23,106) Total $ (315,953) $ (323,054) $ (195,962) |
Schedule Of Components Of Income Tax (provision) Benefit | The following table presents the components of the income tax (provision) benefit on the Company’s consolidated statements of operations and comprehensive loss for each of the periods indicated. Year Ended December 31, 2023 2022 2021 (in thousands) Current income tax (provision) benefit: United States federal and state $ (419) $ (393) $ (240) Foreign (29) (224) (636) Total current income tax provision $ (448) $ (617) $ (876) Deferred income tax (provision) benefit: United States federal and state $ — $ 389 $ (389) Foreign (1,206) 1,131 2,461 Total deferred income tax (provision) benefit $ (1,206) $ 1,520 $ 2,072 Total income tax (provision) benefit $ (1,654) $ 903 $ 1,196 |
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, 2023 2022 2021 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 4.4 4.3 4.4 Foreign tax rate differential 0.2 0.1 0.1 Non-deductible compensation (0.1) (0.5) (6.7) Stock-based compensation (1.6) (1.1) 6.7 Change in valuation allowance (18.9) (20.2) (26.5) Non-deductible impairment (3.2) (0.1) — Other (2.3) (3.2) 1.6 Effective tax rate (0.5) % 0.3 % 0.6 % |
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, 2023 2022 (in thousands) Deferred tax assets: Accrued expenses and other $ 10,804 $ 12,217 Accrued compensation and related benefits 3,331 3,253 Property and equipment 1,545 676 Stock-based compensation 12,269 19,644 Deferred income 1,223 1,343 Lease liability 21,178 24,865 Intangible assets 21,193 — Interest expense carryforwards 46,800 27,405 Foreign net operating loss carryforwards 10,750 8,480 U.S. net operating loss carryforwards 220,449 218,319 Valuation allowance (337,836) (277,840) Total deferred tax assets $ 11,706 $ 38,362 Deferred tax liabilities: Right-of-use assets $ (12,001) $ (14,097) Intangible assets — (22,957) Deferred rent (28) (383) Total deferred tax liabilities (12,029) (37,437) Net deferred tax (liabilities) assets $ (323) $ 925 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Equity [Abstract] | |
Schedule Of Shares Of Common Stock Reserved For Future Issuance | As of December 31, 2023, there were 82,260,619 shares of common stock outstanding, and the Company had reserved a total of 47,216,572 of its authorized shares of common stock for future issuance as follows: Shares Reserved for Future Issuance Outstanding restricted stock units 4,595,630 Outstanding performance restricted stock units 1,404,125 Outstanding stock options 4,103,758 Reserved for convertible senior notes 37,113,059 Total shares of common stock reserved for future issuance 47,216,572 |
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, 2023 2022 2021 (in thousands) Curriculum and teaching $ 132 $ 208 $ 69 Servicing and support 10,084 15,543 15,352 Technology and content development 5,518 9,534 11,832 Marketing and sales 5,402 6,319 6,711 General and administrative 18,552 48,616 63,802 Total stock-based compensation expense $ 39,688 $ 80,220 $ 97,766 |
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, 2022 4,739,861 $ 14.24 Granted* 4,182,872 6.34 Vested (3,373,076) 14.08 Forfeited (954,027) 9.79 Outstanding balance as of December 31, 2023 4,595,630 $ 8.09 * Includes 215,054 RSUs issued pursuant to an inducement award outside of the 2014 Plan. 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, 2022 1,651,864 $ 22.74 Granted 1,182,620 9.57 Vested (179,886) 20.57 Forfeited (1,250,473) 23.18 Outstanding balance as of December 31, 2023 1,404,125 $ 11.15 |
Schedule Of Assumptions Used For Estimating The Fair Value Of The Stock Options Granted | The following tables present a summary of (i) for the year ended December 31, 2023, the assumptions used for estimating the fair value of the TSR-performance component of the PRSUs, and (ii) for the years ended December 31, 2022 and 2021, the assumptions used for estimating the fair values of the PRSUs subject to market-based vesting conditions. As of December 31, 2023, 2022 and 2021 there were 1.2 million, 1.0 million, and 1.0 million outstanding PRSUs for which the performance metrics has not been defined as of each respective date. Accordingly, such awards are not considered granted for accounting purposes as of December 31, 2023, 2022 and 2021, and have been excluded from the tables below. Year Ended December 31, 2023 Risk-free interest rate 4.68% Expected term (years) 1.00 Expected volatility 108% Dividend yield 0% Year Ended December 31, 2022 2021 Risk-free interest rate 0.39% – 1.88% 0.10% – 0.26% Expected term (years) 1.00 – 3.00 1.00 – 3.00 Expected volatility 49% – 97% 85% – 89% Dividend yield 0% 0% The following table summarizes the assumptions used for estimating the fair value of the stock options granted for the periods presented. No stock options were granted during the year ended December 31, 2021. Year Ended December 31, 2023 2022 Risk-free interest rate 3.6% 1.9% – 4.2% Expected term (years) 5.69 5.63 – 5.78 Expected volatility 87% 75% – 81% Dividend yield 0% 0% Weighted-average grant date fair value per share $4.93 $6.98 |
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, 2022 5,195,538 $ 25.28 5.88 $ 78 Granted 66,910 6.76 6.05 Exercised (17,166) 6.38 0.48 Forfeited (331,684) 10.74 Expired (809,840) 17.44 Outstanding balance as of December 31, 2023 4,103,758 27.79 4.63 — Exercisable as of December 31, 2023 3,229,631 $ 31.66 3.85 $ — |
Net Loss per Share (Tables)
Net Loss per Share (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
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, 2023 2022 2021 Stock options 4,103,758 5,195,538 3,477,439 Restricted stock units 4,595,630 4,739,861 2,613,063 Performance restricted stock units 1,404,125 1,651,864 1,121,277 Shares related to convertible senior notes 29,776,706 13,443,374 13,443,374 Total antidilutive securities 39,880,219 25,030,637 20,655,153 |
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. Year Ended December 31, 2023 2022 2021 Numerator (in thousands): Net loss $ (317,607) $ (322,151) $ (194,766) Denominator: Weighted-average shares of common stock outstanding, basic and diluted 80,891,146 77,327,850 74,580,115 Net loss per share, basic and diluted $ (3.93) $ (4.17) $ (2.61) |
Segment and Geographic Inform_2
Segment and Geographic Information (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
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, 2023 2022 2021 (in thousands) Revenue by segment* Degree Program Segment $ 561,044 $ 571,608 $ 592,288 Alternative Credential Segment 384,909 391,472 353,394 Total revenue $ 945,953 $ 963,080 $ 945,682 Segment profitability** Degree Program Segment $ 214,699 $ 180,727 $ 126,141 Alternative Credential Segment (43,903) (55,646) (59,564) Total segment profitability $ 170,796 $ 125,081 $ 66,577 Segment profitability margin*** Degree Program Segment 38 % 32 % 21 % Alternative Credential Segment (11) % (14) % (17) % Total segment profitability margin 18 % 13 % 7 % * The Company has excluded immaterial amounts of intersegment revenues from each of the years ended December 31, 2023, 2022 and 2021. ** The Company defines segment profitability as net income or net loss, as applicable, before net interest income (expense), other income (expense), net, taxes, depreciation and amortization expense, 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, debt modification expense and 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, 2023 2022 2021 (in thousands) Net loss $ (317,607) $ (322,151) $ (194,766) Adjustments: Stock-based compensation expense 39,688 80,220 97,766 Other (income) expense, net 803 3,815 (22,324) Net interest expense 72,612 61,069 49,747 Income tax expense (benefit) 1,654 (903) (1,196) Depreciation and amortization expense 115,322 128,153 108,448 Debt modification expense and loss on debt extinguishment 16,735 — 1,101 Impairment charges 196,871 138,291 — Restructuring charges 36,256 33,239 8,544 Other* 8,462 3,348 19,257 Total adjustments 488,403 447,232 261,343 Total segment profitability $ 170,796 $ 125,081 $ 66,577 * Includes (i) transaction and integration costs of $3.6 million, $3.6 million and $16.9 million for the years ended December 31, 2023, 2022 and 2021, respectively, and (ii) stockholder activism and litigation-related (recoveries) costs of $4.9 million, $(0.3) million and $2.4 million for the years ended December 31, 2023, 2022 and 2021, respectively. |
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 $ 377,395 $ 459,252 Alternative Credential Segment 1,082,288 1,351,607 Total assets $ 1,459,683 $ 1,810,859 |
Receivables and Contract Liab_2
Receivables and Contract Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Receivables And Contract Liabilities Disclosure [Abstract] | |
Schedule Of Receivables | The following table presents the Company’s trade accounts receivable in each segment as of each of the dates indicated. December 31, 2023 December 31, 2022 (in thousands) Degree Program Segment accounts receivable $ 3,207 $ 14,212 Degree Program Segment unbilled revenue 72,525 14,896 Alternative Credential Segment accounts receivable 47,455 51,360 Total 123,187 80,468 Less: Provision for credit losses (7,243) (17,642) Trade accounts receivable, net $ 115,944 $ 62,826 December 31, 2023 December 31, 2022 (in thousands) Other receivables, amortized cost 49,358 $ 52,180 Less: Provision for credit losses (8,558) (3,579) Other receivables, net $ 40,800 $ 48,601 Other receivables, net, current $ 28,293 $ 33,813 Other receivables, net, non-current $ 12,507 $ 14,788 |
