TWOU - Earnings call transcript Q4 2021

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Operator

Good day and thank you for standing by. Welcome to the Fourth Quarter and Full Year 2021 Earnings Report Conference Call. At this time all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to Parth Patel, Head of Investor Relations. you. Thank ahead. go Please

Parth Patel

joined Good fourth and call. quarter of Lalljie XU. Patel, Operator. and our full and CEO; I’m to year Head Paul I’m at Relations and XXXX CFO. Investor Chip afternoon, you, Paucek, welcome Co-Founder everyone, our XU’s Parth by Thank earnings conference

remarks, Paul’s Following take Chip prepared and questions. will we

call materially and XX-K uncertainties report those assumptions quarterly and set our that report Commission, the ended cause no to and plans call annual webcast the most this Investor from Form financial for will filed Statements Securities replay made statements risks, on statements. as to December well described demand presentation, Such Relations and have and matters. and are risk release may refer duty of our slide the webcast on results recent for information for and COVID-XX subject available Please Exchange factors forth website the with Our plans statements uncertainties for and made reflect to include made today of on A this and a be statements we regarding year investor.Xu.com student continued forward-looking the of them. and simultaneous the press of days. management in update the call. press XX, has or differ this impact integration of assumptions. university including call to on XXXX, our we in Form operating release such results, earnings earnings XX the Any future other forward-looking our documents this objectives as next actual may as and XX-Q analysis the our operations, risks, pandemic, edX, of on

measures not a in call, should or we substitute to financial and in isolation These XU’s useful believe we are results. today’s measures, as as addition In measures be non-GAAP discuss considered which from of GAAP will supplemental performance. during addition, non-GAAP for

including reconciliations find and You can of additional in results GAAP the on disclosures Chip. earnings me our release Relations website. let comparable our with to over Investor call page the non-GAAP measures, these With that, hand regarding press

Chip Paucek

Parth. you, Thank

in competitive XX% is the XXXX alternative numbers demand and growth business to positioning marketing while with strong continuing environment. believe offering. our As sustainable delivered revenue outcomes deliver strength. company our performance education results experiences student We you’ve in undergraduate that XU’s in today, that excess And in the reflect and of numbers and XXXX we become platform globally. by digital seen to our our leading resilient. world-class learning a particularly unmatched both degree our XXXX were for led strong and business, and credential All

growth EBITDA X% an year our of also adjusted ending on with improvement We past profitability edX, the last of the delivered profitable we’ve learning of of the a year. from we And leading acquisition platforms. margin to world’s one completed this attained X%, redefining margin complete November, online online industry of company With one become improvement. and powerful and a combination, expanded world’s platforms education our this most driver

On I’ll details edX today, business. some how is enhancing currently provide the additional call about our first

these out XXXX. lastly, priorities key midterm our And I’ll into how map I’ll strategic our Second, targets. for share translate performance priorities

world’s XU of and committed to learners. offer free-to-degree XX and powered programs marketplace. joined also find edX learners have since of million registered most top hundreds education on to open Demonstrating now edX over content free digital edX universities online Together With X powerful And leading disruptively universities These XXX Doctorate comprehensive business XX their societal on and degrees, support more delivering market education, from edX and the and we off are over can the continue learners, of in brand, degree online already force. including partners growing XX offerings increase edx.org, including and fields partners, to than support XU They course millions nursing of globally, X,XXX technology deliver lead our discoverable. focused now Master’s edX. education serve and learners get education combination, from smarter than as positioned with start Let’s boot programs undergraduate to more consumer an the and camps, XX priced to XU to XU law. easily the is million executive impact.

the past learner them You edX leverage changing strengths accessible can the learners life And edX new months, yourself. deliver see portfolio of affordability innovative, programs, maintaining XU digital demands disciplines first In plan that education, on XXXX, unmatched these In in of transform affordable we’ve Micro the for they millions to the market few also certificate now go with as XU leading at launched in universities while helping and combined profitability continue for Harvard’s and platform and edX’s our outcomes to Through the into center Bachelor like demand. worldwide. from higher driving education we for and broader products to drive societal new we age. commitment themselves and with company transform of higher we impact, meet expand learners, into a chemistry. the outcomes

strengthen scale In decision on improved hybrid degree meaningful drivers programs and deliver delivering improve delivered bottomline remain wind international which key two made to XXXX. ground Number performance Simmons we plus In profitability. launching We while efficiency. can the quality segment. our deliver And growth. expansion. operational down substantially our believe one, segment, and we percent in enterprise on Together, we margin, undergraduate program. degree Number number these expect our will the just our QX, XX to the that focused will profitability three three,

