2U plans for international expansion as it integrates operations with edX

2U plans for international expansion as it integrates operations with edX


Dive Brief: 

  • 2U, a company that helps colleges launch and manage online programs, has set its sights on international expansion as it merges operations with edX, a MOOC platform it bought in November. 
  • The company plans on making edX the face of its consumer brand, with the aim of attracting the platform’s users to 2U’s paid programs. Together, 2U and edX have 43 million registered learners, up 3 million since the acquisition, 2U co-founder and CEO Chip Paucek told analysts on a call Wednesday to discuss the company’s 2021 earnings. 
  • About 80% of edX’s registered learners live outside of the U.S., Paucek said. To meet their demand for online education, he said, 2U is contracting with universities in international markets. For instance, the company announced Wednesday it is working with the University of Sydney, in Australia, on four new online graduate degrees that will launch next year. 

Dive Insight: 

Last year proved to be pivotal for 2U, which announced plans in June to acquire edX for $800 million in a bid to lower marketing costs and grow the company’s reach. Now, officials are integrating the two teams and working to update the edX platform, including by adding personalized recommendations and cross-selling programs. 

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

More than 27 of the universities working with 2U have committed to having free and open course content on the edX platform, Paucek said. The company has also added hundreds of 2U-powered programs on the edX website, including boot camps and undergraduate and graduate degrees. 2U works with more than 230 colleges.

The company plans on building up its work educating corporate employees, the fastest-growing part of its business. Paucek said revenue in this segment has doubled year over year. 

2U and edX have a combined 1,200 corporate clients, to whom the company plans to cross-sell its broader portfolio of offerings. The company also plans to grow its relationship with Guild Education, a tuition benefits platform that helps employers offer access to online degree programs for their workers. 

“With the Great Resignation underway, we believe there’s growing recognition from businesses worldwide that upskilling and re-skilling employees is imperative to build a sustainable talent pipeline that enables them to execute their business plan,” Paucek said. 

2U’s net loss for the year shrank to $194.8 million, an improvement from a $216.5 million net loss the year before.

The company’s revenue reached $945.7 million in 2021, up 22% from the prior year. That includes a 22% increase in revenue from the company’s degree programs, which Paucek said the company plans on strengthening. 

Nearly 59,000 students were enrolled in 2U-powered degrees in 2021’s fourth quarter, up from about 58,400 students the year before, according to documents filed with the SEC. Revenue per student also grew slightly over that time, from about $2,200 to $2,600. 

Revenue for 2U’s alternative credential segment also saw strong growth, rising 23% from the year before to $353.4 million. The company had about 21,200 students enrolled in its alternative credential offerings in 2021’s fourth quarter, down slightly from 22,200 students the year before. Revenue per student in the segment grew from about $3,800 to $4,300.

Costs and expenses increased to $1.1 billion, rising almost 17% from the year before. Marketing and sales continue to be 2U’s largest cost, at $456.1 million, up about 17% year over year. 

Paucek said officials expect the edX acquisition will lower paid marketing expenses by 10% to 15% by the beginning of 2024.

2U’s stock tumbled Thursday, falling nearly 48% by the time markets closed.


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