v3.20.2

Segment and Geographic Information | 6 Months Ended
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Jun. 30, 2020
Segment Reporting [Abstract] |
Segment and Geographic Information | Segment and Geographic Information The Company has two reportable segments: the Graduate Program Segment and the Alternative Credential Segment. The Company’s reportable segments are determined based on (i) financial information reviewed by the chief operating decision maker, the Chief Executive Officer (“CEO”), (ii) internal management and related reporting structure, and (iii) the basis upon which the CEO makes resource allocation decisions. The Company’s Graduate Program Segment includes the technology and services provided to nonprofit colleges and universities to enable the online delivery of degree programs. The Company’s Alternative Credential Segment includes the premium online short courses and technical skills-based boot camps provided through relationships with nonprofit colleges and universities. Graduate Program Segment For the three months ended June 30, 2020, one university client accounted for 10% or more of the Company’s consolidated revenue, contributing $18.8 million, or approximately 10% of the Company’s consolidated revenue. For the three months ended June 30, 2019, one university client accounted for 10% or more of the Company’s consolidated revenue, contributing $21.2 million, or approximately 16 % of the Company’s consolidated revenue. For the six months ended June 30, 2020, one university client accounted for 10% or more of the Company’s consolidated revenue, contributing $36.3 million, or approximately 10% of the Company’s consolidated revenue. For the six months ended June 30, 2019, one university client accounted for 10% or more of the Company’s consolidated revenue, contributing $43.8 million, or approximately 17% of the Company’s consolidated revenue. As of June 30, 2020, one university client accounted for 10% or more of the Company’s consolidated accounts receivable, net balance, contributing $15.2 million, or approximately 21% of the Company’s consolidated accounts receivable, net balance. As of December 31, 2019, two university clients each accounted for 10% or more of the Company’s consolidated accounts receivable, net balance, contributing $6.1 million and $4.9 million, or approximately 18% and 15% of the Company’s consolidated accounts receivable, net balance, respectively. Alternative Credential Segment For the three and six months ended June 30, 2020 and 2019, there were no customers or individual university clients that had associated offerings that accounted for 10% or more of the Company’s consolidated revenue. In addition, as of June 30, 2020 and December 31, 2019, 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 June 30, 2020, offerings associated with one university client accounted for 10% or more of the segment’s revenue, contributing $9.2 million, or approximately 14% of the segment’s revenue. For the three months ended June 30, 2019, offerings associated with two university clients each accounted for 10% or more of the segment’s revenue, and when combined, accounted for approximately 37% of the segment’s revenue. For the six months ended June 30, 2020, offerings associated with one university client accounted for 10% or more of the segment’s revenue, contributing $17.1 million, or approximately 14% of the segment’s revenue. For the six months ended June 30, 2019, offerings associated with three university clients each accounted for 10% or more of the segment’s revenue, and when combined, accounted for approximately 56% of the segment’s revenue. Segment Performance The following table presents financial information regarding each of the Company’s reportable segment’s results of operations for each of the periods indicated.
| Three Months Ended June 30, |  |  |  | Six Months Ended June 30, |  |
| 2020 |  | 2019 |  | 2020 |  | 2019
| (dollars in thousands) |  |  |  |  |  |
Revenue by segment* |  |  |  |  |  |  |
Graduate Program Segment | $ | 115,685 |  |  | $ | 101,403 |  |  | $ | 234,142 |  |  | $ | 205,577 |
Alternative Credential Segment | 67,002 |  |  | 34,058 |  |  | 124,024 |  |  | 52,118 |
Total revenue | $ | 182,687 |  |  | $ | 135,461 |  |  | $ | 358,166 |  |  | $ | 257,695 |
Segment profitability** |  |  |  |  |  |  |
Graduate Program Segment | $ | 4,703 |  |  | $ | (8,049) |  |  | $ | 11,163 |  |  | $ | (7,339) |
Alternative Credential Segment | (6,790) |  |  | (6,926) |  |  | (17,554) |  |  | (10,842) |
Total segment profitability | $ | (2,087) |  |  | $ | (14,975) |  |  | $ | (6,391) |  |  | $ | (18,181) |
Segment profitability margin*** |  |  |  |  |  |  |
Graduate Program Segment | 4.1 | % |  | (7.9) | % |  | 4.8 | % |  | (3.6) | %
Alternative Credential Segment | (10.1) |  |  | (20.3) |  |  | (14.2) |  |  | (20.8) |
Total segment profitability margin | (1.1) | % |  | (11.1) | % |  | (1.8) | % |  | (7.0) | %
*The Company has excluded immaterial amounts of intersegment revenues from the three- and six-month periods ended June 30, 2020 and 2019. ** The Company defines segment profitability as net income or net loss, as applicable, before net interest income (expense), taxes, depreciation and amortization expense, foreign currency gains or losses, deferred revenue fair value adjustments, transaction costs, integration costs, restructuring-related costs, stockholder activism costs, impairment charges, losses on debt extinguishment, 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 the respective segment’s revenue. The following table presents a reconciliation of the Company’s net loss to total segment profitability for each of the periods indicated.
