v3.20.2

Segment and Geographic Information | 9 Months Ended
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Sep. 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. Significant Customers For the three months ended September 30, 2020, one university client in the Graduate Program Segment accounted for 10% or more of the Company’s consolidated revenue, contributing $19.3 million, or approximately 10% of the Company’s consolidated revenue. For the three months ended September 30, 2019, one university client in the Graduate Program Segment accounted for 10% or more of the Company’s consolidated revenue, contributing $20.5 million, or approximately 13% of the Company’s consolidated revenue. For the nine months ended September 30, 2020, one university client in the Graduate Program Segment accounted for 10% or more of the Company’s consolidated revenue, contributing $55.5 million, or approximately 10% of the Company’s consolidated revenue. For the nine months ended September 30, 2019, one university client in the Graduate Program Segment accounted for 10% or more of the Company’s consolidated revenue, contributing $64.3 million, or approximately 16% of the Company’s consolidated revenue. As of September 30, 2020, two university clients in the Graduate Program Segment accounted for 10% or more of the Company’s consolidated accounts receivable, net balance, contributing $11.1 million and $11.0 million, or approximately 12% and 11% of the Company’s consolidated accounts receivable, net balance, respectively. As of December 31, 2019, two university clients in the Graduate Program Segment 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. 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 September 30, |  |  |  | Nine Months Ended September 30, |  |
| 2020 |  | 2019 |  | 2020 |  | 2019
| (dollars in thousands) |  |  |  |  |  |
Revenue by segment* |  |  |  |  |  |  |
Graduate Program Segment | $ | 122,036 |  |  | $ | 103,393 |  |  | $ | 356,178 |  |  | $ | 308,970 |
Alternative Credential Segment | 79,037 |  |  | 50,405 |  |  | 203,061 |  |  | 102,523 |
Total revenue | $ | 201,073 |  |  | $ | 153,798 |  |  | $ | 559,239 |  |  | $ | 411,493 |
Segment profitability** |  |  |  |  |  |  |
Graduate Program Segment | $ | 9,713 |  |  | $ | 1,213 |  |  | $ | 20,876 |  |  | $ | (6,126) |
Alternative Credential Segment | (6,001) |  |  | (11,936) |  |  | (23,555) |  |  | (22,778) |
Total segment profitability | $ | 3,712 |  |  | $ | (10,723) |  |  | $ | (2,679) |  |  | $ | (28,904) |
Segment profitability margin*** |  |  |  |  |  |  |
Graduate Program Segment | 8.0 | % |  | 1.2 | % |  | 5.9 | % |  | (2.0) | %
Alternative Credential Segment | (7.6) |  |  | (23.7) |  |  | (11.6) |  |  | (22.2) |
Total segment profitability margin | 1.8 | % |  | (7.0) | % |  | (0.5) | % |  | (7.0) | %
* The Company has excluded immaterial amounts of intersegment revenues from the three- and nine-month periods ended September 30, 2020 and 2019. ** The Company defines segment profitability as net income or net loss, as applicable, before net interest income (expense), foreign currency gains or losses, taxes, depreciation and amortization expense, deferred revenue fair value adjustments, transaction costs, integration costs, restructuring-related costs, stockholder activism costs, certain litigation-related costs, consisting of fees for certain litigation and other proceedings, 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 September 30, |  |  |  | Nine Months Ended September 30, |  |
| 2020 |  | 2019 |  | 2020 |  | 2019
| (in thousands) |  |  |  |  |  |
Net loss | $ | (52,554) |  |  | $ | (141,112) |  |  | $ | (178,827) |  |  | $ | (190,638) |
Adjustments: |  |  |  |  |  |  |
Stock-based compensation expense | 22,001 |  |  | 16,535 |  |  | 63,962 |  |  | 36,086 |
Foreign currency (gain) loss | (42) |  |  | 710 |  |  | 1,659 |  |  | 1,093 |
Net interest expense | 6,851 |  |  | 4,727 |  |  | 18,195 |  |  | 3,043 |
Income tax (benefit) expense | (162) |  |  | 714 |  |  | (1,580) |  |  | (18,918) |
Depreciation and amortization expense | 23,936 |  |  | 22,288 |  |  | 71,406 |  |  | 46,639 |
Loss on debt extinguishment | — |  |  | — |  |  | 11,671 |  |  | — |
Impairment charge | — |  |  | 70,379 |  |  | — |  |  | 70,379 |
Other* | 3,682 |  |  | 15,036 |  |  | 10,835 |  |  | 23,412 |
Total adjustments | 56,266 |  |  | 130,389 |  |  | 176,148 |  |  | 161,734 |
Total segment profitability | $ | 3,712 |  |  | $ | (10,723) |  |  | $ | (2,679) |  |  | $ | (28,904) |
*Includes (i) transaction and integration costs of $0.4 million and $2.5 million in the three months ended September 30, 2020 and 2019, respectively and $1.5 million and $7.0 million in the nine months ended September 30, 2020 and 2019, respectively, (ii) restructuring-related costs of $2.7 million and $6.6 million in the three months ended September 30, 2020 and 2019, respectively and $3.2 million and $7.2 million in the nine months ended September 30, 2020 and 2019, respectively, (iii) stockholder activism costs of $5.6 million in the nine months ended September 30, 2020, (iv) litigation-related costs of $0.6 million in each of the three- and nine-month periods ended September 30, 2020, and (v) deferred revenue fair value adjustments of $5.9 million and $9.3 million in the three and nine months ended September 30, 2019, respectively. The following table presents the Company’s total assets by segment as of each of the dates indicated.
| September 30, 2020 |  | December 31, 2019
| (in thousands) |  |
Total assets |  |  |
Graduate Program Segment | $ | 852,350 |  |  | $ | 507,187 |
Alternative Credential Segment | 700,428 |  |  | 679,643 |
Total assets | $ | 1,552,778 |  |  | $ | 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.
| September 30, 2020 |  | December 31, 2019
| (in thousands) |  |
Trade accounts receivable |  |  |
Graduate Program Segment accounts receivable | $ | 27,118 |  |  | $ | 3,454 |
Graduate Program Segment unbilled revenue | 35,199 |  |  | 12,123 |
Alternative Credential Segment accounts receivable | 37,035 |  |  | 19,408 |
Provision for credit losses | (3,640) |  |  | (1,330) |
Total trade accounts receivable | $ | 95,712 |  |  | $ | 33,655 |
Contract liabilities |  |  |
Graduate Program Segment deferred revenue | $ | 7,851 |  |  | $ | 2,210 |
Alternative Credential Segment deferred revenue | 83,932 |  |  | 46,623 |
Total contract liabilities | $ | 91,783 |  |  | $ | 48,833 |
For the Graduate Program Segment, no revenue recognized during each of the three months ended September 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 nine months ended September 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, no revenue recognized during each of the three months ended September 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 nine months ended September 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 other assets, non-current on the condensed consolidated balance sheets as of September 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 $19.7 million and $10.6 million for the three months ended September 30, 2020 and 2019, respectively. The Company’s non-U.S. revenue was $49.2 million and $29.4 million for the nine months ended September 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 September 30, 2020 and December 31, 2019 totaled $1.6 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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