Schedule Of Accounts Receivable, Allowance For Credit Loss | The following table presents the change in provision for credit losses for trade accounts receivable on the Company’s consolidated balance sheets for the period indicated. Provision for Credit Losses (in thousands) Balance as of December 31, 2022 $ 17,642 Current period provision 5,038 Amounts written off (15,442) Foreign currency translation adjustments 5 Other — Balance as of December 31, 2023 $ 7,243 |
Schedule Of Other Receivable, Allowance For Credit Loss | The following table presents the change in provision for credit losses for other receivables on the Company’s consolidated balance sheets for the period indicated. Provision for Credit Losses (in thousands) Balance as of December 31, 2022 $ 3,579 Current period provision 4,979 Other — Balance as of December 31, 2023 $ 8,558 |
Schedule Of Other Receivable Credit Quality Indicators | The following tables present other receivables, at amortized cost including interest accretion, by credit quality indicator and year of origination, as of the dates indicated. December 31, 2023 Year of Origination 2023 2022 2021 2020 2019 and Prior Total (in thousands) Credit Quality Tier High $ 12,744 $ 1,229 $ 404 $ 311 205 $ 14,893 Mid 13,178 3,067 2,614 735 674 20,268 Low 7,658 2,464 2,684 734 657 14,197 Total $ 33,580 $ 6,760 $ 5,702 $ 1,780 $ 1,536 $ 49,358 December 31, 2022 Year of Origination 2022 2021 2020 2019 2018 Total (in thousands) Credit Quality Tier High $ 15,737 $ 2,285 $ 48 18 115 $ 18,203 Mid 14,005 3,773 1,239 1,363 392 20,772 Low 6,160 3,099 1,677 1,939 330 13,205 Total $ 35,902 $ 9,157 $ 2,964 $ 3,320 $ 837 $ 52,180 |
Schedule Of Contract Liabilities By Segment | The following table presents the Company’s contract liabilities in each segment as of each of the dates indicated. December 31, December 31, (in thousands) Degree Program Segment deferred revenue $ 1,735 $ 1,245 Alternative Credential Segment deferred revenue 80,214 88,916 Total contract liabilities $ 81,949 $ 90,161 |
Organization (Details)
Organization (Details) people in Millions | 12 Months Ended |
Dec. 31, 2023 segment university people learningOpportunity | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of registered learners | people | 83 |
Number of universities and other leading institutions that company serves | university | 260 |
Number of learning opportunities offered | learningOpportunity | 4,500 |
Number of reportable segments | segment | 2 |
Significant Accounting Polici_3
Significant Accounting Policies (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2023 USD ($) | Jun. 30, 2023 USD ($) segment | Sep. 30, 2022 USD ($) reportingUnit | Mar. 31, 2022 USD ($) | Sep. 30, 2021 USD ($) | Dec. 31, 2023 USD ($) segment | Dec. 31, 2023 USD ($) segment | Dec. 31, 2022 USD ($) | Oct. 01, 2023 | Jul. 01, 2023 | Jan. 31, 2023 USD ($) | Jan. 11, 2023 USD ($) | Jan. 09, 2023 USD ($) | Apr. 30, 2020 USD ($) | |
Property and Equipment, Net | ||||||||||||||
Total debt | $ 904,729,000 | $ 904,729,000 | $ 904,729,000 | $ 936,144,000 | ||||||||||
Capital expenditures | 800,000 | 1,200,000 | ||||||||||||
Impairment charges | $ 62,800,000 | $ 16,700,000 | $ 50,200,000 | $ 28,800,000 | $ 79,471,000 | 78,991,000 | ||||||||
Impairment of indefinite lived intangibles | $ 117,400,000 | $ 29,300,000 | $ 30,000,000 | |||||||||||
Reporting unit carrying percentage (as a percent) | 10% | 10% | 10% | 10% | 10% | |||||||||
Impairment, Intangible Asset, Indefinite-Lived (Excluding Goodwill), Statement of Income or Comprehensive Income [Extensible Enumeration] | Impairment charges | |||||||||||||
Open Courses | ||||||||||||||
Property and Equipment, Net | ||||||||||||||
Impairment charges | $ 43,000,000 | |||||||||||||
Executive Education | ||||||||||||||
Property and Equipment, Net | ||||||||||||||
Impairment charges | $ 7,200,000 | |||||||||||||
Trade names | ||||||||||||||
Property and Equipment, Net | ||||||||||||||
Estimated useful life | 25 years | |||||||||||||
Minimum | ||||||||||||||
Property and Equipment, Net | ||||||||||||||
Term of other receivables (in months) | 12 months | |||||||||||||
Estimated useful life | 3 years | 3 years | 3 years | |||||||||||
Minimum | Bundle Of Services | ||||||||||||||
Property and Equipment, Net | ||||||||||||||
Period of revenue recognition | 10 years | 10 years | 10 years | |||||||||||
Minimum | Services Under The Flexible Degree Model | ||||||||||||||
Property and Equipment, Net | ||||||||||||||
Period of revenue recognition | 5 years | 5 years | 5 years | |||||||||||
Minimum | Internally-developed software | ||||||||||||||
Property and Equipment, Net | ||||||||||||||
Estimated useful life | 3 years | 3 years | 3 years | |||||||||||
Minimum | Artistic Related Intangible Assets | ||||||||||||||
Property and Equipment, Net | ||||||||||||||
Estimated useful life | 4 years | 4 years | 4 years | |||||||||||
Minimum | Computer hardware | ||||||||||||||
Property and Equipment, Net | ||||||||||||||
Useful lives (in years) | 3 years | 3 years | 3 years | |||||||||||
Minimum | Furniture and office equipment | ||||||||||||||
Property and Equipment, Net | ||||||||||||||
Useful lives (in years) | 5 years | 5 years | 5 years | |||||||||||
Minimum | Leasehold improvements | ||||||||||||||
Property and Equipment, Net | ||||||||||||||
Useful lives (in years) | 4 years | 4 years | 4 years | |||||||||||
Maximum | ||||||||||||||
Property and Equipment, Net | ||||||||||||||
Term of other receivables (in months) | 42 months | |||||||||||||
Estimated useful life | 25 years | 25 years | 25 years | |||||||||||
Maximum | Bundle Of Services | ||||||||||||||
Property and Equipment, Net | ||||||||||||||
Period of revenue recognition | 15 years | 15 years | 15 years | |||||||||||
Maximum | Internally-developed software | ||||||||||||||
Property and Equipment, Net | ||||||||||||||
Estimated useful life | 5 years | 5 years | 5 years | |||||||||||
Maximum | Artistic Related Intangible Assets | ||||||||||||||
Property and Equipment, Net | ||||||||||||||
Estimated useful life | 5 years | 5 years | 5 years | |||||||||||
Maximum | Computer hardware | ||||||||||||||
Property and Equipment, Net | ||||||||||||||
Useful lives (in years) | 5 years | 5 years | 5 years | |||||||||||
Maximum | Furniture and office equipment | ||||||||||||||
Property and Equipment, Net | ||||||||||||||
Useful lives (in years) | 7 years | 7 years | 7 years | |||||||||||
Maximum | Leasehold improvements | ||||||||||||||
Property and Equipment, Net | ||||||||||||||
Useful lives (in years) | 11 years | 11 years | 11 years | |||||||||||
Degree Program Segment | ||||||||||||||
Property and Equipment, Net | ||||||||||||||
Revenue, performance obligation, description of timing | The Company’s contracts with university clients in this segment 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. | |||||||||||||
Number of reporting units | segment | 1 | |||||||||||||
Alternative Credential Segment | ||||||||||||||
Property and Equipment, Net | ||||||||||||||
Revenue, performance obligation, description of timing | The Company’s executive education programs run between two and 16 weeks, while boot camps run between 12 and 24 weeks. | |||||||||||||
Number of reporting units | 3 | 2 | 1 | |||||||||||
Second Amended Credit Agreement | ||||||||||||||
Property and Equipment, Net | ||||||||||||||
Debt instrument, restrictive covenants, minimum recurring revenues | $ 900,000,000 | |||||||||||||
2025 Notes | Convertible Debt | ||||||||||||||
Property and Equipment, Net | ||||||||||||||
Principal | $ 380,000,000 | $ 380,000,000 | $ 380,000,000 | 380,000,000 | $ 380,000,000 | |||||||||
Total debt | 377,193,000 | 377,193,000 | 377,193,000 | $ 375,102,000 | ||||||||||
Interest rate (as a percent) | 2.25% | |||||||||||||
2030 Notes | Convertible Debt | ||||||||||||||
Property and Equipment, Net | ||||||||||||||
Principal | 147,000,000 | 147,000,000 | 147,000,000 | $ 147,000,000 | $ 147,000,000 | |||||||||
Total debt | $ 127,864,000 | $ 127,864,000 | 127,864,000 | |||||||||||
Interest rate (as a percent) | 4.50% | 4.50% | ||||||||||||
Revolving Loan Facility | Line of Credit | ||||||||||||||
Property and Equipment, Net | ||||||||||||||
Principal | $ 40,000,000 | |||||||||||||
Term loan facilities | Line of Credit | ||||||||||||||
Property and Equipment, Net | ||||||||||||||
Total debt | $ 372,400,000 | |||||||||||||
Second Amended Credit Agreement | Line of Credit | ||||||||||||||
Property and Equipment, Net | ||||||||||||||
Debt instrument, restrictive covenants, minimum recurring revenues | $ 900,000,000 |
Business Combination - Narrativ
Business Combination - Narrative (Details) - edX - USD ($) $ in Thousands | 12 Months Ended | ||||
Nov. 16, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2023 | |
Business Acquisition [Line Items] | |||||
Membership Interests (in percent) | 100% | ||||
Net purchase price | $ 773,000 | ||||
Escrow deposit | 23,000 | $ 3,400 | |||
Working capital adjustment | $ 5,000 | ||||
Preliminary purchase price | 768,009 | ||||
Business combination, acquisition related costs | $ 14,800 | $ 300 | |||
Trade names | |||||
Business Acquisition [Line Items] | |||||
Identifiable-lived intangible assets | $ 255,000 |
Business Combination - Estimate
Business Combination - Estimated Fair Value (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Jul. 01, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Nov. 16, 2021 |
Acquisition | |||||
Goodwill | $ 651,498 | $ 734,620 | $ 834,539 | ||
Maximum | |||||
Acquisition | |||||
Estimated Useful Life (in years) | 25 years | ||||
Trade names | |||||
Acquisition | |||||
Estimated Useful Life (in years) | 25 years | ||||
Developed technology | Maximum | |||||
Acquisition | |||||
Estimated Useful Life (in years) | 5 years | ||||
University client relationships | Maximum | |||||
Acquisition | |||||
Estimated Useful Life (in years) | 10 years | ||||
Enterprise client relationships | |||||
Acquisition | |||||
Estimated Useful Life (in years) | 10 years | ||||
Trade names and domain names | Maximum | |||||
Acquisition | |||||
Estimated Useful Life (in years) | 25 years | ||||
edX | |||||
Acquisition | |||||
Cash and cash equivalents | $ 11,901 | ||||
Accounts receivable | 6,608 | ||||
Prepaid expenses and other assets | 13,098 | ||||
Property and equipment, net | 529 | ||||
Right-of-use assets | 2,355 | ||||
Other assets, non-current | 572 | ||||
Accounts payable and accrued expenses | (10,057) | ||||
Deferred revenue | (16,408) | ||||
Lease liability | (2,512) | ||||
Other liabilities | (32,981) | ||||
Goodwill | 406,204 | ||||
Total | 768,009 | ||||
edX | Trade names | |||||
Acquisition | |||||
Identifiable-lived intangible assets | 255,000 | ||||
edX | Developed technology | |||||
Acquisition | |||||
Amortizable intangible assets | $ 15,400 | ||||
Estimated Useful Life (in years) | 3 years | ||||
edX | University client relationships | |||||
Acquisition | |||||
Amortizable intangible assets | $ 104,000 | ||||
Estimated Useful Life (in years) | 10 years | ||||
edX | Enterprise client relationships | |||||
Acquisition | |||||
Amortizable intangible assets | $ 14,300 | ||||
Estimated Useful Life (in years) | 10 years |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Property and Equipment, Net | |||
Property and equipment, gross | $ 87,713 | $ 89,664 | |
Accumulated depreciation and amortization | (47,480) | (43,809) | |
Property and equipment, net | 40,233 | 45,855 | |
Depreciation expense | 10,600 | 11,300 | $ 12,500 |
Computer hardware | |||
Property and Equipment, Net | |||
Property and equipment, gross | 6,747 | 8,392 | |
Furniture and office equipment | |||
Property and Equipment, Net | |||
Property and equipment, gross | 8,725 | 9,453 | |
Leasehold improvements | |||
Property and Equipment, Net | |||
Property and equipment, gross | 72,165 | 67,188 | |
Leasehold improvements in process | |||
Property and Equipment, Net | |||
Property and equipment, gross | $ 76 | $ 4,631 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Dec. 31, 2023 | Jun. 30, 2023 | Sep. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | |
Goodwill [Roll Forward] | ||||||
Beginning balance | $ 904,918 | $ 883,990 | $ 904,918 | |||
Goodwill, accumulated impairment, beginning balance | (70,379) | (149,370) | (70,379) | |||
Beginning balance | 834,539 | 734,620 | 834,539 | |||
Allocations | 0 | |||||
Adjustments | (17,348) | |||||
Impairment Charges | $ (62,800) | $ (16,700) | $ (50,200) | (28,800) | (79,471) | (78,991) |
Foreign Currency Translation Adjustments | (3,651) | (3,580) | ||||
Ending balance | 880,339 | 880,339 | 883,990 | |||
Goodwill, accumulated impairment ending balance | (228,841) | (228,841) | (149,370) | |||
Ending balance | 651,498 | 651,498 | 734,620 | |||
Corporate, Non-Segment | ||||||
Goodwill [Roll Forward] | ||||||
Beginning balance | 423,552 | 0 | 423,552 | |||
Allocations | (423,552) | |||||
Adjustments | 0 | |||||
Impairment Charges | 0 | |||||
Foreign Currency Translation Adjustments | 0 | |||||
Ending balance | 0 | |||||
Degree Program Segment | Operating Segments | ||||||
Goodwill [Roll Forward] | ||||||
Beginning balance | 0 | 192,459 | 0 | |||
Goodwill, accumulated impairment, beginning balance | 0 | 0 | 0 | |||
Beginning balance | 0 | 192,459 | 0 | |||
Allocations | 198,378 | |||||
Adjustments | (5,919) | |||||
Impairment Charges | 0 | 0 | ||||
Foreign Currency Translation Adjustments | 0 | 0 | ||||
Ending balance | 192,459 | 192,459 | 192,459 | |||
Goodwill, accumulated impairment ending balance | 0 | 0 | 0 | |||
Ending balance | 192,459 | 192,459 | 192,459 | |||
Alternative Credential Segment | Operating Segments | ||||||
Goodwill [Roll Forward] | ||||||
Beginning balance | 481,366 | 691,531 | 481,366 | |||
Goodwill, accumulated impairment, beginning balance | (70,379) | (149,370) | (70,379) | |||
Beginning balance | $ 410,987 | 542,161 | 410,987 | |||
Allocations | 225,174 | |||||
Adjustments | (11,429) | |||||
Impairment Charges | (79,471) | (78,991) | ||||
Foreign Currency Translation Adjustments | (3,651) | (3,580) | ||||
Ending balance | 687,880 | 687,880 | 691,531 | |||
Goodwill, accumulated impairment ending balance | (228,841) | (228,841) | (149,370) | |||
Ending balance | $ 459,039 | $ 459,039 | $ 542,161 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2023 | Jun. 30, 2023 | Sep. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Finite-Lived Intangible Assets [Line Items] | |||||||
Impairment charges | $ 62,800 | $ 16,700 | $ 50,200 | $ 28,800 | $ 79,471 | $ 78,991 | |
In process capitalized technology and content development | 371,198 | 371,198 | 549,755 | ||||
Amortization of intangible assets | 104,700 | 116,900 | $ 95,900 | ||||
In Process Capitalized Technology And Content Development | |||||||
Finite-Lived Intangible Assets [Line Items] | |||||||
In process capitalized technology and content development | $ 43,400 | 43,400 | 53,900 | ||||
Operating Segments | Alternative Credential Segment | |||||||
Finite-Lived Intangible Assets [Line Items] | |||||||
Impairment charges | $ 79,471 | 78,991 | |||||
edX | |||||||
Finite-Lived Intangible Assets [Line Items] | |||||||
Working capital adjustment | 5,000 | ||||||
Acquired assets and assumed liabilities of edX | $ 12,300 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | $ 987,392 | $ 997,744 |
Accumulated Amortization and Impairments | (616,194) | (447,989) |
Total | $ 371,198 | 549,755 |
Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated useful life | 3 years | |
Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated useful life | 25 years | |
Capitalized technology | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | $ 245,867 | 226,761 |
Accumulated Amortization and Impairments | (159,155) | (132,621) |
Total | $ 86,712 | 94,140 |
Capitalized technology | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated useful life | 3 years | |
Capitalized technology | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated useful life | 5 years | |
Capitalized content development | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | $ 233,592 | 261,844 |
Accumulated Amortization and Impairments | (176,374) | (177,154) |
Total | $ 57,218 | 84,690 |
Capitalized content development | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated useful life | 4 years | |
Capitalized content development | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated useful life | 5 years | |
University client relationships | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | $ 208,823 | 210,138 |
Accumulated Amortization and Impairments | (75,849) | (55,556) |
Total | $ 132,974 | 154,582 |
University client relationships | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated useful life | 9 years | |
University client relationships | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated useful life | 10 years | |
Enterprise client relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated useful life | 10 years | |
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | $ 14,300 | 14,300 |
Accumulated Amortization and Impairments | (3,039) | (1,609) |
Total | 11,261 | 12,691 |
Trade names and domain names | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | 284,810 | 284,701 |
Accumulated Amortization and Impairments | (201,777) | (81,049) |
Total | $ 83,033 | 203,652 |
Trade names and domain names | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated useful life | 5 years | |
Trade names and domain names | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated useful life | 25 years | |
Trade names | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | $ 255,000 | 255,000 |
Accumulated Amortization and Impairments | $ (176,700) | $ (59,300) |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Estimated Future Amortization Expense and License agreement (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Future Amortization Expense | ||
Total | $ 371,198 | $ 549,755 |
Excluding In Process Capitalized Technology and Content Development | ||
Future Amortization Expense | ||
2024 | 76,084 | |
2025 | 56,310 | |
2026 | 41,557 | |
2027 | 29,563 | |
2028 | 25,800 | |
Thereafter | 98,483 | |
Total | $ 327,797 |
Other Balance Sheet Details - N
Other Balance Sheet Details - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||
Prepaid assets | $ 19,800 | $ 20,500 | |
Deferred expenses incurred to integrate software | 13,600 | 9,300 | |
Amortization of capitalized software implementation costs | 3,700 | 2,300 | $ 2,400 |
Other current liabilities | 44,348 | 58,210 | |
Interest payable | 13,600 | 11,200 | |
Related Party | |||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||
Other current liabilities | $ 10,500 | $ 14,700 | |
Minimum | |||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||
Estimated Useful Life (in years) | 3 years | ||
Minimum | Developed technology | |||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||
Estimated Useful Life (in years) | 3 years | ||
Maximum | |||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||
Estimated Useful Life (in years) | 25 years | ||
Maximum | Developed technology | |||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||
Estimated Useful Life (in years) | 5 years |
Other Balance Sheet Details - A
