2U Inc (TWOU) 2023 Q3 法說會逐字稿

Thank you for standing by. At this time, I would like to welcome everyone to the 2U, Inc. Third Quarter 2023 Earnings Call. (Operator Instructions) As a reminder, today's call is being recorded.

謝謝你的支持。此時，我謹歡迎大家參加 2U, Inc. 2023 年第三季財報電話會議。 （操作員說明）謹此提醒，今天的通話正在錄音。

I will now hand today's call over to Steve Virostek. Please go ahead, sir.

我現在將今天的電話轉交給史蒂夫·維羅斯泰克。請繼續，先生。

Thank you, Tamica, and good afternoon, everyone, and welcome to 2U's Third Quarter 2023 Earnings Conference Call. Joining me on the call this afternoon are Chip Paucek, our Co-Founder and CEO; and Paul Lalljie, our Chief Financial Officer. Following our prepared remarks, we'll take questions.

謝謝 Tamica，大家下午好，歡迎參加 2U 2023 年第三季財報電話會議。今天下午與我一起參加電話會議的是我們的共同創辦人兼執行長 Chip Paucek；和我們的財務長 Paul Lalljie。在我們準備好的發言之後，我們將回答問題。

First, I'd like to cover a few housekeeping items. The earnings release and slide presentation are available on the Investor Relations website, and a replay of this webcast will be made available later today. Statements made during our call will include forward-looking statements regarding our financial and operating results, plans and objectives of management for future operations, including our strategic realignment plan, the implementation of our platform strategy and portfolio management activities, anticipated trends for learners and university partners, changes in laws, regulations and agency guidance for our industry and other matters. These statements are subject to risks, uncertainties and assumptions. Any forward-looking statements made on this call reflect our analysis as of today, and we have no plans or duty to update them.

首先，我想介紹一些家事用品。收益報告和幻燈片演示可在投資者關係網站上獲取，今天稍後將重播該網絡廣播。我們在電話會議期間發表的聲明將包括有關我們的財務和營運績效、未來營運管理計畫和目標的前瞻性聲明，包括我們的策略調整計畫、我們的平台策略和投資組合管理活動的實施、學習者和大學的預期趨勢合作夥伴、我們行業的法律、法規和機構指南的變化以及其他事項。這些陳述受到風險、不確定性和假設的影響。本次電話會議中所做的任何前瞻性陳述均反映了我們截至目前為止的分析，我們沒有計劃或義務對其進行更新。

Please refer to the earnings press release and to the risk factors described in the documents with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31, 2022, and other SEC filings for information on risks, uncertainties and assumptions that may cause our actual results to differ materially from those set forth in such statements.

請參閱收益新聞稿以及向美國證券交易委員會提交的文件中描述的風險因素，包括我們截至 2022 年 12 月 31 日的 10-K 表格年度報告以及其他 SEC 備案文件，以了解風險信息，可能導致我們的實際結果與此類聲明中規定的結果存在重大差異的不確定性和假設。

In addition, during today's call, we will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of 2U's performance. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results. You can find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP results in our earnings press release and on the Investor Relations page of our website.

此外，在今天的電話會議中，我們將討論非 GAAP 財務指標，我們認為這些指標可作為 2U 績效的補充指標。這些非公認會計原則措施應作為公認會計原則結果的補充，而不是替代或孤立於公認會計原則結果。您可以在我們的收益新聞稿和我們網站的投資者關係頁面上找到有關這些非公認會計原則衡量標準的其他披露信息，包括與可比較公認會計原則結果的調節表。

So with that, let me hand the call to Chip.

那麼，讓我把電話轉給奇普。

Thanks, Steve, and good afternoon, everyone. Revenue for the third quarter came in at $229.7 million with adjusted EBITDA of $28.6 million. These results did not meet our expectations, given weaker demand in our coding boot camps and continued enrollment softness in some of our higher-priced degree programs. We also know we need to strengthen our balance sheet and are working on it diligently, and Paul will talk about that more in a moment.