double-digit negatively of recognize our we was would profitability strategy. this with it growth product Although segment our delivered and in not program degree have that would impact XXXX, part long-term

of Hybrid assistant our which degree, contracted few of on launch based which from time-to-time also is degree seen programs over we’ve a the programs accreditation various cadence. includes year’s years. dates this our We Physician pushed Arcadia’s delays, in impacting the This out

expected scale pretty are the we’re partner. we the programs our new under XXXX not diverse on weeks, that disruptively institutions, margins stopped alone, the of program degree significant $XXX priced. However, we end degree both stopping. drivers programs business Both first project edX That’s of with to in of profitability. online notable in of world-class contract, steady at remarkable, and that if a state would as well It’s coming revenue, announce million XX%. XXXX, degree launching to our Master’s roadmap as undergraduate excess are to MOOC the we a already In expect long-term be from longtime

launch XXXX. go expect back We our to cadence up in

programs institutional year. example, prouder We relationship one for As be planning there and expanding. is UNC our couldn’t deliver of multiple we’re one with Hill to our Chapel not only UNC next the deal

launching with of meet growing to international and in data high expanding the edX’s United the partnerships marketplace registered outside degree About demand flexible of learners the shows universities overseas. We’re quality demand. markets top particularly in online high are education resides community States, of also for XX% programs us

consistently launching a This four in graduate one university be in as with that boot of the see of their You can we’ve of in partner, Sydney, already action. top Australia, expanded camp the powering University XX degrees in XXXX. ranked relationship afternoon, online announced best world. our we the strategy universities We’ll

enterprise more enterprise XXXX, edX growing to the is We coding, the believe re-skilling data of told disciplines, revenue to these executive as X,XXX management, expansive in boot on across in product its XXXX. analytics, even you by course currently Next, portfolio our we better in Together including high camps have leadership currently year-over-year organizations up-skilling cyber under and security fastest like momentum doubled broader our edX’s and for to key double and education can planning Enterprise size from again clients. than before, topics, build cross-selling serve part we demand XXXX of business. and programs, And library. we’re brand. XU business that edX

a our we business enables to them build plan. their the there’s the Horizons, talent and employee online pipeline plan some sustainable imperative in largest partners Bright from to great distribution up-skilling the employees and credential growing Gilden worldwide re-skilling at of believe relationships like With build on to also world. execute We businesses more recognition that programs bring that resignation underway, with is businesses degree alternative to to

We’re ready to meet those needs.

will Lastly company for the platform be our XXXX, to strategy. becoming central a to shift

marketing We’re edX geo impact team experience mobile edX and both includes currently growth a marketplace new and confidence. features learners like checkout. more recommendations, so ease search personalized e-commerce best-in-class XU and they explore partners work the will deliver teams, This and better intuitive This integrating and the with and goal edX community targeting, supporting the to with the user can grow the significantly students, our of year, edX. accelerating of and and

MBA. new expand quality We cross-selling a is believe to nation’s blockchain central ranked the IBM’s also certificate plan online of the the unmatched. and We portfolio relevance edX XU to breadth, from opportunities top

You’ll pathways affordable to ways, create for smarter their learners offerings complementary see more in to us including and and bundling our clearer presenting stacking achieve programs goals.

XU strategy this We those like action, to of higher believe students data can and stackable data future Master’s powered is of earn six to example apply up education education. camp, the credits SMU in one Just credits boot this science. analytics the now in SMU modular in

that want plans our to for and I XU turn about Paul, we before expect for midterm always future. Finally, XU term vision to mean a the bold for to I had what it targets. performance has over share longer more

And at They only and the in makes options and careers it affordability center. the learners toward right learning, convenience pandemic business. term. They’re edX, the right force personal will the relevance community also more our power longer for the great of and permanently higher a platform where needs time have consumers. is of best and are ambition accelerated over better has lives learn. edX beyond the shifted on delivering Looking to the us the flexibility online The XXXX, priority placing increasingly students. choosing to number the education edX platform becoming greater over want but The dominant learning as they when, the find company the we institution, premier in those adoption education they’ll at the the a what, dynamics has outcomes choice become one in from edX edX, business important Ed. world’s online the option. not transform education for their of world, seeking company into at how higher with serving Consumers and And premium most be

of of sense I half end targeting some of and XX%. a of flow back XX.X% of we’re a our to of expectations. XXXX, XXXX, such the least be midterm free targets CAGR XXXX. EBITDA As current But to provide crossover targeting consolidated want adjusted our also to end at By share we’re margin by XX% and in with cash between positive the the

