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Segment and Geographic Information | 9 Months Ended
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Sep. 30, 2018
Segment Reporting [Abstract] |
Segment and Geographic Information | Segment and Geographic Information The Company’s operations consist of two operating segments, which are also its two reportable segments: the Graduate Program Segment and the Short Course Segment. The Company’s Graduate Program Segment provides services to well-recognized nonprofit colleges and universities, primarily in the United States, to enable the online delivery of graduate programs. The Company’s Short Course Segment provides premium online short courses to working professionals around the world through relationships with leading universities in the United States, the United Kingdom and South Africa. Graduate Program Segment For the three months ended September 30, 2018, three university clients each accounted for 10% or more of the Company’s consolidated revenue, as follows: $24.0 million, $13.0 million and $10.8 million which equaled 22%, 12% and 10% of the Company’s consolidated revenue, respectively. For the three months ended September 30, 2017, four university clients each accounted for 10% or more of the Company’s consolidated revenue, as follows: $19.6 million, $10.8 million, $7.2 million and $7.1 million, which equaled 28%, 15%, 10% and 10% of the Company’s consolidated revenue, respectively. For the nine months ended September 30, 2018, three university clients each accounted for 10% or more of the Company’s consolidated revenue, as follows: $65.0 million, $39.5 million and $30.6 million, which equaled 22%, 13% and 10% of the Company’s consolidated revenue, respectively. For the nine months ended September 30, 2017, four university clients each accounted for 10% or more of the Company’s consolidated revenue, as follows: $58.4 million, $34.6 million, $21.0 million and $20.3 million, which equaled 30%, 17%, 11% and 10% of the Company’s consolidated revenue, respectively. As of September 30, 2018, two university clients each accounted for 10% or more of the Company’s consolidated accounts receivable, net balance, as follows: $13.4 million and $7.0 million, which equaled 27% and 14% of the Company’s consolidated accounts receivable, net balance, respectively. As of December 31, 2017, two university clients each accounted for 10% or more of the Company’s consolidated accounts receivable, net balance, as follows: $9.4 million and $2.0 million, which equaled 67% and 14% of the Company’s consolidated accounts receivable, net balance, respectively. Short Course Segment For the three and nine months ended September 30, 2018 and 2017, there were no customers or individual university clients that had revenue associated with it that accounted for 10% or more of the Company’s consolidated revenue. In addition, as of September 30, 2018 and December 31, 2017, no customers had accounts receivable, net balances that accounted for 10% or more of the Company’s consolidated accounts receivable, net balance, as customers are individual students or third parties paying on their behalf, rather than university clients. For the three months ended September 30, 2018, offerings associated with four university clients each accounted for 10% or more of the segment’s revenue, and when combined, accounted for approximately 91% of the segment’s revenue. For the three months ended September 30, 2017, offerings associated with two university clients each accounted for 10% or more of the segment’s revenue, and when combined, accounted for approximately 82% of the segment’s revenue. For the nine months ended September 30, 2018, offerings associated with three university clients each accounted for 10% or more of the segment’s revenue, and when combined, accounted for approximately 82% of the segment’s revenue. For the nine months ended September 30, 2017, offerings associated with two university clients each accounted for 10% or more of the segment’s revenue, and when combined, accounted for approximately 82% of the segment’s revenue. Segment Performance The following table summarizes financial information regarding each reportable segment’s results of operations for the periods presented:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2018 |  | 2017 |  | 2018 |  | 2017
| (in thousands)
Revenue by segment* |  |  |  |  |  |  |  |  |  |  |
Graduate Program Segment | $ | 89,719 |  |  | $ | 65,924 |  |  | $ | 251,487 |  |  | $ | 195,748 |
Short Course Segment | 17,244 |  |  | 4,326 |  |  | 45,187 |  |  | 4,326 |
Total revenue | $ | 106,963 |  |  | $ | 70,250 |  |  | $ | 296,674 |  |  | $ | 200,074 |
Segment profitability** |  |  |  |  |  |  |  |  |  |  |
Graduate Program Segment | $ | 5,564 |  |  | $ | (718 | ) |  | $ | (615 | ) |  | $ | 1,693 |
Short Course Segment | (889 | ) |  | (3,002 | ) |  | (1,787 | ) |  | (3,002 | )
Total segment profitability | $ | 4,675 |  |  | $ | (3,720 | ) |  | $ | (2,402 | ) |  | $ | (1,309 | )
Segment profitability margin*** |  |  |  |  |  |  |  |  |  |  |
Graduate Program Segment | 5.2 | % |  | (1.0 | )% |  | (0.2 | )% |  | 0.8 | %
Short Course Segment | (0.8 | ) |  | (4.3 | ) |  | (0.6 | ) |  | (1.5 | )
Total segment profitability margin | 4.4 | % |  | (5.3 | )% |  | (0.8 | )% |  | (0.7 | )%
* | The Company has excluded approximately $44,000 of intersegment revenues from the three and nine months ended September 30, 2018.
** | The Company defines segment profitability as net income or net loss, as applicable, before net interest income (expense), taxes, depreciation and amortization, foreign currency gains or losses, acquisition-related gains or losses and stock-based compensation expense. Some or all of these items may not be applicable in any given reporting period.
*** | The Company defines segment profitability margin as segment profitability as a percentage of consolidated revenue.
The following table reconciles net loss to total segment profitability:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2018 |  | 2017 |  | 2018 |  | 2017
| (in thousands)
Net loss | $ | (9,944 | ) |  | $ | (14,739 | ) |  | $ | (43,162 | ) |  | $ | (29,932 | )
Adjustments: |  |  |  |  |  |  |
Interest income | (1,799 | ) |  | (18 | ) |  | (3,053 | ) |  | (267 | )
Interest expense | 27 |  |  | 36 |  |  | 81 |  |  | 37 |
Foreign currency loss (gain) | 273 |  |  | (59 | ) |  | 1,493 |  |  | 972 |
Depreciation and amortization expense | 8,599 |  |  | 5,887 |  |  | 23,382 |  |  | 13,318 |
Income tax benefit | (414 | ) |  | (974 | ) |  | (5,207 | ) |  | (974 | )
Stock-based compensation expense | 7,933 |  |  | 6,147 |  |  | 24,064 |  |  | 15,537 |
Total adjustments | 14,619 |  |  | 11,019 |  |  | 40,760 |  |  | 28,623 |
Total segment profitability | $ | 4,675 |  |  | $ | (3,720 | ) |  | $ | (2,402 | ) |  | $ | (1,309 | )
The Company’s total assets by segment are as follows:
| September 30, 2018 |  | December 31, 2017
| (in thousands)
Total assets |  |  |  |  |
Graduate Program Segment | $ | 700,978 |  |  | $ | 359,597 |
Short Course Segment | 110,513 |  |  | 122,465 |
Total assets | $ | 811,491 |  |  | $ | 482,062 |
Trade Accounts Receivable and Contract Liabilities The Company’s trade accounts receivable and contract liabilities in each segment are as follows:
| September 30, 2018 |  | December 31, 2017
| (in thousands)
Trade accounts receivable |  |  |  |  |
Graduate Program Segment accounts receivable, net | $ | 22,397 |  |  | $ | 12,520 |
Graduate Program Segment unbilled revenue | 25,583 |  |  | 666 |
Short Course Segment accounts receivable, net | 1,435 |  |  | 988 |
Total trade accounts receivable | $ | 49,415 |  |  | $ | 14,174 |
Contract liabilities |  |  |  |  |
Graduate Program Segment deferred revenue | $ | 9,607 |  |  | $ | 2,523 |
Short Course Segment deferred revenue | 9,346 |  |  | 4,501 |
Total contract liabilities | $ | 18,953 |  |  | $ | 7,024 |
For the Graduate Program Segment, revenue recognized during the three and nine months ended September 30, 2018 that was included in the deferred revenue balance at the beginning of the year was $0.0 million and $2.5 million, respectively. For the Short Course Segment, revenue recognized during the three and nine months ended September 30, 2018 that was included in the deferred revenue balance at the beginning of the year was $0.0 million and $4.5 million, respectively. Contract Acquisition Costs The Graduate Program Segment had $0.3 million of net capitalized contract acquisition costs as of September 30, 2018. For the three months ended September 30, 2018, the Company capitalized no amounts and recorded an immaterial amount of amortization expense in the Graduate Program Segment. For the nine months ended September 30, 2018, the Company capitalized $0.3 million and recorded an immaterial amount of amortization expense in the Graduate Program Segment. Geographical Information The Company’s non-U.S. revenue for the three and nine months ended September 30, 2018, determined based upon the currency of the country in which the university client primarily operates, was $8.8 million and $26.0 million, respectively, and was sourced entirely from the Short Course Segment’s operations outside of the U.S. The Company’s non-U.S. revenue for both the three and nine months ended September 30, 2017, determined based upon the currency of the country in which the university client primarily operates, was $3.0 million, and was sourced entirely from the Short Course Segment’s operations outside of the U.S. The Company’s long-lived assets in non-U.S. countries as of September 30, 2018 and December 31, 2017 totaled approximately $1.3 million and $0.7 million, respectively.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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