| Three Months Ended June 30, |  |  |  | Six Months Ended June 30, |  |
| 2020 |  | 2019 |  | 2020 |  | 2019
| (in thousands) |  |  |  |  |  |
Net loss | $ | (66,167) |  |  | $ | (27,972) |  |  | $ | (126,273) |  |  | $ | (49,526) |
Adjustments: |  |  |  |  |  |  |
Net interest expense (income) | 6,364 |  |  | 610 |  |  | 11,344 |  |  | (1,684) |
Foreign currency (gain) loss | (570) |  |  | 13 |  |  | 1,701 |  |  | 383 |
Income tax benefit | (363) |  |  | (18,691) |  |  | (1,418) |  |  | (19,632) |
Depreciation and amortization expense | 23,985 |  |  | 14,653 |  |  | 47,470 |  |  | 24,351 |
Deferred revenue fair value adjustment | — |  |  | 3,352 |  |  | — |  |  | 3,352 |
Transaction and integration costs | 359 |  |  | 3,093 |  |  | 1,083 |  |  | 5,024 |
Restructuring-related costs | 196 |  |  | — |  |  | 484 |  |  | — |
Stockholder activism costs | 1,347 |  |  | — |  |  | 5,586 |  |  | — |
Stock-based compensation expense | 21,091 |  |  | 9,967 |  |  | 41,961 |  |  | 19,551 |
Loss on debt extinguishment | 11,671 |  |  | — |  |  | 11,671 |  |  | — |
Total adjustments | 64,080 |  |  | 12,997 |  |  | 119,882 |  |  | 31,345 |
Total segment profitability | $ | (2,087) |  |  | $ | (14,975) |  |  | $ | (6,391) |  |  | $ | (18,181) |
The following table presents the Company’s total assets by segment as of each of the dates indicated.
| June 30, 2020 |  | December 31, 2019
| (in thousands) |  |
Total assets |  |  |
Graduate Program Segment | $ | 560,137 |  |  | $ | 507,187 |
Alternative Credential Segment | 672,423 |  |  | 679,643 |
Total assets | $ | 1,232,560 |  |  | $ | 1,186,830 |
Trade Accounts Receivable and Contract Liabilities The following table presents the Company’s trade accounts receivable and contract liabilities in each segment as of each of the dates indicated.
| June 30, 2020 |  | December 31, 2019
| (in thousands) |  |
Trade accounts receivable |  |  |
Graduate Program Segment accounts receivable | $ | 17,185 |  |  | $ | 3,454 |
Graduate Program Segment unbilled revenue | 27,777 |  |  | 12,123 |
Alternative Credential Segment accounts receivable | 29,158 |  |  | 19,408 |
Provision for credit losses | (2,540) |  |  | (1,330) |
Total trade accounts receivable | $ | 71,580 |  |  | $ | 33,655 |
Contract liabilities |  |  |
Graduate Program Segment deferred revenue | $ | 15,112 |  |  | $ | 2,210 |
Alternative Credential Segment deferred revenue | 61,959 |  |  | 46,623 |
Total contract liabilities | $ | 77,071 |  |  | $ | 48,833 |
For the Graduate Program Segment, no revenue recognized during each of the three months ended June 30, 2020 and 2019 was included in the deferred revenue balance at the beginning of each respective year. Revenue recognized in this segment during the six months ended June 30, 2020 and 2019 that was included in the deferred revenue balance at the beginning of each year was $2.2 million and $2.4 million, respectively. For the Alternative Credential Segment, revenue recognized during the three months ended June 30, 2020 and 2019 that was included in the deferred revenue balance at the beginning of each year was $12.2 million and zero, respectively. Revenue recognized in this segment during the six months ended June 30, 2020 and 2019 that was included in the deferred revenue balance at the beginning of each year was $46.6 million and $5.4 million, respectively. Contract Acquisition Costs The Graduate Program Segment had $0.5 million and $0.5 million of net capitalized contract acquisition costs recorded primarily within university payments and other assets, non-current on the condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019, respectively. Geographical Information The Company’s non-U.S. revenue is based on the currency of the country in which the university client primarily operates. The Company’s non-U.S. revenue was $17.2 million and $11.1 million for the three months ended June 30, 2020 and 2019, respectively. The Company’s non-U.S. revenue was $30.0 million and $18.9 million for the six months ended June 30, 2020 and 2019, respectively. Substantially all of the Company’s non-U.S. revenue for each of the aforementioned periods was sourced from the Alternative Credential Segment’s operations outside of the U.S. The Company’s long-lived tangible assets in non-U.S. countries as of June 30, 2020 and December 31, 2019 totaled $1.8 million and $2.7 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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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