annual our is doing our Additionally, and million goal to of more learners so, by grow reach to to XXX expand worldwide. in the enterprise XXXX, end bookings

expand second do. we released transparency we the industry of we we and by expand reach, industry our report, prioritizing In life commitment outcomes. changing December, one As our lead student our will student transparency quality, in to to success believe in expression continuing we impact leading continued XU annual everything

by to in we a percentage from XX% highlighting by close in online XX% degree points across shared our retention me term-two report. Let term-one that XXXX programs stats Average few increased partners, in to XXXX. just four

and all for society And states. education. Paul take future around powerful, do across effect and and Q&A. for communities educate of our why to in-person of of completed do. will that aspiring for XX%. a counselors current and through [Indiscernible] of number decreased from programs, an thousands hours partners’ already placements, return over people themselves the XX low across Our world increased see and million and field having and for of we care diverse a is is I’ll camps of XX% people virtual on you revenue what students who The estimated we X.X creating profound and XU nurses, more now teachers boot helping and pipelines talent Super from color positive degree And better percentage through results,

Paul Lalljie

Chip Thanks, afternoon, everyone. good and

release, from a to our prioritizing quarter-over-quarter, had press notable year, the diligently we end As edX. the integration improvements all you’ve while seen nice of

and conclude a and of Revenue ago. quarter start and like a for update strength sheet financial us gives seeing on XX% year flow on a thoughts XXXX. balance our the and from the our in for of Taking with provide I’d both also which our Then statement totaled I’ll cash business closer an year. for Today, are confidence at quarter $XXX.X indicators, look with our resilience model. discussion the to some We results the up million, outlook results. leading

to over year-over-year trajectory million increased million, FCEs or a year, the Full $XXX.X XX% XX,XXX sequential remained increase quarter. totaled basis, relatively a equivalent full on the $XXX.X quarter enrollments basis changing third FCEs XXXX. for course flat and a the from of For the grew on revenue XXXX. X%

includes from $X.X of by quarter our the segment ground edX growth alternative program. the Revenue increase in basis, higher XX% to million, driven XX% credential by our particularly of year increased to in both revenue a a in X% X% the in The full transitioning the contribution fourth FCEs. fourth decrease increase X% and of segment increased On revenue notable growth by environment revenue, quarter the from full XX% in revenue of totaled student fourth growth from of is totaled elevated average a Simmons million million on offset in year for an segment and executive FCE. a degree lead. last growth in FCE Moving from basis, increase education FCE. $XXX.X average On of $XX.X XX% on segments, boot The credential acceleration revenue. This increase by revenue camp credential year. segments enrollment million, sequential cost revenue degree $XX X% $XXX.X of per and alternative driven million, strong a the in a showed XX% to alternative for revenue $XXX.X was million quarter This driven increase a in XXXX.

look an sales points On a cost million growth expense XX%. grew Operating million with elevated revenue Personnel $XXX.X totaled to percent year. discipline XX%, million. up expense. totaled item increased quarter increase our and reflects $X.X expense last a lead. expense edX. XX% And per a expense, operating addition $XXX.X XX% This in full the year-over-year marketing $XX.X revenue total as environment million $X.X from percentage for and and at to $XX.X the two year take expense the This basis, from year-over-year cost quarter contributing let’s of in notable the and operating of edX basis, expense on XX%. down Now a compared to included of up is related personnel million, of largest for billion,

the per XX $XXX.X flat year-over-year, with employee year-over-year, million productivity. personnel year, at headcount million personnel $XX.X X,XXX Revenue related growth. the the For end and of increased revenue of expense percent increased relatively improvement demonstrating to XX% supporting in plus year and while continued operating efficiencies

$XX.X $XX.X operating the to on the quarter profitability. expense million, quarter year the edX from from loan Moving totaled an addition last the facility, expense increase of notes higher $XX.X term interest of our million Net convertible and reflecting loss acquisition. fourth for from of million

million quarter quarter better million XXXX, from margin year of adjusted impact year. inherent loss $XX.X showing improvement increased of the and net year, XX% last in increase the loss for $XXX.X for of EBITDA largely in EBITDA fourth profitability EBITDA For by model. a million, million, the Adjusted segment expense $XX.X marketing over an business of million, from $XX.X full driven alternative Adjusted the the an sales of the over XX of prior year the driven full segment and year degree point expenses. was segment EBITDA by totaled million XXXX, million Adjusted $X.X increase $XX.X in totaled efficiency. of and improvement margin operating edX an the $XX the credential driving XX%, was degree