謝謝史蒂夫，大家下午好。第三季營收為 2.297 億美元，調整後 EBITDA 為 2,860 萬美元。鑑於我們的程式設計訓練營需求疲軟以及一些價格較高的學位課程的招生持續疲軟，這些結果沒有達到我們的預期。我們也知道我們需要加強我們的資產負債表，並正在努力解決這個問題，保羅稍後會詳細討論這一點。

That said, we did see a number of things that we believe are going in the right direction, which gives us confidence in our ability to return to profitable growth in the future. Our exec ed business grew 32% year-over-year, and key leading indicators continue to improve in our degree business. Degree pipeline also remains strong, and we're targeting over 80 new launches for next year. We've already signed contracts for over half of these programs.

也就是說，我們確實看到了一些我們認為正在朝著正確方向發展的事情，這讓我們對未來恢復獲利成長的能力充滿信心。我們的執行業務年增32%，學位業務的關鍵領先指標持續改善。學位儲備也依然強勁，我們的目標是明年推出 80 多個新學位。我們已經簽署了其中一半以上的項目的合約。

From a marketing standpoint, we've increased the return on our trailing 12-month marketing spend by a factor of 2 since implementing our new marketing framework in mid-2022. Learner prospects grew $3 million to $81 million at the end of Q3 and organic lead volume from the edX platform continued to increase, up to 46% of total leads generated. Lastly, we continue to see solid growth in our enterprise business, up 22% in the quarter. And based on current performance and a strong enterprise pipeline, believe it is poised to more than double next year.

從行銷的角度來看，自 2022 年中期實施新的行銷框架以來，我們將過去 12 個月的行銷支出回報率提高了 2 倍。第三季末，學習者前景增加了 300 萬美元，達到 8,100 萬美元，來自 edX 平台的有機潛在客戶數量持續增加，高達所產生潛在客戶總數的 46%。最後，我們的企業業務持續穩健成長，本季成長 22%。根據目前的業績和強大的企業管道，相信明年的成長將增加一倍以上。

So let's move on and unpack our results in more detail, starting with the Degree segment. As we discussed on our last call, part of our platform strategy involves rotating out of degree programs that are not performing from a financial standpoint, from a debt to earnings standpoint, from a partner relationship standpoint or for other reasons. We refer to this rotation as portfolio management, where we mutually agree with the partner to exit certain programs for a fee.

因此，讓我們繼續更詳細地分析我們的結果，從學位部分開始。正如我們在上次電話會議中討論的那樣，我們平台策略的一部分涉及淘汰從財務角度、從債務到收益的角度、從合作夥伴關係的角度或其他原因表現不佳的學位課程。我們將這種輪調稱為投資組合管理，即我們與合作夥伴共同同意退出某些專案並收取費用。

The market for degree programs has changed over the years and some programs have become more difficult to run due to their pricing or other factors. Where we can't work with our partners to make adjustments to improve these factors, we will consider whether exiting the program makes sense to improve the health of our overall portfolio long term. For example, we believe that affordability is key to the Degree segment's success going forward. But as you know, program pricing is a decision that rests entirely with the university partner. So we've taken a hard look at our portfolio through that lens.

多年來，學位課程市場發生了變化，一些課程由於定價或其他因素而變得更加難以運作。如果我們無法與合作夥伴合作做出調整以改善這些因素，我們將考慮退出該計劃對於改善我們整體投資組合的長期健康是否有意義。例如，我們認為負擔能力是學位領域未來成功的關鍵。但如您所知，專案定價完全由大學合作夥伴決定。因此，我們透過這個鏡頭仔細審視了我們的投資組合。

In that light, in the third quarter, we mutually agreed to transition out of certain degree programs with a client where we believe the long-term future of those particular programs was challenged. This resulted in revenue in the quarter of $26 million related to the fee the university agreed to pay in connection with the transition.

