Segment and Geographic Information (Tables)

9 Months Ended

Sep. 30, 2020

Schedule of revenue, segment profitability and segment profitability margin by segment

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.

Schedule of reconciliation of net loss to total segment profitability

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.

Schedule of total assets by segment

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

Schedule of contract assets and 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