What happened
Shares of 2U (NASDAQ:TWOU) were up more than 11% as of 3:25 p.m. EST Friday after the online education company reported quarterly results that were better than expected and set an optimistic tone for 2020. It still has a lot of work ahead but appears to be making progress with its previously announced business transition.
So what
After markets closed Thursday, 2U reported a fourth-quarter loss of $0.18 per share on revenue of $163 million, beating analyst expectations for a $0.22 per share loss on sales of $164 million. The company said it expects to generate sales between $170 million and $180 million in the current quarter and between $725 million and $750 million for the full year 2020; consensus expectations are for $172.45 million and $729 million, respectively.
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Shares of 2U have lost more than half their value in the past year. They were hit by an August announcement that the company was lowering its near-term growth expectations in order to focus on operational efficiency in response to a flood of new competition in the business of facilitating online learning. The announcement caused investors to question whether 2U is a long-term growth stock.
2U launched 15 new degree programs in the quarter, and said it achieved an 82% student retention rate in the segment.
Now what
2U still has a way to go, but in its forecast for 2020, the company said it expects full-year adjusted EBITDA to range from a loss of $5 million to a gain of $10 million. If the company can indeed cut its spending and turn EBITDA positive by year's end, it will be a fantastic accomplishment.
It has also been the subject of some sale rumors, but management declined comment during the post-earnings conference call with investors. CEO Christopher Paucek instead used the call as an opportunity to argue that 2U's prospects remain as bright as they were prior to the restructuring:
