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July 30, 2019 - the day the OPM market changed. 30 minutes into 2U ($TWOU) earnings call, stock down 25% in after hours trading. 2U is moving from primarily rev-share grad program OPM business into diversified business including full-university deals, fee-for-service, 1/
corporate learning / skills, short courses (non-degree). Yes, they started most of these before, but now business is redefined around full suite. Major changes to expectations on grad program OPM business. 2/
Guidance for program starts in next year or two likely to be "fewer than half" of previous guidance. 3/
2U sees massive change in overall online education - much more competitive, many more offerings, leading to smaller cohorts per programs (theirs and for other programs). 4/
2U mentioned many, many times that it is their scale and suite of offerings that will be their competitive advantage. Sounds like big cuts in expenses for grad business. End (for now) /
One other point - 2U won bid for UNC-wide partner, across entire institution. This is one that introduces fee-for-service.
In Q&A, they state that they are choosing to not just "operate our way out of this problem". Rethinking what outlook should be and how market is structurally changing.
Another big point in Q&A - 2U thinks (due to their market position and cohort size) that they are seeing these issues first, smaller OPMs will see these dynamics soon. Also that changes hit grad program OPM and GetSmarter short courses.
The UNC "institutional suite" of 10 identified programs are all grad, but they are differentiating from their current/prev grad business (what 2U was known for as OPM partner). This is something different, broader. Saying this is new product line to go outside of UNC.
Well that was an earnings call to remember.