Other Balance Sheet Details - Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accrued university and instructional staff compensation | $ 28,339 | $ 30,807 |
Accrued marketing expenses | 19,652 | 15,988 |
Accrued compensation and related benefits | 9,870 | 16,213 |
Accounts payable and other accrued expenses | 45,517 | 47,012 |
Total accounts payable and accrued expenses | $ 103,378 | $ 110,020 |
Commitments and Contingencies -
Commitments and Contingencies - Narratives (Details) - USD ($) | Oct. 10, 2023 | Dec. 31, 2023 |
Commitments and Contingencies Disclosure [Abstract] | ||
Plaintiff violation damages | $ 2,500 | |
Purchase obligation | $ 30,000,000 |
Commitments and Contingencies_2
Commitments and Contingencies - Future Minimum Payments Due to University Clients (Details) $ in Thousands | Dec. 31, 2023 USD ($) |
Future Minimum Payments | |
2024 | $ 3,569 |
2025 | 3,500 |
2026 | 3,500 |
2027 | 3,500 |
2028 | 3,500 |
Thereafter | 0 |
Total future minimum payments to university clients | $ 17,569 |
Restructuring Charges - Additio
Restructuring Charges - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | 21 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2023 | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 36,256 | $ 33,239 | $ 8,544 | |
2022 Strategic Realignment Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 24,900 | $ 30,700 | $ 55,700 | |
2022 Strategic Realignment Plan | Minimum | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Additional restructuring charges | $ 70,000 | $ 70,000 | ||
Estimated remaining costs (in years) | 1 year | 1 year | ||
2022 Strategic Realignment Plan | Maximum | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Additional restructuring charges | $ 75,000 | $ 75,000 | ||
Estimated remaining costs (in years) | 9 years | 9 years |
Restructuring Charges - Schedul
Restructuring Charges - Schedule of Restructuring Charges by Reportable Segment (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Degree Program Segment | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring charges | $ 33,127 | $ 24,528 |
Alternative Credential Segment | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring charges | 3,129 | 8,711 |
Leadership and organizational structure changes | Degree Program Segment | Severance and severance-related costs | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring charges | 9,486 | 0 |
Leadership and organizational structure changes | Alternative Credential Segment | Severance and severance-related costs | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring charges | 293 | 0 |
2022 Strategic Realignment Plan | Accelerated amortization of ROU assets and accelerated depreciation | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring charges | 700 | 8,500 |
2022 Strategic Realignment Plan | Rent expense | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring charges | 10,900 | 3,700 |
2022 Strategic Realignment Plan | Degree Program Segment | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring charges | 22,133 | 22,228 |
2022 Strategic Realignment Plan | Degree Program Segment | Severance and severance-related costs | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring charges | 11,980 | 8,993 |
2022 Strategic Realignment Plan | Degree Program Segment | Lease and lease-related charges | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring charges | 9,098 | 11,215 |
2022 Strategic Realignment Plan | Degree Program Segment | Professional and other fees relating to restructuring activities | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring charges | 1,009 | 2,013 |
2022 Strategic Realignment Plan | Degree Program Segment | Other | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring charges | 46 | 7 |
2022 Strategic Realignment Plan | Alternative Credential Segment | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring charges | 2,789 | 8,500 |
2022 Strategic Realignment Plan | Alternative Credential Segment | Severance and severance-related costs | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring charges | 195 | 6,431 |
2022 Strategic Realignment Plan | Alternative Credential Segment | Lease and lease-related charges | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring charges | 2,594 | 1,061 |
2022 Strategic Realignment Plan | Alternative Credential Segment | Professional and other fees relating to restructuring activities | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring charges | 0 | 0 |
2022 Strategic Realignment Plan | Alternative Credential Segment | Other | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring charges | 0 | 1,008 |
Other restructuring charges | Degree Program Segment | Other restructuring charges | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring charges | 1,508 | 2,300 |
Other restructuring charges | Alternative Credential Segment | Other restructuring charges | ||
Restructuring Cost and Reserve [Line Items] | ||
Total restructuring charges | $ 47 | $ 211 |
Restructuring Charges - Sched_2
Restructuring Charges - Schedule of Adjustments to the Accrued Restructuring Liability (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Restructuring Reserve [Roll Forward] | ||
Beginning Balance | $ 6,692 | $ 1,735 |
Additional Costs | 35,933 | 20,618 |
Cash Payments | (28,119) | (15,661) |
Ending Balance | 14,506 | 6,692 |
Severance and severance-related costs | 2022 Strategic Realignment Plan | ||
Restructuring Reserve [Roll Forward] | ||
Beginning Balance | 5,225 | 0 |
Additional Costs | 11,312 | 14,762 |
Cash Payments | (12,444) | (9,537) |
Ending Balance | 4,093 | 5,225 |
Professional and other fees relating to restructuring activities | 2022 Strategic Realignment Plan | ||
Restructuring Reserve [Roll Forward] | ||
Beginning Balance | 923 | 0 |
Additional Costs | 1,465 | 1,777 |
Cash Payments | (2,025) | (854) |
Ending Balance | 363 | 923 |
Lease and lease-related charges | 2022 Strategic Realignment Plan | ||
Restructuring Reserve [Roll Forward] | ||
Beginning Balance | 83 | 0 |
Additional Costs | 12,865 | 3,351 |
Cash Payments | (12,920) | (3,268) |
Ending Balance | 28 | 83 |
Other severance and severance-related costs | ||
Restructuring Reserve [Roll Forward] | ||
Beginning Balance | 461 | 1,735 |
Additional Costs | 512 | 728 |
Cash Payments | (730) | (2,002) |
Ending Balance | 243 | 461 |
Leadership and organizational structure changes | Leadership and organizational structure changes | ||
Restructuring Reserve [Roll Forward] | ||
Beginning Balance | 0 | 0 |
Additional Costs | 9,779 | 0 |
Cash Payments | 0 | 0 |
Ending Balance | $ 9,779 | $ 0 |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2023 | Dec. 31, 2022 | |
Lessee, Lease, Description [Line Items] | |||
Renewal term (in years) | 5 years | ||
Option to terminate, term (in years) | 1 year | ||
Weighted average remaining lease term (in years) | 6 years 2 months 12 days | ||
Weighted average discount rate | 10.80% | ||
Operating lease payments | $ 24,400,000 | $ 24,500,000 | |
Lease liabilities arising from obtaining right-of-use assets | 0 | $ 15,500,000 | |
Future sublease income expected to be earned | $ 4,700,000 | ||
Sublease Of Office Space, Denver, Colorado | |||
Lessee, Lease, Description [Line Items] | |||
Remaining lease term | 10 months 24 days | ||
Loss on sublease | $ 4,800,000 | ||
Minimum | |||
Lessee, Lease, Description [Line Items] | |||
Contract term (in years) | 1 year | ||
Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Contract term (in years) | 10 years |
Leases - Lease Cost (Details)
Leases - Lease Cost (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Leases [Abstract] | ||
Operating lease expense | $ 17,423 | $ 20,943 |
Short-term lease expense | 183 | 470 |
Variable lease expense | 6,588 | 6,877 |
Sublease income | (2,021) | (1,310) |
Total lease expense | $ 22,173 | $ 26,980 |
Leases - Maturities of Operatin
Leases - Maturities of Operating Lease Liabilities (Details) $ in Thousands | Dec. 31, 2023 USD ($) |
Future minimum lease payments | |
2024 | $ 24,305 |
2025 | 20,530 |
2026 | 21,086 |
2027 | 21,666 |
2028 | 17,191 |
Thereafter | 32,917 |
Total lease payments | 137,695 |
Less: imputed interest | (39,240) |
Total lease liability | $ 98,455 |
Debt - Long-Term Debt (Details)
Debt - Long-Term Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
Less: unamortized debt discount and issuance costs | $ (43,670) | $ (17,666) |
Total debt | 904,729 | 936,144 |
Less: current portion of long-term debt | (8,215) | (7,580) |
Total long-term debt | 896,514 | 928,564 |
Term loan facilities | ||
Debt Instrument [Line Items] | ||
Net carrying amount | 376,200 | 566,622 |
Revolving facility | ||
Debt Instrument [Line Items] | ||
Net carrying amount | 40,000 | 0 |
Convertible senior notes | ||
Debt Instrument [Line Items] | ||
Net carrying amount | 527,000 | 380,000 |
Deferred government grant obligations | ||
Debt Instrument [Line Items] | ||
Net carrying amount | 3,500 | 3,500 |
Other borrowings | ||
Debt Instrument [Line Items] | ||
Net carrying amount | $ 1,699 | $ 3,688 |
Debt - Narrative (Details)
Debt - Narrative (Details) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||
Jan. 11, 2023 USD ($) day $ / shares | Jan. 09, 2023 USD ($) | Apr. 30, 2020 USD ($) day $ / shares | Apr. 30, 2020 USD ($) $ / shares | Sep. 30, 2021 USD ($) | Dec. 31, 2023 USD ($) day agreement | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Jan. 31, 2023 USD ($) | Jan. 08, 2023 USD ($) | Mar. 31, 2022 | |
Debt Instrument [Line Items] | |||||||||||
Cash interest payments | $ 61,200,000 | $ 43,800,000 | $ 25,500,000 | ||||||||