cash preliminary facility. of purchase transaction This and was integration $XXX.X This under with a $XXX.X the incremental closing $XXX by discussion and payment November, in of of related the was decrease the quarter the cash $XX.X result flow million a acquisition million million, price proceeds in the ended edX in partially million loan from end cash decrease our We fees. $XX.X September a term of and of net borrowings offset and in from equivalents cash sheet for statement. Now quarter. of our million decrease with balance

up Our from the of university million year. matches academic from our our balance the quarter, balance end payments $XX.X accounts calendar. $XX.X receivable and often Fluctuation the timing the receivable last million $XX.X partners, previous of down accounts totaled reflects million, which from in

off a To This and we better previously of receivable from rolling basis A fourth included increase representative As the quarter. usage in increased in a $X.X our favorability drove optimized the net compared where last typically free capital. collections receivables XX-month quarter of quarter. use net third the Unlevered fourth was million. capital to year-over-year had million quarter addition we the reflects improvement result, further, business, $XX.X highlighted XXXX, trailing we the the substantial as from of revenue million of on $X.X of in net of as increased is of vendor our experienced a working end fourth year, the accounts decline growth collection flow management of of expand acquisition at of edX XXXX working and relationships. cash

put place of has continue the we benefit an impact. XXXX, While to in of the fourth incremental maintain improvements quarter the less in

Now for of a financial on discussion guidance goals. long-term our

profitability program XXXX, in priorities credential of integration Our segment. edX, around investments for the and our the center degree in segment alternative improved continued

called from Adjusted at range XX% representing million representing billion $X.XX from of of to EBITDA expect words, of adjusted $X.XX to revenue organic Our range increase Keep to dilution million million by than in we includes the an EBITDA to from increase more basis, mind XX%. addition EBITDA other edX. in adjusted to on that midpoint. $XX for billion midpoint. growth to $XX this In million XX% growth for is guidance at the $XX XXXX $XX expected the

outstanding and billion. approximately capital In approximately be expenditures XX $XX addition, to weighted be expect shares million to average we

for manage it proactively marketing to guidance unpredictable prudence marketing and flexibility environment, Our our provides digital us an reflects in spend.

expect be expenditures we addition, million. approximately In capital $XX to

through me year. on Let the some revenue distribution as our of provide color progress on we expectation our the

throughout year. expect quarter-over-quarter revenue increase First, the to we

we expect in revenue half the growth of mid the first having the single-digits. second the Additionally, growth with year accelerate quarter to sequential the in

are enough and in steady This at state Over the reflected overall And segment. years, above ultimately upfront have strong is cohort launched produced programs we an our that with the grown mature degree produce investment margins that in of business that maturity. the believe we’ve a program margin that our demonstrate expectations. scalable margins we XXXX, degree concept a

In to margins XX%. close fact, those are

harmonized Trilogy online and platform and dilution credential edX as capabilities acquisitions together we marketplace, alternative flows. with of two months, and pioneers And This components look be education. acquisition edX in we cash the learners segment, brand. generate strengths midterm, GetSmarter. we growth, marketplace unique addition of access global offerings, expect deliver that and depending It the consumer in in on the the expect For segment we segment, alternative margins profitability over that we set will and to two the positive base If out potential critical and XX have XX months also the edX. combines of credential current complementary a the of transformational to to the a comprehensive brings of the large

into to efficiency it Importantly, us by in end of XXXX marketing deliverer costs XX% we XXXX. positions the believe to XX%

is of EBITDA. range goal XX% between in growth EBITDA times margins XX.X% Looking midterm, at XXXX deliver out over more at compounded by our least XX% than XXXX XXXX, resulting and revenue consolidated to annual adjusted the basis XXXX, level a the to four

expense learners, revenue. goal to and and generate unlevered our registered flow for year sales growth cash XXXX, by In full contribution driven is launches, enterprise free and the from program marketing greater positive lower higher addition,

four while for to Over launches, point cash program program. cumulative expect degree decreasing years, the the next we increase flow

rebound learners a decrease Marketing We comparison. of also by year-over-year and XXXX platform. environment alternative less included results ended that strength sales We revenue and and our particularly credential resiliency to marketing important and believe quarter improvements of made spending to sequential growth, conclude, face we We expected participating another expense our infrastructure. key is XXXX. indicators, good discipline in To as point revenue and segment registered percentage than improvements maintained showed to in the the marketing difficult XX% notable with in the which XXXX. our in in year our to volatile expect double

and and out XU forward motivated call XXXX, We beyond for team our creating XXXX. laid against goals we execute answers. we’ll to margins open revenue, look Looking shareholder have a is roadmap including out entire a And goals. flow. and the to cash for these value, focused, Operator. The questions strong with sustainable that, excited for

Operator

line Blair. Your Instructions] question Sheldon the Stephen first from [Operator William with comes of

Stephen Sheldon

Thanks. pressures you launch and wind of you for items wind XXXX then, some I drove impact the guess programs? the were just you I down key of about here revenue the profitability? program there in Simmons of Simmons pushing Can talked And guidance. on decision, first with the the frame undergraduate on guess, just a terms out facing what down, that one-off what

Paul Lalljie

we’ll guidance start me on XXXX program expecting was XXXX the the off, but we I this double $XX growth. year-over-year million, bottomline were double-digits, let Stephen, impact But million, almost into the million. on on $X.X degree a team is $XX The is, about well perspective, think one segment here. it

as However, with in being is can that number pushed single-digit the you out imagine. that now

a we margins we some our in the the the the and strain business had pressure basis in of can But as margins that as that some operations In part put would to near term. with that revenue as transfer margin terms go term. high you near include of functions in was time on on imagine have on of out

XXXX. XXXX other meaning to So overall, and and in I been benefit margin margins know if have any XXXX in don’t the would a add? on in Chip, contrast, have XXXX, pressure color it you to a

Chip Paucek

going there driving. a what of making focus in for we’re of to segment business that the we’re the we based what in I thought call Yes. important I future mean, long-term on was on think, Sheldon, terms

very the not profitability do strongly COVID drag but help the and that strategic able We’re Simmons term. doing from for program us was Simmons about standpoint that, excited a get we think we we’re long-term, to the through thankful on longer of would be and about period, with of the were what feel very online future undergrad

fit building So, programs and our on than undergraduate profitability more will long-term profile focusing high that anything. quality graduate online,

So to we cadence Simmons some had of the degree rest the With that forward other very out comfortable decision move look to programs, the business. definitely of specific XXXX. of definitely mentioned several great we now one like rest is Ed a just delay. unprecedented standpoint. that accreditation I had higher of world building making others leadership feel and the the from resignation regard change, we seeing right the

So bunch you’re of some changing inside on had impact talking leaders a an programs. Ed about that of higher

pretty be in we calendar couple say of We’re programs excited and programs that the for months year the will more next about have about the have in XXXX. we’ll there here that to

So saying will that XXXX. in feel the cadence increase confident

Stephen Sheldon

Got realize of follow with by efficiencies with XXXX? marketing edX do expected? you I to guess, the marketing think I worse detail how you your less is more in start included for expectations? it, a have just synergies integration some potentially on than think, you process quickly how up how, any as your to gone going guidance and EBITDA relative And you better then on detail the the XXXX. could What’s some gave and or

Paul Lalljie

overall, excited. of we’re first Stephen, all, So I think

in closed the the November just because in stages, are timeframe. We early transaction

that benefits realize the of XXXX. significant In of we’re not is as expected some guidance for are the amount to timeframe fourth we including. terms a into quarter of we And get our XXXX, it

there XXXX now back certain place back synergies Chip, edx.org, pieces we But, a realizing get visible. offerings the and the to the things are in not start on you to don’t go I year. of number expecting half it’s of are technical website that the guidance, see the year. the Right we’re listing beginning material of you put that our but if as can all we So the to to in to know. are half

Chip Paucek

question therefore learn right transition. there’s we the nicely guess company, I whole convert we how like this Look, and we’re And the platform excited into a new notion become track. XU a and bring on year that products. now in them as feel clearly learners for is it’s about transitional of to no we’ve add, flywheel would and I

see We’re feedback and increase. Continue that we million, up pretty momentum nice really the expect we’re pretty from good around already to of there. how go edX came for seeing And pleased together, from XX And XX enterprise to million it that the learners to is edX today. from business time good the get number clients. continue. to working There’s we

had of we’ve but we’re couple a only right So months, now loving it.

Stephen Sheldon

Thank questions. for it. Got you the taking

Chip Paucek

Sheldon, comment, it program was Simmons, told about to I everyone we’re sure make make on down about about the want talking when one we’re to wind other clear, not is talking that campus future. I clear, programs

Operator

Your next Needham. comes MacDonald line with of from Ryan question the

Ryan MacDonald

Thanks for everyone. Hi taking my questions.

you perhaps to bit fiscal here? how about on the can a sense we contribute can Cred think XXXX you a do As think works more color us give XXXX, and guidance what of some edX for of that growth revenue across Alt degrees,

Paul Lalljie

of a couple Hi Ryan things.

