Editors Note: This is an open letter from Co-Founder and CEO Chip Paucek as part of 2U's 2020 Annual Report. Please read the full report here.
Dear Fellow Stockholders,
“I sit here today steadfast and confident in our collective resilience and strength.”
These are the words I opened last year’s stockholder letter with and today, one year later, they resonate even more powerfully—personally and for 2U.
As individuals and communities, 2020 tested us all. Like so many businesses, the past twelve months also tested us as a company. Through it all, what inspired me most is how we collectively rose to the challenge. While the pandemic created upheaval throughout the world and the higher education community, our global team remained steadfast and resilient. We executed against the goals and commitments we set out to achieve. We delivered strong financial results, innovated, and delivered for our university partners, students, faculty, and each other. And, today, we are definitively a stronger team and company than we were at the beginning of 2020.
Strong Results and Growth
Our strength is clearly reflected in the performance of our business in 2020. We delivered organic growth of 21%, significantly improved profitability, and continued on our path towards positive free cash flow. But our strength and positioning is bigger than our performance in the last twelve months.
Institutional adoption and consumer demand for high-quality online education is increasing, and over the last decade 2U has built a sizable, scalable and sustainable business model that continues to deliver strong growth and provide the financial flexibility to both execute our global strategy and drive to profitability. As a result, we’ve become the preferred digital transformation partner for top global institutions. We have an unmatched and growing global network of 80 world-class university partners; and, as a result of our intentional expansion into alternative credentials, we now have a diverse and growing portfolio of over 500 online offerings across short courses, boot camps, professional certificates, undergraduate and graduate degree programs that uniquely positions us to provide high-quality educational offerings throughout the entire life of the learner.
Importantly, even before the COVID-19 pandemic, technology and automation were rapidly changing the workforce, resulting in the creation of new jobs and rendering others obsolete. To keep pace, working adults and employers are increasingly embracing shorter-form, non-degree credentials to deliver the hard and soft skills needed to stay relevant. Today, our alternative credentials business, which is now the largest by revenue among any edtech company outside of China, delivers a diverse and growing portfolio of relevant skills training in topics such as coding, digital marketing, product management, health and wellness, leadership, and disruptive tech. In 2020, our alternative credential revenue of $287.9M increased 83% from full-year 2019. We launched an additional combined 100+ short courses and boot camps with new and existing partners and, accelerated by COVID-19, we transformed our boot camp business to fully online—shifting over 300 physical classroom boot camps to virtual across 50+ universities in less than a week.
We also delivered important and strategic growth in our degree portfolio in 2020. 2020 degree revenue reached $486.7M, a 17% full-year revenue increase. In addition to the 150+ degree and certificate programs we powered, we announced our first pan-institution relationship in partnership with University of North Carolina Chapel Hill, and doubled down on high-quality online undergrad—a market that is nearly six times larger than graduate education.1 In the past 14 months alone, 2U launched undergrad degrees with Simmons University, Morehouse College, and the University of London and the London School of Economics and Political Science.
We also proved our ability to rapidly innovate and answer the evolving digital transformation imperative in higher ed. As an example, when COVID-19 shut down schools and universities, and upended medical institutions, we quickly developed a scalable, high-quality virtual field placement experience for students in clinical/field-based degree programs. This enabled students in 2U-powered degree programs studying to be social workers, teachers, nurses, midwives, speech therapists and physician assistants to earn hundreds of hours of mandatory field placement during the pandemic that they otherwise wouldn’t have been able to fulfill.
Almost immediately after the shutdown was announced, we leveraged our scale and expertise to launch “Studio-in-a-Box,” a virtual course production capability to ensure faculty could continue to create high-quality video course content from their homes. And we broke new ground in embracing innovative partnerships, including our recent collaborations with Netflix and Employ Prince George’s—efforts that drive our mission forward and demonstrate our commitment to expanding access to affordable higher education for people of color, low income students, women, and other communities that historically have been poorly served by online education. The pandemic has only reinforced the critical role these kinds of skills-based, career-focused offerings can play in empowering communities and aiding in our broader economic recovery.
Yet, our growth and innovations only tell part of the story. In 2020 alone, 2U helped to positively transform 99,000 learner’s lives. From day one, we’ve known that when students win, universities win, then 2U wins. Our commitment to student outcomes has never been stronger and more sustainably executed by our team. We released our inaugural Transparency Report, publicly sharing the quality and outcomes of the programs we power, and made our Learning Experience Framework (LXF), a research and learning science-supported approach to designing high-quality, engaging online education, freely available to educators as a public resource. In a year that showed us the clear difference between remote live lectures and intentionally designed online education, our approach to powering high-quality online education offerings has never been more relevant and necessary.
What’s clear is that the digital transformation of higher education is not only here, it’s no longer optional. I’m proud to say that 2U’s partners are in a stronger position as a result of our partnership. And, if ever before doubted, the past year has proven our university partners are resilient, and 2U is resilient. Combined with our experience, capabilities, scale, investment, quality, and diversity of degree and non-degree offerings, we are a sustainable solution to address society’s critical needs. During crisis, calm and everything in between it’s important to remember to never to let the skeptic win.
Christopher “Chip” Paucek
Co-Founder & CEO
¹ National Center for Education Statistics, The Condition of Education, May 2020
Learn more about us.
At 2U, we’re on a mission—to eliminate the back row in higher education and help universities thrive in the digital age. To learn more about who we are and what we do, follow the links below.