有鑑於此，在第三季度，我們與客戶共同同意退出某些學位課程，我們認為這些特定課程的長期未來受到了挑戰。這導致該季度的收入為 2600 萬美元，與大學同意支付的過渡費用相關。

Early in the fourth quarter, we also mutually agreed to transition out of certain degree programs with USC. This will result in revenue in the fourth quarter of approximately $40 million. We thank USC for the role they've had in helping us build our company, but ultimately, the programs we agreed to exit no longer align with our platform strategy. Paul will dig into how these transactions show up in our results and impact our outlook.

第四季初，我們也共同同意從南加州大學的某些學位課程過渡。這將導致第四季度的收入約為 4000 萬美元。我們感謝南加州大學在幫助我們建立公司方面所發揮的作用，但最終，我們同意退出的專案不再符合我們的平台策略。保羅將深入研究這些交易如何顯示在我們的業績中並如何影響我們的前景。

I wanted to highlight a couple of points when thinking about portfolio management. One, in every transition, 2U and the school are hyper-focused on ensuring that students are well served and have a seamless experience; and two, transitioning out of these programs through portfolio management is in the best interest of the company. It allows us to reallocate resources from programs we're exiting to programs remaining in the portfolio. And it also allows us to generate significant cash in the near term that we can use to strengthen our balance sheet and invest in our growth areas.

在考慮投資組合管理時，我想強調幾點。第一，在每一次過渡中，2U 和學校都高度重視確保學生得到良好的服務並擁有無縫的體驗；第二，透過投資組合管理從這些計劃中過渡符合公司的最佳利益。它使我們能夠將資源從我們正在退出的項目重新分配到投資組合中剩餘的項目。它還使我們能夠在短期內產生大量現金，我們可以用它們來加強我們的資產負債表並投資於我們的成長領域。

While on the subject of portfolio management, you might be wondering whether we're engaging in these activities because of softness across the entire degree portfolio. I wanted to give you some color to show why that is not the case. We think it's helpful to look at the performance of the remaining [free] portfolio, independent of portfolio management, similar to a same-store sales comparison.

在談到投資組合管理的主題時，您可能想知道我們是否因為整個學位投資組合的疲軟而參與這些活動。我想給你一些顏色來說明為什麼情況並非如此。我們認為，查看剩餘的[免費]產品組合的表現是有幫助的，獨立於產品組合管理，類似於同店銷售比較。

A key leading indicator for Degree performance is submitted application volume. And for the programs in our current portfolio, over the past few months, the 90-day submitted application volume has remained over 10% higher than the prior year. We expect that this will translate to increased enrollment starting with the January 2024 cohort with revenue following. This gives us high confidence in the growth profile of the Degree segment going forward.

學位表現的一個關鍵領先指標是提交的申請量。對於我們目前投資組合中的項目，在過去幾個月中，90 天提交的申請量仍然比去年高出 10% 以上。我們預計，從 2024 年 1 月開始，這將意味著入學人數增加，收入隨之增加。這讓我們對學位領域未來的成長前景充滿信心。

In addition, the profitability of our current portfolio remains strong. So at the end of the day, the underlying degree business has many positive attributes that we believe will drive profitable growth in the future. But the story of the Degree segment is not just about portfolio management and the health of the current portfolio.

此外，我們目前投資組合的獲利能力仍然強勁。因此，歸根結底，基礎學位業務具有許多積極的屬性，我們相信這些屬性將推動未來的獲利成長。但學位部分的故事不僅僅是投資組合管理和當前投資組合的健康狀況。

We're the market leader in OPM for degrees, and we're building on that lead. We're indeed transitioning to an overall more competitive and affordable portfolio and we're well-positioned to do so because of our flex revenue share model, which enables us to profitably deliver lower-cost degrees. As a reminder, our flex model allows universities to obtain our product and service stack with a tiered revenue share model based on what they need. It also allows for a shorter overall contract, which can be desirable for some partners.

