LANDOVER, Md., May 5, 2016 /PRNewswire/ -- 2U, Inc. (NASDAQ: TWOU), today reported financial and operating results for the first quarter ended March 31, 2016. 2U is a leading provider of cloud-based software-as-a-service technology fused with technology-enabled services that enables leading nonprofit colleges and universities to deliver their high-quality degree programs online.

First Quarter 2016 Results

• Revenue was $47.4 million, an increase of 37 percent from $34.6 million in the first quarter of 2015.
• Net loss was $(3.4) million, or $(0.07) per share, compared to $(5.5) million, or $(0.13) per share, in the first quarter of 2015.
• Adjusted net income was $0.2 million, or $0.00 per share compared to an adjusted net loss of $(3.4) million, or $(0.08) per share, in the first quarter of 2015.
• Adjusted EBITDA was $2.2 million, compared to an adjusted EBITDA loss of $(1.6) million in the first quarter of 2015.

"We had another great quarter and a strong start to 2016," said Chip Paucek, 2U's CEO and co-founder. "Revenue for Q1 increased 37 percent year-over-year. Adjusted EBITDA was $2.2 million, representing an improvement of approximately 900 basis points in margin over the first quarter of last year. Building on this strong performance, we now expect that we will reach adjusted EBITDA profitability for full-year 2016."

Recent Program Related Developments

2U announced in April that its first partner, the University of Southern California (USC) Rossier School of Education, has extended its contract with for an additional 12 years (to 2030) for the program that includes the Master of Arts in Teaching, Master of Arts in Teaching-TESOL and Doctor of Education in Organizational Change and Leadership. The new agreement significantly reduces exclusivity and allows 2U to pursue its multiple program vertical strategy in the education vertical. The new agreement also includes a Master of Education in School Counseling program, pending university and accreditor approval. Target launch date for this program remains to be determined.

Also in April, 2U announced two new programs with Syracuse University: a program with the Syracuse University College of Law to develop a hybrid Juris Doctor (J.D.) degree, pending New York State and American Bar Association approval, and a program with the Syracuse University's Maxwell School of Citizenship and Public Affairs to develop an online Executive Master of Public Administration (EMPA) degree.

"We have now signed and announced all six programs for our 2016 launch schedule. We have also announced eight of at least 21 new programs we are targeting for launch in 2017 and 2018," said Paucek. "Our new agreement with USC Rossier means that 2U doesn't have a contract coming up for renewal until the end of 2021, nearly six years from now. And with the announcement of the Syracuse Law J.D. program and Maxwell EMPA program, our partnership with Syracuse University now includes a total of seven programs."

Financial Outlook

Based on information available as of today, 2U is issuing the following guidance for second quarter and full year of 2016.

2U expects that of the revenue it recognizes in the second half 2016, approximately 48 percent will be recognized in the third quarter. It also reiterates that it expects an adjusted EBITDA margin of one to two percent for the second half of the year with the fourth quarter being adjusted EBITDA positive. Note that cost seasonality in the fourth quarter typically improves margins in the second half of each year so second-half margins should not be viewed as a run rate for the first half of the following year.

Non-GAAP Measures

To supplement the company's consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles ("GAAP"), we use adjusted net income and adjusted EBITDA, which are non-GAAP financial measures. Additionally, we calculate adjusted net income per share using weighted average common shares.

Adjusted net income is defined as net income attributable to holders of common stock before stock-based compensation expense. Some or all of these items may not be applicable in any given reporting period.

Adjusted EBITDA is defined as earnings before net interest income (expense), taxes, depreciation and amortization, and stock-based compensation expense. Some or all of these items may not be applicable in any given reporting period.

The principal limitation of these non-GAAP financial measures is that they exclude significant expenses that are required by GAAP to be recorded in the company's financial statements. These non-GAAP measures are key metrics company management uses to compare the company's performance to that of prior periods for trend analyses, and for budgeting and planning purposes. These measures also provide useful information to investors relating to 2U's financial condition and results of operations. These financial measures are not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. In addition, these financial measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes.

For more information on 2U's non-GAAP financial measures and reconciliations of such measures to the nearest GAAP measures, please see the reconciliation tables in this press release under the heading "Reconciliation of Non-GAAP Measures." 2U urges investors to review these reconciliations and not to rely on any single financial measure to evaluate the company's business. 

About 2U, Inc. (NASDAQ: TWOU)

2U partners with leading colleges and universities to deliver the world's best online degree programs so students everywhere can reach their full potential. Our Platform, a fusion of cloud-based software-as-a-service technology and technology-enabled services, provides schools with the comprehensive operating infrastructure they need to attract, enroll, educate, support and graduate students globally. Blending live face-to-face classes, dynamic course content and real-world learning experiences, 2U's No Back Row® approach ensures that every qualified student can experience the highest quality university education for the most successful outcome.

To learn more, go to 2U.com. Be sure to follow us on LinkedIn (http://www.linkedin.com/company/2u), Twitter (http://twitter.com/2Uinc) and Facebook (http://www.facebook.com/2u).

Cautionary Language Concerning Forward-Looking Statements

This press release contains forward-looking statements regarding our future business expectations, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  All statements other than statements of historical facts contained in this press release, including statements regarding future results of the operations and financial position of 2U, Inc., including financial targets, business strategy, and plans and objectives for future operations, are forward-looking statements. 2U has based these forward-looking statements largely on its estimates of its financial results and its current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy, short term and long-term business operations and objectives, and financial needs as of the date of this press release. We undertake no obligation to update these statements as a result of new information or future events. These forward-looking statements are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially from the results predicted, including, our failure to attract new colleges and universities as clients; our failure to acquire qualified students for our clients' programs; failure of clients' students to remain enrolled in their programs; loss, or material underperformance, of any one client; our ability to compete against current and future competitors; disruption to, or failure of, our Platform; and data privacy or security breaches. These and other potential risks and uncertainties that could cause actual results to differ from the results predicted are more fully detailed under the heading "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2015 and other reports filed with the Securities and Exchange Commission.  Moreover, 2U operates in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for 2U management to predict all risks, nor can 2U assess the impact of all factors on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements 2U may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this press release may not occur and actual results could differ materially and adversely from those anticipated. 

Investor Relations Contact: Ed Goodwin, Sr. Director of Investor Relations, 2U, Inc., egoodwin@2u.com

Media Contact: Cassie France-Kelly, VP of Public Relations, 2U, Inc., cfrance-kelly@2u.com

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SOURCE 2U, Inc.