I QX on continue we on my we single-digit quarter-over-quarter sequential expect and to of to the First in top overall we basis, of quarterly the expect go that then, that alluded to a as kind growth to be see year. all, increase mid And throughout we spread, line. expect

days point XX So in Keep recognition. edX number two, that’s $X.X in number delivered XXXX, one. was million. for mind net Point about that revenue

is I have been revenue from do subtracted the line revenue what situation. that otherwise the our mean Partner that. So fees line in by included would in

and between you XX% reduction in it’s So revenue, will. anywhere if XX%

recognition net a revenue We is one us. basis. revenue of type exception. diligence, in others this, they look for the our And that analysis recognize if a So recognition the type of revenue we did you our on did similar this similar space with in and streams, gross on expect December, at with we concluded

nonprofit. there a for As recorded are discontinue things example, certain stop something move that we was as as when intend something to revenue XXXX, edX membership will forward. fees, It’s look we that’s been we that forward into doing,

of roll-off think membership quickly you XX between giving short on to XX So a fees. and number, the that depending from be the I revenue business can how somewhere we expect

We excited about this. are definitely

is at as give is you internal in way plan the of do Number big shot out you And that point prior go aggressive with on midpoint lead number spend guidance that, depending is to seen XX% imagine, market. year-over-year go want if ourselves we business basis because the growth the certain through we’ve full XXXX and the adopt expected credential think to a years. year and Alt assumptions our the I two, can thing have around degree ability the as that’s year. of a meaning think than going variable our one. alternative try rest per that’s business, We we of our cost business, provided the a going guidance, about the we other think the as that So Cred bit what’s what on a we we’re year, optionality always I with and through to to have you’ve on the XXXX we more as

be there, then to single-digit business as XX. that had degree look credential XXXX So our have out we growth should business without in and would alternative mid rates mid the Simmons double-digit

Ryan MacDonald

Paul. up. really color. Chip you for I that That’s helpful as one really appreciate follow a

demand able maybe bit they’re talk to of on seeing programs. stream programs? out about a greater a about, in for offer larger, and Are of some or demand launch talked because declines to new for ground? seeing actually you creating to if degree these enrollment that of translates the is universities be Thanks. both this overall Can what maybe reeling online push online revenue caught cadence of how of you’re the the the you some So environment

Paul Lalljie

demand and the for There management plenty business companies. services Yes. is plenty There program of demand online is us model. of from other for the

in reports in the same that compare for range. see the you growth growth at, overtime time above that look our can growth of to that you we’re space. [Indiscernible] them, in And You period Ryan if

continue decreasing big Sydney a new the four with that’s programs for of outside the students core growing you of looking in market United students for commitment for of services. for really reason the you’re announcement undergrad So our and to significantly see plenty today what higher on the and XXXX, that’s US, States with at some with part amount degree XU. a percentage level undergraduate demand of And the overall

and some places had it So with leadership demand move the we had a in for services. do with does out of programs variety to change more XXXX into obviously than

Ryan MacDonald

color, Helpful I so will much, back hop queue. thanks in

Operator

George Sachs. with line question Tong next comes from the Your Goldman of

George Tong

thanks, good afternoon. Hi,

business impact beyond business lead credentials what in Your you costs? the and costs. lead is XXXX lead alternative and around cost that Can gen discuss the assumes guidance for for higher gen across from per trends most seeing you your saw quarter

Paul Lalljie

the that in in we we fourth third improvement George, trends from an the were quarter. So quarter, seeing the saw

in from spreads it think know XX%. almost said, per camp then, of the I was and it a in third boot quarter, back increase executive look we side seeing business. were the And cost portion education you the in I almost we XX% house If the the leads of

cost decreased higher much quarter. happened seeing those things the in per there were fourth that we So, rates think couple in of leads, But I quarter. are the fourth a

the like as have lead that I use prudent. those extent allocation rates and think that the things to the marketing efficient we the we we we particularly, on the And third go from I perspective. our inflation to Our sequential assume is we the we credential basically same model running occurred XXXX conversion to the assumed is that XX% better or than look somewhere of around because And and per leads calendar and alternative per as will for in we’re that if lower our from team expect, have XX% in for us more a guidance you And example, dollars. has I is words the assumptions at And ability to numbers more still quarter, basis, it the spend what revenue half That above through through you or have and will. some pre-COVID ability we quarter leads of flow the segment cost why to described spending. better have have run and model, lead, And of automate, be rates, also then saw much inflation XXXX for quarter. in cost that allowed the to exit a numbers us through lead dollars fourth why optionality rates we over allow stay in if numbers, at cost year, you found got improved if some per back the generating in year. see more within numbers, the to ways have we fourth

what this point putting predicted So but at and environment the somewhat the we in time, digital we’re in line year. sand marketing I think unpredictable for the all that us, to a was of