我們是 OPM 學位市場的領導者，我們正在鞏固這一領先地位。我們確實正在向整體更具競爭力和價格實惠的產品組合過渡，並且由於我們靈活的收入分成模式，我們處於有利地位，這使我們能夠以較低成本提供學位並實現盈利。提醒一下，我們的彈性模型允許大學根據他們的需求透過分層收入分享模型來獲得我們的產品和服務堆疊。它還允許較短的總體合同，這對於某些合作夥伴來說可能是可取的。

Most partners have been selecting our core services plus enhanced marketing and placement for a revenue share of 50% to 55% to 2U. University demand for our flex degrees continues to be incredibly strong. We're launching over 80 degrees in 2024, up from a previous target of 50, over 70 of which are flex, and we've signed contracts for over half of these programs, as you can see in the earnings release. We believe these new degrees can generate $120 million of revenue at steady state and will more than replace the revenue of the degrees being exited through portfolio management.

大多數合作夥伴一直選擇我們的核心服務以及增強的行銷和佈局，以獲得 2U 50% 至 55% 的收入份額。大學對我們的彈性學位的需求仍然非常強勁。我們將在2024 年推出超過80 個學位，高於之前50 個學位的目標，其中70 多個是靈活的，並且我們已經簽署了其中一半以上的項目合同，正如您在收益發布中看到的那樣。我們相信這些新學位在穩定狀態下可以產生 1.2 億美元的收入，並將遠遠取代透過投資組合管理退出的學位的收入。

Our new flex model is allowing us to radically alter the makeup of the degree business. We're aggregating degrees that we believe will meet significant market demand with competitive pricing. The average tuition price of our flex degree programs is $40,000, about 50% less than our full model degree programs. We also think this demand for our flex degree is just the beginning. Based on current interest from university clients, we expect degree signings to continue at this rate and anticipate that 2025 will have a similar number of new launches as 2024.

我們新的彈性模式使我們能夠從根本上改變學位業務的組成。我們正在匯總學位，我們相信這些學位將以具有競爭力的價格滿足巨大的市場需求。我們靈活學位課程的平均學費為 40,000 美元，比我們完整的示範學位課程低約 50%。我們也認為對我們的彈性學位的需求只是一個開始。根據大學客戶目前的興趣，我們預計學位簽約量將繼續保持這一速度，並預計 2025 年新推出的學位數量將與 2024 年相似。

So to sum up what's happening in the degree segment, while portfolio management may complicate current period results, the cash generated from these transactions, the health of the current portfolio, and the significant demand for new flex programs give us confidence that the segment can return to really solid growth as we enter 2025.

因此，總結一下學位領域正在發生的事情，雖然投資組合管理可能會使當期業績複雜化，但這些交易產生的現金、當前投資組合的健康狀況以及對新彈性項目的巨大需求使我們有信心該領域能夠實現回報進入 2025 年，我們將實現真正穩健的成長。

Moving on to Alt Cred. Q3 presented some challenges due to significant softness in our boot camp business in coding, which was disappointing. Coding is now running at pre-pandemic levels of enrollment after 2022 enrollment that was very, very strong. This underperformance impacted both the top and bottom lines in the segment. However, noncoding offerings in the boot camp business like cyber showed growth.

轉向 Alt Cred。由於我們的程式設計訓練營業務顯著疲軟，第三季帶來了一些挑戰，這令人失望。 2022 年的入學人數非常非常強勁，現在編程的入學人數處於大流行前的水平。這種表現不佳影響了該領域的營收和利潤。然而，訓練營業務中的非程式設計產品（例如網路）卻出現了成長。

Turning to the other side of Alt Cred. Our executive education business performed nicely in Q3, growing 32% due to platform organic growth and a really compelling artificial intelligence product line. These are the only cohort-based products in the market at scale which creates fantastic retention in student outcomes.

轉向 Alt Cred 的另一邊。我們的高階主管教育業務在第三季表現出色，由於平台有機成長和真正引人注目的人工智慧產品線，成長了 32%。這些是市場上唯一大規模的基於群體的產品，可以大大提高學生的學業成績。

Also, organic leads in this part of the business are up 12% year-over-year. Across all of Alt Cred, we continue to believe that the key to success is cohort-based programs, which drive high completion rates and strong student outcomes. But given the Q3 performance in coding, we're taking a hard look at all aspects of this business and are committed to making it profitable and cash flow positive as soon as possible.