Total debt | 904,729,000 | 936,144,000 | |||||||||
Less: unamortized debt discount and issuance costs | 43,670,000 | 17,666,000 | |||||||||
Proceeds from debt | 329,223,000 | 696,000 | 569,477,000 | ||||||||
Debt issuance costs | 13,652,000 | 19,835,000 | $ 25,403,000 | ||||||||
Standby Letters of Credit | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Maximum borrowing capacity | $ 12,100,000 | ||||||||||
Prince Georges County Maryland | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Interest rate (as a percent) | 3% | ||||||||||
Prince Georges County Maryland | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Number of contracts (in contracts) | agreement | 2 | ||||||||||
Convertible Debt | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Net carrying amount | $ 527,000,000 | 380,000,000 | |||||||||
Revolving facility | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Net carrying amount | 40,000,000 | 0 | |||||||||
Deferred government grant obligations | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Net carrying amount | 3,500,000 | 3,500,000 | |||||||||
Deferred government grant obligations | Prince Georges County Maryland | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Net carrying amount | 3,500,000 | ||||||||||
Second Amended Credit Agreement | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument, restrictive covenants, minimum recurring revenues | $ 900,000,000 | ||||||||||
2025 Notes | Convertible Debt | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Principal | $ 380,000,000 | $ 380,000,000 | 380,000,000 | 380,000,000 | |||||||
Total debt | 377,193,000 | 375,102,000 | |||||||||
Interest rate (as a percent) | 2.25% | 2.25% | |||||||||
Proceeds from debt | $ 369,600,000 | ||||||||||
Interest expense, debt | 10,600,000 | 10,600,000 | |||||||||
Debt instrument, effective interest rate (as a percent) | 2.80% | ||||||||||
Debt instrument, convertible, threshold percentage of stock price trigger | 130% | ||||||||||
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% | ||||||||||
Debt instrument, convertible, conversion ratio | 0.0353773 | ||||||||||
Debt instrument, convertible, conversion price (in dollars per share) | $ / shares | $ 28.27 | $ 28.27 | |||||||||
2025 Notes | Convertible Debt | Minimum | Outstanding on January 30, 2025 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Principal | $ 40,000,000 | ||||||||||
2025 Notes | Line of Credit | Minimum | Outstanding on January 1, 2025 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Long-term debt, average amount outstanding | 50,000,000 | ||||||||||
2025 Notes | Fair Value, Inputs, Level 2 | Convertible Debt | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Long-term debt, fair value | 191,700,000 | 241,600,000 | |||||||||
2030 Notes | Convertible Debt | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Principal | $ 147,000,000 | 147,000,000 | $ 147,000,000 | ||||||||
Total debt | 127,864,000 | ||||||||||
Interest rate (as a percent) | 4.50% | 4.50% | |||||||||
Proceeds from debt | $ 127,100,000 | ||||||||||
Interest expense, debt | $ 9,100,000 | ||||||||||
Debt instrument, convertible, threshold percentage of stock price trigger | 130% | ||||||||||
Debt instrument, convertible, threshold trading days | day | 20 | ||||||||||
Debt instrument, convertible, threshold consecutive trading days | day | 30 | ||||||||||
Debt instrument, convertible, conversion ratio | 0.1111111 | ||||||||||
Debt instrument, convertible, conversion price (in dollars per share) | $ / shares | $ 9 | ||||||||||
Interest rate during period (as a percent) | 7.40% | ||||||||||
2030 Notes | Fair Value, Inputs, Level 2 | Convertible Debt | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Long-term debt, fair value | $ 55,000,000 | ||||||||||
Term loan facilities | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Less: unamortized debt discount and issuance costs | $ 21,700,000 | $ 12,800,000 | |||||||||
Debt instrument, effective interest rate percentage | 14.40% | 9.10% | |||||||||
Term loan facilities | Line of Credit | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Net carrying amount | 380,000,000 | $ 567,000,000 | |||||||||
Total debt | $ 372,400,000 | ||||||||||
Prepayment premium (as a percent) | 1% | ||||||||||
Principal repayments | 0.25% | ||||||||||
Interest expense, debt | $ 54,900,000 | $ 51,200,000 | |||||||||
Term loan facilities | Line of Credit | Base Rate | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Variable rate, applicable margin (as a percent) | 5.50% | ||||||||||
Interest rate (as a percent) | 4.75% | ||||||||||
Term loan facilities | Line of Credit | SOFR | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Variable rate, applicable margin (as a percent) | 6.50% | ||||||||||
Term loan facilities | Line of Credit | Eurodollar | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Interest rate (as a percent) | 5.75% | ||||||||||
Revolving Loan Facility | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument, effective interest rate percentage | 10.70% | ||||||||||
Revolving Loan Facility | Line of Credit | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Principal | $ 40,000,000 | ||||||||||
Revolving Loan Facility | Line of Credit | Base Rate | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Variable rate, applicable margin (as a percent) | 4.50% | ||||||||||
Revolving Loan Facility | Line of Credit | SOFR | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Variable rate, applicable margin (as a percent) | 5.50% | ||||||||||
Senior Secured Term Loan Facility | Line of Credit | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Senior secured term loan facility | $ 250,000,000 | ||||||||||
The Notes | Convertible Debt | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Capped call, cap price (in dollars per share) | $ / shares | $ 44.34 | ||||||||||
Cost of call transaction | $ 50,500,000 |
Debt - Net Carrying Amount (Det
Debt - Net Carrying Amount (Details) - USD ($) | Dec. 31, 2023 | Jan. 31, 2023 | Jan. 11, 2023 | Dec. 31, 2022 | Apr. 30, 2020 |
Debt Instrument [Line Items] | |||||
Total debt | $ 904,729,000 | $ 936,144,000 | |||
2025 Notes | Convertible Debt | |||||
Debt Instrument [Line Items] | |||||
Principal | 380,000,000 | 380,000,000 | $ 380,000,000 | ||
Unamortized issuance costs | (2,807,000) | (4,898,000) | |||
Total debt | 377,193,000 | $ 375,102,000 | |||
2030 Notes | Convertible Debt | |||||
Debt Instrument [Line Items] | |||||
Principal | 147,000,000 | $ 147,000,000 | $ 147,000,000 | ||
Unamortized issuance costs | (19,136,000) | ||||
Total debt | $ 127,864,000 |
Debt - Future Principal Payment
Debt - Future Principal Payments (Details) $ in Thousands | Dec. 31, 2023 USD ($) |
Term Loan Facility, Convertible Notes And Government Grants | |
Debt Instrument [Line Items] | |
2024 | $ 7,300 |
2025 | 383,800 |
2026 | 368,600 |
2027 | 0 |
2028 | 0 |
Thereafter | 147,000 |
Total future principal payments | 906,700 |
Conditional Loan Obligations | Lanham, Amount One | |
Debt Instrument [Line Items] | |
2024 | 1,500 |
Conditional Loan Obligations | Lanham, Amount Two | |
Debt Instrument [Line Items] | |
2024 | $ 2,000 |
Other Income (Expense) (Details
Other Income (Expense) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Other Income and Expenses [Abstract] | |||
Gain on sale of investment | $ 0 | $ 0 | $ 27,762 |
Foreign currency loss | (803) | (4,205) | (2,491) |
Other | 0 | 390 | |
Other | (2,947) | ||
Total | $ (803) | $ (3,815) | $ 22,324 |
Income Taxes - Other (Details)
Income Taxes - Other (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Loss before income taxes: | |||
United States | $ (301,687) | $ (302,541) | $ (172,856) |
Foreign | (14,266) | (20,513) | (23,106) |
Loss before income taxes | $ (315,953) | $ (323,054) | $ (195,962) |
Income Taxes - Components of In
Income Taxes - Components of Income Tax (Provision) Benefit (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Current income tax (provision) benefit: | |||
United States federal and state | $ (419) | $ (393) | $ (240) |
Foreign | (29) | (224) | (636) |
Total current income tax provision | (448) | (617) | (876) |
Deferred income tax (provision) benefit: | |||
United States federal and state | 0 | 389 | (389) |
Foreign | (1,206) | 1,131 | 2,461 |
Total deferred income tax (provision) benefit | (1,206) | 1,520 | 2,072 |
Total income tax (provision) benefit | $ (1,654) | $ 903 | $ 1,196 |
Income Taxes - Statutory Federa
Income Taxes - Statutory Federal Income Tax Rate and the Effective Tax Rate (Details) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |||
U.S. statutory federal income tax rate | 21% | 21% | 21% |
U.S. state income taxes, net of federal benefits | 4.40% | 4.30% | 4.40% |
Foreign tax rate differential | 0.20% | 0.10% | 0.10% |
Non-deductible compensation | (0.10%) | (0.50%) | (6.70%) |
Stock-based compensation | (1.60%) | (1.10%) | 6.70% |
Non-deductible impairment | (3.20%) | (0.10%) | 0% |
Change in valuation allowance | (18.90%) | (20.20%) | (26.50%) |
Other | (2.30%) | (3.20%) | 1.60% |
Effective tax rate | (0.50%) | 0.30% | 0.60% |
Income Taxes - Components of De
Income Taxes - Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Deferred tax assets: | ||
Accrued expenses and other | $ 10,804 | $ 12,217 |
Accrued compensation and related benefits | 3,331 | 3,253 |
Property and equipment | 1,545 | 676 |
Stock-based compensation | 12,269 | 19,644 |
Deferred income | 1,223 | 1,343 |
Lease liability | 21,178 | 24,865 |
Intangible assets | 21,193 | 0 |
Interest expense carryforwards | 46,800 | 27,405 |