Chip Paucek

add it’s George, that’s a would university to only why of to that things. of way the of services and we’re want that is company that with a with the the XU dealing We It’s a ways, small and that optionality why deal we’re a our to learner work and owned single and all believe the a a certainly in. is not difficult very example greater what thing want it good it couple that’s variety that on top brought of a create scale Even our the with months. I it perspective. but The seeing already complicated that partners of only part for of complexity today. in future company in will though of we from in kinds platform we’ve for And does

George Tong

helpful. months? Great, that’s drove the trend? the kind you next the have you’re actual traffic XX to product has into within around have you attendance seen kind edX what examples to of hoping converted successfully integrating examples where of seen have edX, quarter platform, achieve audience how or effectively the very that What synergies diving into seen evidence you online you XU the program gave over XQ since perhaps you’re of and edX and And

Chip Paucek

couple months. a been of literally it’s George,

that significant the different come convert it’s So LSE variety working the what the lead system on and we’re been seeing seat very program. with I’ve ways doing to undergraduate into flow we’re pleased lines. particularly of on flow product across

the worldwide. and It’s international a audience attractive clearly to price So a point. for audiences large and has edX, brand obviously, there’s both that program very

it. how So we’re for just whether able very for getting be going candidly micro-bachelors is to product the this here. there portfolio calendar the going We across XU year, we question do there significant do think we’re of think much the that there’s and demand been micro-masters, a that just opportunities is to for demand significant are and amount not of

look we accept undergrad micro-bachelors they need announced credit attend you a ago, that will from any for program and to first involved like the something Harvard, do just quality program those If it Harvard can that at credits. little micro-bachelors while creates pathways people, to credit

what degrees in shorter people pathways high about. as this all options combination bring quality free for quality that both of portfolio of we and free Cred boot Alt forms high part overall of to a is to camps and bear. into portfolio full flexibility courses creating high just and And that is and of So, story the degree option, quality

do the next over couple So we of years. really company like it the what for says

George Tong

it, Got very you. Thank helpful.

Operator

from Your Capital. next of question Phillip comes the Berenberg Leytes line with

Phillip Leytes

given Can with guys, for that my on can competitive elaborate bit scale landscape? you the that the Hi thanks highly you you business gives enterprise? taking part confidence a little questions. the strategy What of

Chip Paucek

of number many that seeing team. knowing both [Indiscernible]. even incredibly base business And technical demand across with and and get both that degree We’ve a going breath, for mean, of excited and for a programs subjects very and different So really our the it’s so subscription seeing up-skilling very got both and products well, the I close camps executives re-skilling, about sort boot we’re into broad significant of proud sort single being broader of larger of action across of customers. a to portfolio larger list enterprise

it’s enterprise, going So, really well.

broader segment appealing is client. last So, as be year, ourselves enterprise it’s think, key very to can that going portfolio competitive this we what to the so, I we to mentioned in we’re that proving double very and double year. the is

from employees out worldwide demand significant and and the stay to re-skilling their enterprise up-skilling that. we’re seeing in for this competitive So, is marketplace

Phillip Leytes

Got thanks. it,

Operator

Morgan Our comes next line from with Josh question of Baer the Stanley.

Josh Baer

Great, the for million XX% frameworks state? term on the you margins launching question. I in guess, programs timeframe your How and question, you degree appreciate I end on the of steady business, if reaching longer about thanks Chip, XXXX. for the part on of had first state about stopped and revenue question comments think steady and do there. $XXX targets the

Chip Paucek

current is like at XXXX XXXX, and are business actually reason pipeline of reasonable we So, it’s the And granted, steady And times a we’re of going over explain, we’re Josh, those be the as at programs. to, if to had programs if understand and this about degree and business, at that state [Indiscernible] think you we’re build a talking look we’d some out business we do year. in the at feel billion revenue part end look don’t that here if of in we us just people you great clear we the of XXXX. it. stage trying movement a this intentional, life, at a to we about

trying profitable state not just down you that can today, So build And and degree with business, the the profitability to we’re road. a kick financial be. and see the and the incredibly look it’s continues if come profitable at business to through it

it’s revenue the – sorry, shorter times to XX% of at think there clients and of the OPM this give of business that sort shows the we around out at a that on overall, over amount understanding one Sydney valuable and believe continue if a just is year best more brand put for a long-term – size term institutions degree. what is of produces business breaking growth, it literally It’s to the really I is trying color and XX% that how to growth people is. data that a misperception space of and space thing and the pull going So planet, more are to deals, to fundamentally just somehow space space we’re significant the as of you an play new the seeing of, every also over look good here, in is is the share the we we’re be

But So because through stop. to see balance that company trajectory it’s with think we the today And greater that we current we profitability you to not need expect let to we a that’s what that happening. that enough come in periods. growth large want

on the dilution seen flywheel term of you well in the long-term. think core substantial business the earnings profitability that of hit But itself term, the to investment long-term mean, improvements. would it may the it generate some and short we company worth because greater I creates you will shorter will edX the clearly, do for for is that. bottomline have the So what want platform

Paul Lalljie

XX% on it’s midpoint $XX mean, $XX guidance improvement basis. over and dilution the about of the that’s I billion. midpoint EBITDA edX is million The at a year-over-year

there, that it’s the So today we’re something of that’s a our revenue, is believe outlook choices to year you we our it transition. is believe something very guide, is represents XXXX as what growth plus can platform medium-term proud get of out company. the made and long-term that the And we that that benefits XXXX we’ve and that we’re presenting realize necessary We of as And we billion we of. put balance a truly here and profitability. the see the numbers to

Josh Baer

That’s helpful.

type launches? if new of was, any with state that have second as scale part insights no and the of The you side, Thanks. state question as assuming same alternative exercise original margins, credential steady my far into steady just

Paul Lalljie

a different. is bit little Yes. the mean, I Alt Cred

of of edX, it before more is of two you think components presentation. camp the boot the If

side, You you sign it partner presentations education executive and rolling then, new subject across about you partners short is the out you’re that the networks of the that up. take the or the have. in And in course

much the for much So and it. the alternative sticks is the business cycles years, program side, cycles and around say in shorter. I degree How this, half in do shorter with enters much two side a much, different credential the it’s a student and

that on delusion standalone you months to seen edX XXXX, to edX to had inclusion said done XX depending XX material say I XXXX XX we business within improvement. it’s the if And margins the as the have in what months, the crossing months over that would we it. been we say solution XXXX. XX credential been I’ve probably the profitability the I’ll But of would edX trend And months in without Here’s the we exit from alternative into the XXXX, see to have the at business portfolio. into side on look profitable that addition to not guide, would you,

I that. the the into to similar insight degree not probably comparison. an you segment gives fair But that hopefully So is think a analysis

Josh Baer

thanks. Great,

Operator

Your the Brent Thill is Jefferies. question line of with from next

Unidentified Analyst

question. Hi on I click side. the Brent. for on guys, taking to double the this want Thanks is David for enterprise

like guys lot Sounds momentum. a of you are seeing

like the was think accelerating said year. out. you growth looking What’s business and revenue your there? I could put you last do wondering retention you behind some again expect landing, deals and double you’re year doubled I this it Is you if context to that. find load more that

is about just how Let’s be trending helpful? business that will talk Thanks.

Chip Paucek

a more be. it more how now, color the it’s segment years pretty selling. the have arms of about we’re So all around products to talk But significant are our on we get community much the couple that clear that this right over we going lot next is can and put a as for investor

what will on out together, combination seat for ran a the it’s of camp the the or with, GetSmarter basis through today, business, all bring content coming like started of edX So executives edX been side GetSmarter diverse and that offering team of that’s of we based many of we side enterprise enterprise desperately and our programs sort together. Netflix sort boot still business we run then, talents to come XU two has colleges. been is off Zec And people delivering a quality, black for side, we what the that overall clients, applicability Ed popular. quality more was has pipelines Hispanic overtime added institution. a And run improve program and that. very across we And need as was of as because serving representative to our edX as high home for worldwide to some some will historically high The broader the it this of

a lot there’s So there.

Paul Lalljie

X,XXX channel, to edX, Yes. sales And over a and with multi-product think I addition mean, enterprise David brings edX you things. a channel channel, essentially, the of us of it partners. of couple can as

think fuel I to million of bookings gotten we’ve significant get he as said well a growth this the us, some as engine be XXXX. $XXX end could that category in for some to extent, as of excess in we So comments, in Chip’s

Chip Paucek

edX note experienced very members. also would brought team with I some sales that it

So real that’s been positive.

Unidentified Analyst

color the Appreciate it. guys. for Thanks

Operator

questions there And queue no further in the time. are at this

Your remarks closing please.

Chip Paucek

Again, you We’ll talk thank you soon. everybody. to

Operator

Thank today’s conclude does for you conference call. participating. This

You now disconnect. may

2U (TWOUQ) 10 Feb 222021 Q4 Earnings call transcript