此外，這部分業務的有機領先優勢較去年同期成長 12%。在整個 Alt Cred 中，我們仍然相信成功的關鍵是基於隊列的項目，它可以提高完成率和學生的成績。但考慮到第三季的編碼表現，我們正在認真審視該業務的各個方面，並致力於盡快使其盈利並實現正現金流。

Before I turn it over to Paul, I want to provide a quick note on regulatory matters. We continue to strongly believe that revenue sharing will continue, particularly given the vocal support for the model from universities and other third parties. As regulators listen to their stakeholders, we believe they'll see the importance of third-party arrangements for driving innovation, access and affordability in higher education.

在將其交給保羅之前，我想先簡單介紹一下監管問題。我們仍然堅信收入分享將繼續下去，特別是考慮到大學和其他第三方對該模式的大力支持。當監管機構傾聽利害關係人的意見時，我們相信他們會看到第三方安排對於推動高等教育創新、入學機會和負擔能力的重要性。

With that, I'll hand things over to Paul to discuss the results in more detail.

這樣，我將把事情交給 Paul 來更詳細地討論結果。

Thanks, Chip, and good afternoon, everyone. During the quarter, we continued to make progress implementing our platform strategy, which we believe will drive benefits for students, universities and shareholders.

謝謝奇普，大家下午好。本季度，我們繼續在實施平台策略方面取得進展，我們相信這將為學生、大學和股東帶來利益。

Revenue from the third quarter totaled $229.7 million, with Degree segment revenue of $137.6 million and Alternative Credential revenue of $92.1 million. Operating expense for the quarter totaled $256.6 million, a decrease of 24% from the third quarter of 2022. Adjusted EBITDA for the quarter totaled $28.6 million, a margin of 12%, while adjusted unlevered free cash flow on a trailing 12-month basis was $31.9 million.

第三季收入總計 2.297 億美元，其中學位部門收入為 1.376 億美元，替代證書收入為 9,210 萬美元。該季度的營運費用總計 2.566 億美元，較 2022 年第三季下降 24%。該季度調整後 EBITDA 總計 2,860 萬美元，利潤率為 12%，而過去 12 個月的調整後無槓桿自由現金流為3190萬美元。

Overall, the third quarter was challenging due to enrollment softness in our coding boot camps and continued enrollment declines in our higher-priced degree programs. However, there are some bright spots in this quarter's results and key leading indicators and we are taking significant actions to drive profitability and free cash flow. Our results this quarter and outlook for the year are impacted by 3 items: portfolio management of $25.8 million, softness in our boot camp business of approximately $10.5 million and cost management actions taken in the quarter that are expected to reduce ongoing operating expense by $43 million.

總體而言，由於我們的編碼訓練營的入學人數疲軟以及價格較高的學位課程的入學人數持續下降，第三季度充滿挑戰。然而，本季的業績和關鍵領先指標有一些亮點，我們正在採取重大行動來提高獲利能力和自由現金流。我們本季的業績和今年的前景受到3 個項目的影響：2,580 萬美元的投資組合管理、約1,050 萬美元的訓練營業務疲軟以及本季採取的成本管理行動，預計將減少4,300 萬美元的持續營運費用。

As we discussed on our last earnings call, part of our platform strategy involves rotating our degree portfolio away from degree programs that no longer align with our business objectives, and replace these programs with degree offerings that better align with our strategy, like our flex degrees. They have favorable cash flow profiles due to lower capital expenditure requirements and lower marketing expense given our ability to leverage the edX platform for marketing. Many of our planned 80-plus 2024 launches are programs that we're taking over from another provider. These programs are already operational, so we expect them to reach steady state cash generation more quickly than degree programs where we're starting from scratch.

