2u (TWOU) Tops Q3 EPS by 1c, Revenues Beat; Offers FY20 Revenue Guidance Above Consensus

2u (NASDAQ: TWOU) reported Q3 EPS of ($0.24), $0.01 better than the analyst estimate of ($0.25). Revenue for the quarter came in at $201.1 million versus the consensus estimate of $188.56 million.

Results for Third Quarter 2020 Compared to Third Quarter 2019

• Revenue increased 31% to $201.1 million
• Graduate Program Segment revenue increased 18% to $122.0 million
• Alternative Credential Segment revenue increased 57% to $79.1 million
• Net loss decreased $88.6 million to $52.6 million, or $0.77 per share
• Total cash balance increased to $499.6 million

"2U's evolution over the past few years puts us in an excellent position to meet the needs of lifelong learners," Co-Founder and Chief Executive Officer, Christopher "Chip" Paucek said. "Today, we are a digital enabler bringing product strategy, technology capabilities, data analysis, marketing expertise, and student and faculty support to the best non-profit universities in the world. We are operating at the nexus of the future of education and the future of work, and the impact of accelerating demand is becoming increasingly evident in our operating results across the portfolio."

"Our results for the quarter reflect the strong leading indicators we discussed in our last two earnings reports," said Chief Financial Officer, Paul Lalljie. "Organic revenue accelerated, we continued to make progress on our profitability and free cash flow goals, and we have enhanced our liquidity position. With better visibility into the remainder of the year and continued confidence in the fundamentals of our business, we are pleased to reintroduce annual guidance."

GUIDANCE:

2u sees FY2020 revenue of $760-775 million, versus the consensus of $743.47 million.

While recognizing that the COVID-19 pandemic continues to evolve, the company believes that increasing student and university demand for high-quality online education will continue. The company expects it will continue to drive growth in this dynamic environment, as evidenced by its strong performance in the third quarter of 2020 and its momentum entering the fourth quarter. With 2U's increased visibility into the balance of fiscal year 2020, the company is providing annual guidance. Going forward, the company expects to provide annual guidance, updated quarterly, if necessary.

For the full year of 2020, the company expects:

• Revenue to range from $760.0 million to $775.0 million, or growth of 32% to 35%
• Net loss to range from $225.0 million to $210.0 million
• Adjusted EBITDA to range from $7.0 million to $14.0 million

For earnings history and earnings-related data on 2u (TWOU) click here.

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