Foreign net operating loss carryforwards | 10,750 | 8,480 |
U.S. net operating loss carryforwards | 220,449 | 218,319 |
Valuation allowance | (337,836) | (277,840) |
Total deferred tax assets | 11,706 | 38,362 |
Deferred tax liabilities: | ||
Right-of-use assets | (12,001) | (14,097) |
Intangible assets | 0 | (22,957) |
Deferred rent | (28) | (383) |
Total deferred tax liabilities | (12,029) | (37,437) |
Net deferred tax (liabilities) assets | $ (323) | |
Net deferred tax (liabilities) assets | $ 925 |
Income Taxes - Carryforwards (D
Income Taxes - Carryforwards (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Net Operating Loss And Tax Credit Carryovers [Line Items] | ||
Increase in valuation allowance | $ 60,000,000 | |
Uncertain tax positions recognized | 0 | $ 0 |
Income tax returns currently under examination | 0 | |
U.S. | ||
Net Operating Loss And Tax Credit Carryovers [Line Items] | ||
Operating loss carryforwards | 829,700,000 | |
Operating loss carryforwards, subject to expiration | 264,000,000 | |
operating loss carryforwards, not subject to expiration | 565,700,000 | |
Foreign | ||
Net Operating Loss And Tax Credit Carryovers [Line Items] | ||
Operating loss carryforwards | 42,400,000 | |
Operating loss carryforwards, subject to expiration | $ 400,000 |
Stockholders' Equity - Common S
Stockholders' Equity - Common Stock and Stock-based Compensation (Details) - shares | Dec. 31, 2023 | Dec. 31, 2022 |
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) | 82,260,619 | 78,334,666 |
Common stock, shares outstanding (in shares) | 82,260,619 | 78,334,666 |
Available shares of common stock reserved for future issuance (in shares) | 47,216,572 | |
Restricted stock units | ||
Stockholders' Equity | ||
Available shares of common stock reserved for future issuance (in shares) | 4,595,630 | |
Performance Restricted Stock Units | ||
Stockholders' Equity | ||
Available shares of common stock reserved for future issuance (in shares) | 1,404,125 | |
Stock options | ||
Stockholders' Equity | ||
Available shares of common stock reserved for future issuance (in shares) | 4,103,758 | |
Shares related to convertible senior notes | ||
Stockholders' Equity | ||
Available shares of common stock reserved for future issuance (in shares) | 37,113,059 |
Stockholders' Equity - Stock-Ba
Stockholders' Equity - Stock-Based Compensation (Details) | 12 Months Ended | ||||
Dec. 31, 2023 plan $ / shares shares | Jan. 01, 2024 shares | Jan. 01, 2023 shares | Dec. 31, 2022 $ / shares shares | Jan. 30, 2014 shares | |
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | |||||
Number of stock-based compensation plans | plan | 2 | ||||
Available shares of common stock reserved for future issuance (in shares) | 47,216,572 | ||||
Option to purchase common stock, outstanding (in shares) | 4,103,758 | 5,195,538 | |||
Weighted average exercise price (in dollars per share) | $ / shares | $ 27.79 | $ 25.28 | |||
RSUs | |||||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | |||||
Available shares of common stock reserved for future issuance (in shares) | 4,595,630 | ||||
Performance Restricted Stock Units | |||||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | |||||
Available shares of common stock reserved for future issuance (in shares) | 1,404,125 | ||||
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% | ||||
Increase in shares in available for future issuance (in shares) | 3,916,733 | ||||
Available shares of common stock reserved for future issuance (in shares) | 6,904,662 | ||||
Option to purchase common stock, outstanding (in shares) | 4,103,758 | ||||
Weighted average exercise price (in dollars per share) | $ / shares | $ 27.79 | ||||
Equity Incentive Plan 2014 | RSUs | |||||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | |||||
Outstanding balance (in shares) | 4,595,630 | ||||
Equity Incentive Plan 2014 | Performance Restricted Stock Units | |||||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | |||||
Outstanding balance (in shares) | 1,404,125 | ||||
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 | ||||
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) | 4,113,030 | ||||
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 |
Stockholders' Equity - Employee
Stockholders' Equity - Employee Stock Purchase Plan (Details) | 12 Months Ended | |||
Dec. 31, 2023 USD ($) offering shares | Dec. 31, 2022 USD ($) shares | Dec. 31, 2021 USD ($) shares | Jun. 30, 2023 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% | |||
Maximum payroll deduction amount per calendar year | $ | $ 25,000 | |||
Available shares of common stock reserved for future issuance (in shares) | 47,216,572 | |||
Issuance of common stock in connection with employee stock purchase plan | $ | $ 2,102,000 | $ 1,282,000 | $ 3,583,000 | |
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) | 462,329 | 136,039 | 150,685 | |
Issuance of common stock in connection with employee stock purchase plan | $ | $ 1,000 | $ 1,300,000 | ||
Employee Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Available shares of common stock reserved for future issuance (in shares) | 1,917,341 | |||
Equity Incentive Plan 2017 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Increase in shares in available for future issuance (in shares) | 2,000,000 | |||
Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Percentage of payroll deduction | 1% | |||
Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Percentage of payroll deduction | 15% |
Stockholders' Equity - Stock-_2
Stockholders' Equity - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | |||
Total stock-based compensation expense | $ 39,688 | $ 80,220 | $ 97,766 |
Curriculum and teaching | |||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | |||
Total stock-based compensation expense | 132 | 208 | 69 |
Servicing and support | |||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | |||
Total stock-based compensation expense | 10,084 | 15,543 | 15,352 |
Technology and content development | |||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | |||
Total stock-based compensation expense | 5,518 | 9,534 | 11,832 |
Marketing and sales | |||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | |||
Total stock-based compensation expense | 5,402 | 6,319 | 6,711 |
General and administrative | |||
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | |||
Total stock-based compensation expense | $ 18,552 | $ 48,616 | $ 63,802 |
Stockholders' Equity - Restrict
Stockholders' Equity - Restricted Stock Units (Details) | 12 Months Ended |
Dec. 31, 2023 $ / shares shares | |
RSUs | |
Number of Units | |
Outstanding balance at the beginning of the period (in shares) | 4,739,861 |
Granted (in shares) | 4,182,872 |
Vested (in shares) | (3,373,076) |
Forfeited (in shares) | (954,027) |
Outstanding balance at the end of the period (in shares) | 4,595,630 |
Weighted-Average Grant Date Fair Value per Share | |
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 14.24 |
Granted (in dollars per share) | $ / shares | 6.34 |
Vested (in dollars per share) | $ / shares | 14.08 |
Forfeited (in dollars per share) | $ / shares | 9.79 |
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 8.09 |
RSUs | Equity Incentive Plan 2014 | |
Number of Units | |
Granted (in shares) | 215,054 |
PRSU | |
Number of Units | |
Outstanding balance at the beginning of the period (in shares) | 1,651,864 |
Granted (in shares) | 1,182,620 |
Vested (in shares) | (179,886) |
Forfeited (in shares) | (1,250,473) |
Outstanding balance at the end of the period (in shares) | 1,404,125 |
Weighted-Average Grant Date Fair Value per Share | |
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 22.74 |
Granted (in dollars per share) | $ / shares | 9.57 |
Vested (in dollars per share) | $ / shares | 20.57 |
Forfeited (in dollars per share) | $ / shares | 23.18 |
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 11.15 |
Stockholders' Equity - Restri_2
Stockholders' Equity - Restricted Stock Units Narrative (Details) - RSUs - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total fair value of RSUs and PRSUs vested | $ 17.3 | $ 33.9 | $ 57.8 |
Total unrecognized compensation cost related to unvested RSUs | $ 24.8 | ||
Unrecognized compensation cost period expected to be realized | 1 year 8 months 12 days | ||
Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 3 years |
Stockholders' Equity - Performa
Stockholders' Equity - Performance Restricted Stock Units (Details) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||
Mar. 31, 2023 USD ($) $ / shares shares | Feb. 28, 2023 $ / shares | Jan. 31, 2022 $ / shares shares | Mar. 31, 2021 USD ($) installment $ / shares shares | Mar. 31, 2023 USD ($) $ / shares shares | Mar. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 shares | Mar. 31, 2021 USD ($) installment $ / shares shares | Dec. 31, 2023 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) shares | Dec. 31, 2021 USD ($) shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Aggregate intrinsic value of employee options exercised | $ | $ 0.1 | $ 3.3 | $ 6.8 | ||||||||
Monte Carlo Valuation Model | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Granted (in dollars per share) | $ / shares | $ 0.39 | ||||||||||
Performance Restricted Stock Units | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Awarded (in shares) | shares | 1,400,000 | ||||||||||
Aggregate grant date fair value of awards | $ | $ 12.2 | $ 12.2 | |||||||||
PRSU award vesting (as a percent) | 0% | 27.80% | 100% | 112.70% | |||||||
Granted (in dollars per share) | $ / shares | $ 9.57 | ||||||||||