正如我們在上次財報電話會議上討論的那樣，我們平台策略的一部分涉及將我們的學位組合從不再符合我們業務目標的學位課程中剝離出來，並用更符合我們策略的學位課程（例如我們的靈活學位）取代這些課程。由於我們能夠利用 edX 平台進行行銷，因此資本支出要求較低，行銷費用也較低，因此他們擁有良好的現金流狀況。我們計劃在 2024 年推出的 80 多個專案中，有許多是我們從另一家供應商手中接手的。這些項目已經投入運行，因此我們預計它們能夠比我們從頭開始的學位專案更快地達到穩定的現金生成狀態。

Before I move on to a discussion of our results in more detail, I thought it would be helpful to give you an overview of how we account for portfolio management and its financial impact. When we and our university partners agreed to discontinue our program, our partner agrees to pay us a fee, which we recognize as revenue when the agreement is signed. Actual cash payments are scheduled in the agreement and occur over the next 12 to 24 months.

在我繼續更詳細地討論我們的結果之前，我認為向您概述我們如何解釋投資組合管理及其財務影響會有所幫助。當我們和我們的大學合作夥伴同意終止我們的專案時，我們的合作夥伴同意向我們支付一筆費用，我們在簽署協議時將其確認為收入。實際現金支付已在協議中安排，並在未來 12 至 24 個月內支付。

From a cash flow standpoint, portfolio management generates near-term cash that strengthens our balance sheet and provides us with the flexibility to launch new programs and invest in our growth areas. Please keep these dynamics in mind as I discuss the results for the quarter and our expectations for the year.

從現金流的角度來看，投資組合管理產生的短期現金可以增強我們的資產負債表，並使我們能夠靈活地啟動新計劃和投資於我們的成長領域。當我討論本季的業績和我們對今年的預期時，請記住這些動態。

Now for a closer look at our results for the quarter. Revenue for the quarter totaled $229.7 million, down 1% from revenue of $232.2 million a year ago. Revenue from our degree segment was $137.6 million, essentially flat when compared with the third quarter of 2022. Degree segment revenue included $25.8 million of revenue from our portfolio management activities in the quarter as we mutually agreed to exit a handful of degree programs with a university client. This was the primary driver of our 26% year-over-year increase in average revenue per full course equivalent, or FCE enrollment. Degree FCEs decreased 21% year-over-year, reflecting the impact of portfolio management and the implementation of our new marketing framework in mid-2022.

現在仔細看看我們本季的業績。該季度營收總計 2.297 億美元，比去年同期的 2.322 億美元下降 1%。我們的學位部門收入為 1.376 億美元，與 2022 年第三季相比基本持平。學位部門收入包括本季投資組合管理活動的 2,580 萬美元收入，因為我們雙方同意退出與大學的少數學位課程客戶。這是我們每門相當於完整課程或 FCE 入學人數的平均收入年增 26% 的主要動力。學位 FCE 年減 21%，反映了投資組合管理和 2022 年中期實施新行銷框架的影響。

Revenue from our Alternative Credential segment was $92.1 million, a decrease of 3% on a year-over-year basis. Average revenue per FCE decreased 11% and FCE enrollment increased 9%, driven by strong performance of our exec ed offering, which increased 18%, primarily due to continued strength in our artificial intelligence courses. Partially offsetting this increase was softness in our largest boot camp vertical, coding. Remember that our exec ed offerings are lower priced than our boot camps. And this shift in mix led to a decrease in average revenue per FCE.

我們的替代證書部門的收入為 9,210 萬美元，年減 3%。每個FCE 的平均收入下降了11%，而FCE 入學人數增加了9%，這得益於我們的執行課程的強勁表現，該課程增長了18%，這主要是由於我們人工智慧課程的持續強勁。我們最大的訓練營垂直領域的軟性部分抵消了這一增長。請記住，我們的執行教育課程的價格低於我們的新手訓練營。這種組合的轉變導致每個 FCE 的平均收入下降。

Now for a discussion of operating expenses. For the third quarter, operating expense totaled $256.6 million, a decrease of 24% compared with the year-ago quarter, mainly due to a noncash impairment charge of $79.5 million in our Alternative Credential segment in the third quarter of last year, and we did not have a corresponding charge this quarter. The remaining decrease of $300,000 was primarily driven by a $9 million decrease in personnel and personnel-related expense, partially offset by a $3.7 million increase in paid marketing costs in the Alternative Credential segment and a $2.5 million increase in restructuring charges.

