Chip Paucek, Co-Founder and Chief Executive Officer of 2U Inc (TWOU), said the company has signed its fifth program commitment for 2015, adding an MBA program at the Kogod School of Business at American University. He was speaking at the 17th annual Needham Growth Conference, held at the Palace Hotel in New York City.
2U partners with colleges and universities to create degree programs that combine online learning with live programming and on-campus privileges. Existing partners include the University of California at Berkeley, the University of Southern California, Georgetown and other top institutions. The company has a total of 18 programs covering 13 verticals with 12 universities.
The American deal marks the first time a third program has been added to a vertical, Paucek said. 2U signs 10-to-15-year deals with the universities, provides the back end for the online learning and shares tuition revenue. Admission, staffing and other details that traditionally fall to the universities are strictly handled by those institutions, Paucek said.
Paucek said the 2U programs have an 83% to 84% retention rate for students. Revenue share to 2U averages 65%, he added.
2U had an IPO last March. “Year-over-year losses are decelerating,” Paucek said, with adjusted net loss improved by 46% and adjusted EBTDA loss improved by 60%, year over year. Initial 2015 outlook suggests revenue growth remaining high and adjusted EBITDA loss margins continuing to improve, Paucek said.
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