Share-based compensation, adjustment upon company's total shareholder return | 20% | ||||||||||
Total shareholder return multiplier maximum percent | 0% | ||||||||||
Granted (in shares) | shares | 1,182,620 | ||||||||||
Total fair value of RSUs and PRSUs vested | $ | $ 0.2 | $ 1.9 | $ 71.9 | ||||||||
Total unrecognized compensation cost related to unvested RSUs | $ | $ 2 | ||||||||||
Unrecognized compensation cost period expected to be realized | 1 year 3 months 18 days | ||||||||||
Performance Restricted Stock Units | Maximum | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
PRSU award vesting (as a percent) | 150% | 200% | 200% | ||||||||
Eligible vesting rights, percentage | 130% | ||||||||||
Performance Restricted Stock Units | Minimum | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
PRSU award vesting (as a percent) | 0% | 0% | 0% | ||||||||
Eligible vesting rights, percentage | 0% | ||||||||||
Performance Restricted Stock Units | One and Three Year Performance Based Vesting, Stock Price Achievement | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Awarded (in shares) | shares | 1,700,000 | 400,000 | |||||||||
Aggregate grant date fair value of awards | $ | $ 20 | $ 20.4 | $ 20 | ||||||||
Granted (in shares) | shares | 100,000 | 100,000 | 600,000 | 100,000 | |||||||
Granted (in dollars per share) | $ / shares | $ 7.15 | $ 10.77 | $ 40.69 | $ 10.77 | |||||||
Vesting period | 1 year | 1 year | |||||||||
Share-based compensation number of installment | installment | 3 | 3 | |||||||||
Granted (in shares) | shares | 500,000 | ||||||||||
Performance Restricted Stock Units | One and Three Year Performance Based Vesting, Stock Price Achievement | Maximum | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Granted (in dollars per share) | $ / shares | $ 11.13 | ||||||||||
Performance Restricted Stock Units | Three Year Performance Based Vesting, Stock Price Achievement | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Aggregate grant date fair value of awards | $ | $ 9.1 | $ 8.9 | $ 9.1 | ||||||||
Granted (in shares) | shares | 700,000 | ||||||||||
Granted (in dollars per share) | $ / shares | $ 14.53 | $ 61.94 | |||||||||
Aggregate intrinsic value of employee options exercised | $ | $ 0.2 | ||||||||||
Vesting period | 3 years | 3 years | |||||||||
Performance Restricted Stock Units | Three Year Performance Based Vesting, Stock Price Achievement | Maximum | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
PRSU award vesting (as a percent) | 200% | 200% | |||||||||
Performance Restricted Stock Units | Three Year Performance Based Vesting, Stock Price Achievement | Minimum | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
PRSU award vesting (as a percent) | 0% | 0% | |||||||||
Performance Restricted Stock Units | First performance period | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
PRSU award vesting (as a percent) | 125% | ||||||||||
Performance Restricted Stock Units | First performance period | Maximum | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
PRSU award vesting (as a percent) | 100% | ||||||||||
Performance Restricted Stock Units | Second performance period | Maximum | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
PRSU award vesting (as a percent) | 27.80% | ||||||||||
Performance Restricted Stock Units, Performance Metrics Not Yet Defined | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Outstanding balance (in shares) | shares | 1,000,000 | 1,200,000 | 1,000,000 | 1,000,000 |
Stockholders' Equity - Fair Val
Stockholders' Equity - Fair Value Assumptions (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Fair value assumptions and methodology | |||
Weighted average grant date fair value (in dollars per share) | $ 4.93 | $ 6.98 | |
PRSU | |||
Fair value assumptions and methodology | |||
Risk-free interest rate | 4.68% | ||
Risk-free interest rate minimum | 0.39% | 0.10% | |
Risk-free interest rate maximum | 1.88% | 0.26% | |
Expected term (years) | 1 year | ||
Expected volatility | 108% | ||
Expected volatility minimum | 49% | 85% | |
Expected volatility maximum | 97% | 89% | |
Dividend yield | 0% | 0% | 0% |
PRSU | Minimum | |||
Fair value assumptions and methodology | |||
Expected term (years) | 1 year | 1 year | |
PRSU | Maximum | |||
Fair value assumptions and methodology | |||
Expected term (years) | 3 years | 3 years | |
Stock options | |||
Fair value assumptions and methodology | |||
Risk-free interest rate | 360% | ||
Risk-free interest rate minimum | 1.90% | ||
Risk-free interest rate maximum | 4.20% | ||
Expected term (years) | 5 years 8 months 8 days | ||
Expected volatility | 8,700% | ||
Expected volatility minimum | 75% | ||
Expected volatility maximum | 81% | ||
Dividend yield | 0% | 0% | |
Stock options | Minimum | |||
Fair value assumptions and methodology | |||
Expected term (years) | 5 years 7 months 17 days | ||
Stock options | Maximum | |||
Fair value assumptions and methodology | |||
Expected term (years) | 5 years 9 months 10 days |
Stockholders' Equity - Stock Op
Stockholders' Equity - Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Number of Options | |||
Outstanding balance at the beginning of the period (in shares) | 5,195,538 | ||
Granted (in shares) | 66,910 | 0 | |
Exercised (in shares) | (17,166) | ||
Forfeited (in shares) | (331,684) | ||
Expired (in shares) | (809,840) | ||
Outstanding balance at the end of the period (in shares) | 4,103,758 | 5,195,538 | |
Exercisable at the end of the period (in shares) | 3,229,631 | ||
Weighted-Average Exercise Price per Share | |||
Outstanding balance at the beginning of the period (in dollars per share) | $ 25.28 | ||
Granted (in dollars per share) | 6.76 | ||
Exercised (in dollars per share) | 6.38 | ||
Forfeited (in dollars per share) | 10.74 | ||
Expired (in dollars per share) | 17.44 | ||
Outstanding balance at the end of the period (in dollars per share) | 27.79 | $ 25.28 | |
Exercisable at the end of the period (in dollars per share) | $ 31.66 | ||
Weighted Average Remaining Contractual Term | |||
Outstanding balance (in years) | 4 years 7 months 17 days | 5 years 10 months 17 days | |
Granted (in years) | 6 years 18 days | ||
Exercised (in years) | 5 months 23 days | ||
Exercisable (in years) | 3 years 10 months 6 days | ||
Aggregate Intrinsic Value | |||
Outstanding balance at the end of the period | $ 0 | $ 78 | |
Exercisable at the end of the period | $ 0 |
Stockholders' Equity - Stock _2
Stockholders' Equity - Stock Options Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Aggregate intrinsic value of employee options exercised | $ 0.1 | $ 3.3 | $ 6.8 |
Stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expiration period | 10 years | ||
Compensation cost related to the nonvested awards not yet recognized | $ 4.6 | ||
Unrecognized compensation cost period expected to be realized | 1 year 1 month 6 days | ||
Stock options | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Stock options | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 4 years |
Net Loss per Share (Details)
Net Loss per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Potential dilutive securities that would have been anti-dilutive | |||
Potential dilutive securities that would have been anti-dilutive due to net loss (in shares) | 39,880,219 | 25,030,637 | 20,655,153 |
Numerator | |||
Net loss | $ (317,607) | $ (322,151) | $ (194,766) |
Denominator: | |||
Weighted-average shares of common stock outstanding, basic (in shares) | 80,891,146 | 77,327,850 | 74,580,115 |
Weighted-average shares of common stock outstanding, diluted (in shares) | 80,891,146 | 77,327,850 | 74,580,115 |
Net loss per share, basic (in dollars per share) | $ (3.93) | $ (4.17) | $ (2.61) |
Net loss per share, diluted (in dollars per share) | $ (3.93) | $ (4.17) | $ (2.61) |
Stock options | |||
Potential dilutive securities that would have been anti-dilutive | |||
Potential dilutive securities that would have been anti-dilutive due to net loss (in shares) | 4,103,758 | 5,195,538 | 3,477,439 |
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) | 4,595,630 | 4,739,861 | 2,613,063 |
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) | 1,404,125 | 1,651,864 | 1,121,277 |
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) | 29,776,706 | 13,443,374 | 13,443,374 |
Segment and Geographic Inform_3
Segment and Geographic Information - Narrative (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 USD ($) segment | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Segment Reporting Information [Line Items] | |||
Number of reportable segments | segment | 2 | ||
Revenue | $ 945,953 | $ 963,080 | $ 945,682 |
Accounts receivable, net | 115,944 | 62,826 | |
Long-lived assets | 1,459,683 | 1,810,859 | |
Degree Program Segment | |||
Segment Reporting Information [Line Items] | |||
Revenue | 561,044 | 571,608 | 592,288 |
Long-lived assets | $ 377,395 | $ 459,252 | |
Degree Program Segment | Credit concentration risk | University client 1 | Accounts receivable | |||
Segment Reporting Information [Line Items] | |||
Percentage of concentration of credit risk | 31% | 12% | |
Accounts receivable, net | $ 36,400 | $ 7,300 | |
Degree Program Segment | Credit concentration risk | University client 2 | Accounts receivable | |||
Segment Reporting Information [Line Items] | |||
Percentage of concentration of credit risk | 12% | ||
Accounts receivable, net | $ 14,300 | ||
Alternative Credential Segment | |||
Segment Reporting Information [Line Items] | |||
Revenue | 384,909 | 391,472 | 353,394 |
Long-lived assets | 1,082,288 | 1,351,607 | |
Alternative Credential Segment | Non-US | |||