現在討論營運費用。第三季營運費用總計 2.566 億美元，年減 24%，主要是由於去年第三季我們的替代證書部門的非現金減損費用為 7,950 萬美元，我們做到了本季沒有相應的費用。其餘 30 萬美元的減少主要是由於人事和人事相關費用減少 900 萬美元，部分被替代證書部門付費行銷成本增加 370 萬美元和重組費用增加 250 萬美元所抵銷。

In the quarter, we reduced head count across the business by 12% and resulting in approximately $55 million of annual savings, including $43 million of OpEx. This reflects our continued focus on improving EBITDA and cash flow.

本季度，我們將整個業務的員工人數減少了 12%，每年節省了約 5,500 萬美元，其中包括 4,300 萬美元的營運支出。這反映出我們持續關注改善 EBITDA 和現金流。

Turning to our profitability measures. Net loss for the quarter totaled $47.4 million compared to $121.7 million in the third quarter of 2022, reflecting the revenue and operating expense drivers I mentioned previously as well as higher interest expense of $3.3 million from our convertible notes issued in January 2023 and our revolver. Adjusted EBITDA in the quarter was $28.6 million, a margin of 12% compared to a 14% margin in the third quarter of 2022. Adjusted EBITDA for our Degree segment was $43.6 million compared to $44.9 million in the third quarter of 2022. For the Alternative Credential segment, adjusted EBITDA loss of $15 million increased 21% from $12.4 million in the prior year.

轉向我們的獲利能力指標。本季淨虧損總計4,740 萬美元，而2022 年第三季為1.217 億美元，反映了我之前提到的收入和營運費用驅動因素，以及2023 年1 月發行的可轉換票據和左輪手槍帶來的330 萬美元的較高利息費用。本季調整後 EBITDA 為 2,860 萬美元，利潤率為 12%，而 2022 年第三季為 14%。學位部門調整後 EBITDA 為 4,360 萬美元，而 2022 年第三季為 4,490 萬美元。憑證部門調整後EBITDA 虧損為1,500 萬美元，比前一年的1,240 萬美元增加了21%。

Next, I'll turn to the balance sheet and cash flow statement. As a reminder, the timing of payments from our university partners follows the academic calendar with the exception of payments made as part of portfolio management activities, which, as I said earlier, are typically paid over 12 to 24 months. Accounts receivable increased $25.9 million to $113.2 million from the end of our second quarter, primarily due to $13.1 million related to portfolio management and the delayed receipt of a $15 million payment from a university partner, which was collected in October.

接下來，我將轉向資產負債表和現金流量表。提醒一下，我們的大學合作夥伴的付款時間遵循學術日曆，但作為投資組合管理活動一部分的付款除外，正如我之前所說，這些付款通常在 12 至 24 個月內支付。應收帳款較第二季末增加了 2,590 萬美元，達到 1.132 億美元，主要是由於與投資組合管理相關的 1,310 萬美元以及延遲收到大學合作夥伴 10 月份收取的 1,500 萬美元付款。

We ended the quarter with cash and cash equivalents of $53.9 million, a decrease of $12.8 million from the second quarter of 2023. Cash at the end of the quarter includes approximately $20 million from our revolving credit facility, which we used to manage working capital due to the delayed payment from one of our university partners.

本季末，我們的現金和現金等價物為5,390 萬美元，比2023 年第二季減少1,280 萬美元。本季末的現金包括來自我們循環信貸額度的約2,000 萬美元，我們用該額度來管理到週期營運資金我們的一所大學合作夥伴延遲付款。

From a cash flow perspective, our portfolio management activities executed through October of 2023, which includes the USC programs Chip discussed, are expected to generate approximately $96 million of cash over the next 12 to 24 months. We delivered adjusted unlevered free cash flow of $31.9 million for the trailing 12 months ending September 30, 2023, an improvement of $33.3 million compared to the 12 months ending September 30, 2022, reflecting higher profitability and lower capital expenditures.

