2U Annual Report

Annual Report
2014

Video: Learn about #NOBACKROW

CEO's Letter to Shareholders

Fellow Stockholders,

2U started in 2008 when a small team began working on a big idea. Everyone said we were crazy and tried to convince us it would not work. Statements such as “online programs are terrible,” “great students and great schools will shun you,” and “you’ll never be able to match the quality of education delivered on campus” filled nearly every room we entered.

Thankfully, we did not listen. Our small team was united around a mission to build online degree programs as good as, or better than, traditional on-campus programs. We believed that the segregation of online students could end if universities engaged with these students as they did their on-campus students. We believed that great educational experiences were about being part of something bigger, regardless of the delivery method. We believed we could reshuffle the deck of higher education by focusing on quality, and most importantly, outcomes.

As we look back over 2014—our first year as a public company—I could not be prouder of what our company and its university clients have done to show that quality online education is real. We have proven that when armed with the right solutions, great colleges and universities can transform the way their education is delivered while maintaining, if not exceeding, the quality, rigor and outcomes of their on-campus programs.

Since the early days at 2U, we believed that there would be a long-term correlation between student outcomes and our financial success. This is starting to prove true. We are creating a rapidly growing, highly visible business, in a very large market sector, that is driving great financial results. In 2014, we delivered 33% year-over-year revenue growth while demonstrating that 2U is on a path to profitability. As we expanded our Multiple Program Vertical, or MPV, strategy, a key point of leverage in our business model, our year-over-year Adjusted EBITDA loss improved by 30%, and we cut our Adjusted EBITDA loss margin almost in half.

In the last year, we drove substantial results for our university clients and quality outcomes for students and faculty. As of December 31, 2014:

  • 2U was operating 13 programs at 9 universities with another 6 programs now announced at an additional 4 universities.
  • More than 12,300 students had enrolled in 2U client programs, and of those, more than 4,000 students had graduated.
  • 83% of the students who had ever enrolled in one of our clients’ programs were either still enrolled or had graduated.
  • By the time the last of these students graduates or leaves our clients' programs, we estimate an approximate $698 million in total program tuition and fees for our clients.
  • 2U had facilitated more than 20,000 in-program field placements in approximately 14,000 placement sites around the world. In the Nursing@Georgetown NM/WHNP program, these placements resulted in the delivery of 3,653 babies by enrolled nurse-midwifery students.
  • In client programs with the largest number of graduates, 83% of graduates were working in their field and 20% were offered full-time employment at their placement site.
  • 74% of MBA@UNC students reported that they received a job change or promotion while enrolled in the program.
  • 2U client programs had a blended student and faculty Net Promoter Score of 68, rivaling brands such as Amazon, Netflix and Apple’s iPad.

Our technology and technology-enabled services allow our clients to reach students globally, enabling the education they provide to reach its highest potential so students can reach theirs. Together, we are eliminating the back row in higher education to ensure that every student can experience the best possible education for the brightest possible future.

I want to acknowledge and thank our employees, our clients and our clients’ students for believing in our shared mission and working every day to make it come to life.

It has been a good run so far, but as a fellow stockholder of the company, I’m excited to tell you that this is just the beginning. We believe we are only in the second inning and I, for one, can’t wait to see what happens in the rest of the game.

Thank you all for believing in 2U, its people and its mission.

Chip Paucek
CEO and Co-Founder
#NOBACKROW