Segment Reporting Information [Line Items] | |||
Revenue | 116,900 | 107,200 | $ 98,500 |
Long-lived assets | $ 3,500 | $ 4,500 |
Segment and Geographic Inform_4
Segment and Geographic Information - Segment Results of Operations (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Segment Reporting Information [Line Items] | |||
Total revenue | $ 945,953 | $ 963,080 | $ 945,682 |
Total segment profitability | $ 170,796 | $ 125,081 | $ 66,577 |
Total segment profitability margin | 18% | 13% | 7% |
Degree Program Segment | |||
Segment Reporting Information [Line Items] | |||
Total revenue | $ 561,044 | $ 571,608 | $ 592,288 |
Total segment profitability | $ 214,699 | $ 180,727 | $ 126,141 |
Total segment profitability margin | 38% | 32% | 21% |
Alternative Credential Segment | |||
Segment Reporting Information [Line Items] | |||
Total revenue | $ 384,909 | $ 391,472 | $ 353,394 |
Total segment profitability | $ (43,903) | $ (55,646) | $ (59,564) |
Total segment profitability margin | (11.00%) | (14.00%) | (17.00%) |
Segment and Geographic Inform_5
Segment and Geographic Information - Reconciliation of Net Loss to Total Segment Profitability (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Segment Reporting [Abstract] | |||
Net loss | $ (317,607) | $ (322,151) | $ (194,766) |
Adjustments: | |||
Stock-based compensation expense | 39,688 | 80,220 | 97,766 |
Other (income) expense, net | 803 | 3,815 | (22,324) |
Net interest expense | 72,612 | 61,069 | 49,747 |
Income tax expense (benefit) | 1,654 | (903) | (1,196) |
Depreciation and amortization expense | 115,322 | 128,153 | 108,448 |
Debt modification expense and loss on debt extinguishment | 16,735 | 0 | 1,101 |
Impairment charges | 196,871 | 138,291 | 0 |
Restructuring charges | 36,256 | 33,239 | 8,544 |
Other | 8,462 | 3,348 | 19,257 |
Total adjustments | 488,403 | 447,232 | 261,343 |
Total segment profitability | 170,796 | 125,081 | 66,577 |
Transaction costs | 3,600 | 3,600 | 16,900 |
Stockholder activism costs | $ 4,900 | $ (300) | $ 2,400 |
Segment and Geographic Inform_6
Segment and Geographic Information - Total Assets by Segment (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Segment Reporting Information [Line Items] | ||
Total assets | $ 1,459,683 | $ 1,810,859 |
Degree Program Segment | ||
Segment Reporting Information [Line Items] | ||
Total assets | 377,395 | 459,252 |
Alternative Credential Segment | ||
Segment Reporting Information [Line Items] | ||
Total assets | $ 1,082,288 | $ 1,351,607 |
Receivables and Contract Liab_3
Receivables and Contract Liabilities - Trade Accounts Receivable and Contract Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Segment Reporting Information [Line Items] | ||
Accounts receivable, before allowance for credit loss, current | $ 123,187 | $ 80,468 |
Less: Provision for credit losses | (7,243) | (17,642) |
Trade accounts receivable, net | 115,944 | 62,826 |
Degree Program Segment | ||
Segment Reporting Information [Line Items] | ||
Accounts receivable, before allowance for credit loss, current | 3,207 | 14,212 |
Degree Program Segment unbilled revenue | 72,525 | 14,896 |
Alternative Credential Segment | ||
Segment Reporting Information [Line Items] | ||
Accounts receivable, before allowance for credit loss, current | $ 47,455 | $ 51,360 |
Receivables and Contract Liab_4
Receivables and Contract Liabilities - Change in Provision for Credit Losses for Trade Receivables (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Provision for Credit Losses | |
Current period provision | $ 5,038 |
Amounts written off | (15,442) |
Foreign currency translation adjustments | 5 |
Other | 0 |
Balance as of December 31, 2023 | $ 7,243 |
Receivables and Contract Liab_5
Receivables and Contract Liabilities - Narrative (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Jan. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 | |
Segment Reporting Information [Line Items] | |||
Percentage of other receivables that are current | 76% | ||
Subsequent Event | |||
Segment Reporting Information [Line Items] | |||
Accounts receivable, sale | $ 86,200 | ||
Percent of financing receivable | 88% | ||
Degree Program Segment | |||
Segment Reporting Information [Line Items] | |||
Degree Program Segment unbilled revenue | $ 72,525 | $ 14,896 | |
Contract with customer, liability, revenue recognized | 1,200 | 1,500 | |
Capitalized contract cost | 1,000 | 500 | |
Alternative Credential Segment | |||
Segment Reporting Information [Line Items] | |||
Contract with customer, liability, revenue recognized | $ 73,400 | 77,900 | |
Minimum | |||
Segment Reporting Information [Line Items] | |||
Trade receivable, term | 12 months | ||
Term of other receivables (in months) | 12 months | ||
Maximum | |||
Segment Reporting Information [Line Items] | |||
Trade receivable, term | 24 months | ||
Term of other receivables (in months) | 42 months | ||
Portfolio Management Agreement | |||
Segment Reporting Information [Line Items] | |||
Degree Program Segment unbilled revenue | $ 68,200 | 6,400 | |
Non-current accounts receivable | $ 16,900 | $ 6,300 |
Receivables and Contract Liab_6
Receivables and Contract Liabilities - Other Receivables (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Receivables And Contract Liabilities Disclosure [Abstract] | ||
Other receivables, amortized cost | $ 49,358 | $ 52,180 |
Less: Provision for credit losses | (8,558) | (3,579) |
Other receivables, net, non-current | 40,800 | 48,601 |
Other receivables, net | 28,293 | 33,813 |
Other receivables, net, non-current | $ 12,507 | $ 14,788 |
Receivables and Contract Liab_7
Receivables and Contract Liabilities - Change in Provision for Credit Losses for Other Receivables (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Provision for Credit Losses | |
Balance as of December 31, 2022 | $ 3,579 |
Current period provision | 4,979 |
Other | 0 |
Balance as of December 31, 2023 | $ 8,558 |
Receivables and Contract Liab_8
Receivables and Contract Liabilities - Other Receivables Credit Quality Indicators (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Origination year | $ 33,580 | $ 35,902 |
Origination year, one year before current fiscal year | 6,760 | 9,157 |
Origination year, two years before current fiscal year | 5,702 | 2,964 |
Origination year, three years before current fiscal year | 1,780 | 3,320 |
Origination year, four years before current fiscal year | 1,536 | 837 |
Other receivables, amortized cost | 49,358 | 52,180 |
High | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Origination year | 12,744 | 15,737 |
Origination year, one year before current fiscal year | 1,229 | 2,285 |
Origination year, two years before current fiscal year | 404 | 48 |
Origination year, three years before current fiscal year | 311 | 18 |
Origination year, four years before current fiscal year | 205 | 115 |
Other receivables, amortized cost | 14,893 | 18,203 |
Mid | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Origination year | 13,178 | 14,005 |
Origination year, one year before current fiscal year | 3,067 | 3,773 |
Origination year, two years before current fiscal year | 2,614 | 1,239 |
Origination year, three years before current fiscal year | 735 | 1,363 |
Origination year, four years before current fiscal year | 674 | 392 |
Other receivables, amortized cost | 20,268 | 20,772 |
Low | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Origination year | 7,658 | 6,160 |
Origination year, one year before current fiscal year | 2,464 | 3,099 |
Origination year, two years before current fiscal year | 2,684 | 1,677 |
Origination year, three years before current fiscal year | 734 | 1,939 |
Origination year, four years before current fiscal year | 657 | 330 |
Other receivables, amortized cost | $ 14,197 | $ 13,205 |
Receivables and Contract Liab_9
Receivables and Contract Liabilities - Contract Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Segment Reporting Information [Line Items] | ||
Total contract liabilities | $ 81,949 | $ 90,161 |
Degree Program Segment | ||
Segment Reporting Information [Line Items] | ||
Total contract liabilities | 1,735 | 1,245 |
Alternative Credential Segment | ||
Segment Reporting Information [Line Items] | ||
Total contract liabilities | $ 80,214 | $ 88,916 |
Retirement Plan (Details)
Retirement Plan (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Defined Contribution Plan Disclosure [Line Items] | |||
Eligible employees to contribute | 100% | ||
Contributions made by Company | $ 8.9 | $ 9.7 | $ 7.8 |
Defined Contribution Plan, Tranche One | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Employee contribution | 100% | ||
Maximum matching contributions as a percentage of eligible compensation | 2% | ||
Defined Contribution Plan, Tranche Two | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Employee contribution | 50% | ||
Maximum matching contributions as a percentage of eligible compensation | 4% |
Schedule II - Valuation and Q_2
Schedule II - Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Provision for credit losses for trade accounts receivable: | |||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Period | $ 17,642 | $ 11,686 | $ 5,936 |
Additions Charged to Expense/Against Revenue | 5,038 | 6,393 | 6,794 |
Deductions | (15,437) | (437) | (1,044) |
Balance at End of Period | 7,243 | 17,642 | 11,686 |
Income tax valuation allowance: | |||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Period | 277,840 | 190,779 | 137,767 |
Additions Charged to Expense/Against Revenue | 59,996 | 87,061 | 53,012 |
Deductions | 0 | 0 | 0 |
Balance at End of Period | $ 337,836 | $ 277,840 | $ 190,779 |