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Restructuring Charges | 6 Months Ended
--- | ---
Jun. 30, 2024
Restructuring and Related Activities [Abstract] |
Restructuring Charges | Restructuring Charges During the second quarter of 2022, the Company accelerated its planned transition to a platform company (the “2022 Strategic Realignment Plan”). The plan was designed to reorient the Company around a single platform allowing it to pursue a portfolio-based marketing strategy that drives traffic to the edX marketplace. As part of the plan, the Company simplified its executive structure, reduced employee headcount, rationalized its real estate footprint and implemented steps to optimize marketing spend. During the third quarter of 2022, the Company completed the planned headcount reductions and consolidated its in-person operations to its offices in Lanham, Maryland and Cape Town, South Africa. In furtherance of the 2022 Strategic Realignment Plan, the Company reduced employee headcount during the third quarter of 2023. Restructuring charges related to the 2022 Strategic Realignment Plan were $2.7 million and $3.2 million for the three months ended June 30, 2024 and 2023, respectively, and $5.5 million and $7.7 million for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024, the Company incurred cumulative restructuring charges of $61.2 million related to the 2022 Strategic Realignment Plan. The Company anticipates that it will incur aggregate restructuring charges associated with the 2022 Strategic Realignment Plan of approximately $70 million to $75 million. The majority of the estimated remaining restructuring charges relate to leased facilities and will be recognized as expense over the remaining lease terms, ranging from 1 to 7 years. On July 25, 2024, the Company took steps to reject several operating leases in connection with the Chapter 11 Cases. The Bankruptcy Court will assess these motions at a hearing scheduled for September 6, 2024. In late 2023, the Company announced leadership changes and commenced a comprehensive performance improvement exercise aimed at, among other things, further improving its profitability and optimizing its operating model and balance sheet. Part of this exercise includes headcount reductions associated with implementing changes to the Company’s organizational structure, as management works to align staffing levels with business priorities across functional areas. During the second quarter of 2024, the Company further reduced its occupancy in its Lanham, Maryland office. The following tables present restructuring charges by reportable segment on the Company’s condensed consolidated statements of operations for the periods indicated.
| Three Months Ended June 30, 2024 |  | Three Months Ended June 30, 2023
| Degree Program Segment |  | Alternative Credential Segment |  | Degree Program Segment |  | Alternative Credential Segment
| (in thousands)
Leadership and organizational structure changes |  |  |  |  |  |  |
Severance and severance-related costs | $ | 3,951 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Lease and lease-related charges | 1,398 |  |  | — |  |  | — |  |  | — |
| 5,349 |  |  | — |  |  | — |  |  | — |
2022 Strategic Realignment Plan |  |  |  |  |  |  |
Severance and severance-related costs | — |  |  | — |  |  | — |  |  | — |
Lease and lease-related charges | 1,956 |  |  | 717 |  |  | 2,129 |  |  | 682 |
Professional and other fees relating to restructuring activities | — |  |  | — |  |  | 404 |  |  | — |
Other* | — |  |  | — |  |  | 13 |  |  | — |
| 1,956 |  |  | 717 |  |  | 2,546 |  |  | 682 |
Other restructuring charges** | 384 |  |  | — |  |  | 373 |  |  | 21 |
Total restructuring charges | $ | 7,689 |  |  | $ | 717 |  |  | $ | 2,919 |  |  | $ | 703 |
| Six Months Ended June 30, 2024 |  | Six Months Ended June 30, 2023
| Degree Program Segment |  | Alternative Credential Segment |  | Degree Program Segment |  | Alternative Credential Segment
| (in thousands)
Leadership and organizational structure changes |  |  |  |  |  |  |
Severance and severance-related costs | $ | 5,091 |  |  | $ | 308 |  |  | $ | — |  |  | $ | — |
Lease and lease-related charges | 1,398 |  |  | — |  |  | — |  |  | — |
| 6,489 |  |  | 308 |  |  | — |  |  | — |
2022 Strategic Realignment Plan |  |  |  |  |  |  |
Severance and severance-related costs | — |  |  | — |  |  | 1,231 |  |  | — |
Lease and lease-related charges | 3,967 |  |  | 1,459 |  |  | 4,272 |  |  | 1,441 |
Professional and other fees relating to restructuring activities | — |  |  | 119 |  |  | 744 |  |  | — |
Other* | — |  |  | — |  |  | 26 |  |  | — |
| 3,967 |  |  | 1,578 |  |  | 6,273 |  |  | 1,441 |
Other restructuring charges** | 791 |  |  | — |  |  | 753 |  |  | 30 |
Total restructuring charges | $ | 11,247 |  |  | $ | 1,886 |  |  | $ | 7,026 |  |  | $ | 1,471 |
* |  | Includes the acceleration of certain technology and content development costs.
** |  | Includes severance and severance-related costs and lease-related charges.
Summary of Accrued Restructuring Liability The following table presents the additions and adjustments to the accrued restructuring liability on the Company’s condensed consolidated balance sheets for the periods indicated.
|  | Balance as of December 31, 2023 |  | Additional Costs |  | Cash Payments |  | Balance as of June 30, 2024
| (in thousands)
Leadership and organizational structure changes |  |  |  |  |  |  |  |
Severance and severance-related costs |  | $ | 9,779 |  |  | $ | 5,025 |  |  | $ | (8,907) |  |  | $ | 5,897 |
2022 Strategic Realignment Plan |  |  |  |  |  |  |  |
Severance and severance-related costs |  | 4,093 |  |  | 107 |  |  | (3,595) |  |  | 605 |
Professional and other fees relating to restructuring activities |  | 363 |  |  | 191 |  |  | (558) |  |  | (4) |
Lease and lease-related charges |  | 28 |  |  | 7,614 |  |  | (7,214) |  |  | 428 |
Other severance and severance-related costs |  | 243 |  |  | — |  |  | (243) |  |  | — |
Total restructuring |  | $ | 14,506 |  |  | $ | 12,937 |  |  | $ | (20,517) |  |  | $ | 6,926 |

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- Definition The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 5.P.4.e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479823/420-10-S99-2 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (b)(2) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482017/420-10-50-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482017/420-10-50-1 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/420/tableOfContent Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482017/420-10-50-1 + Details
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