v3.20.2
Segment and Geographic Information
 9 Months Ended
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,
 2020201920202019
 (dollars in thousands)
Revenue by segment*  
Graduate Program Segment$122,036 $103,393 $356,178 $308,970 
Alternative Credential Segment79,037 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 Segment8.0 %1.2 %5.9 %(2.0)%
Alternative Credential Segment(7.6)(23.7)(11.6)(22.2)
Total segment profitability margin1.8 %(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,
 2020201920202019
 (in thousands)
Net loss$(52,554)$(141,112)$(178,827)$(190,638)
Adjustments:
Stock-based compensation expense22,001 16,535 63,962 36,086 
Foreign currency (gain) loss(42)710 1,659 1,093 
Net interest expense6,851 4,727 18,195 3,043 
Income tax (benefit) expense(162)714 (1,580)(18,918)
Depreciation and amortization expense23,936 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 adjustments56,266 130,389 176,148 161,734 
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 Segment700,428 679,643 
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 revenue35,199 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 revenue83,932 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.