從現金流的角度來看，我們截至 2023 年 10 月執行的投資組合管理活動（包括所討論的 USC Chip 專案）預計將在未來 12 至 24 個月內產生約 9,600 萬美元的現金。截至2023年9月30日的過去12個月，我們的調整後無槓桿自由現金流為3,190萬美元，比截至2022年9月30日的12個月增加了3,330萬美元，反映出更高的獲利能力和更低的資本支出。

Before I turn to a discussion of guidance, I want to mention that we are constantly evaluating our liquidity and financial situation. As part of this effort, we've been in active discussions with note holders to refinance our convertible notes, improve our balance sheet and optimize our maturity profile. We intend to continue to do so, targeting a successful outcome in the near term.

在開始討論指導之前，我想提一下，我們正在不斷評估我們的流動性和財務狀況。作為這項努力的一部分，我們一直在與票據持有人積極討論，為我們的可轉換票據再融資、改善我們的資產負債表並優化我們的期限結構。我們打算繼續這樣做，目標是在短期內取得成功。

Now for a discussion of guidance for 2023. We now expect revenue to range from $965 million to $990 million, reflecting the continued softness we have discussed, particularly in coding boot camp enrollments and the expected timing of portfolio management.

現在討論 2023 年的指導。我們現在預計收入範圍為 9.65 億美元至 9.9 億美元，這反映了我們討論過的持續疲軟，特別是在編碼訓練營招生和投資組合管理的預期時間方面。

From a cash flow perspective, we are working on additional portfolio management activities that can generate cash of up to $49 million. When combined with the $96 million already executed as of October 2023, this totals approximately $145 million by mid-2025. Adjusted EBITDA is now expected to range from $165 million to $175 million.

從現金流的角度來看，我們正在進行額外的投資組合管理活動，可產生高達 4,900 萬美元的現金。加上截至 2023 年 10 月已執行的 9,600 萬美元，到 2025 年中期，總額約 1.45 億美元。調整後的 EBITDA 目前預計為 1.65 億美元至 1.75 億美元。

At the midpoint of our adjusted EBITDA range, we expect year-on-year growth of 36% and a margin of 17%. A few points to note for our full year 2023 expectations. We anticipate $50 million in stock-based compensation, $45 million in CapEx and approximately 81 million shares outstanding.

在我們調整後的 EBITDA 範圍的中點，我們預計將年增 36%，利潤率為 17%。對於我們 2023 年全年的預期，有幾點需要注意。我們預計股票薪酬為 5,000 萬美元，資本支出為 4,500 萬美元，流通股數約為 8,100 萬股。

In closing, we recognize that our management decisions regarding our portfolio may introduce some complexity to our results. But the key point is that we are creating a more robust portfolio that will aid us in achieving our goal of profitable growth while generating cash in the near term. With strong leading indicators in our Degree segment, a robust degree pipeline and the rising demand for our executive education and enterprise offering, we're confident we're on the right path.

最後，我們認識到，我們有關投資組合的管理決策可能會為我們的結果帶來一些複雜性。但關鍵是，我們正在創建一個更穩健的投資組合，這將有助於我們實現獲利成長的目標，同時在短期內產生現金。憑藉我們學位領域強勁的領先指標、強大的學位管道以及對我們的高階主管教育和企業產品不斷增長的需求，我們相信我們正走在正確的道路上。

And now I will hand the call back to the operator to begin the Q&A session.

現在我將把電話轉交給接線員以開始問答環節。

(Operator Instructions) Your first question is from the line of George Tong of Goldman Sachs.

（操作員說明）您的第一個問題來自高盛的 George Tong。

You're transitioning out of your degree programs as part of your portfolio management strategy. In general, how much do fees from these program shutdowns compare with the initial capital invested and foregone future revenue streams?

作為您的投資組合管理策略的一部分，您將退出學位課程。一般來說，與初始投資和放棄的未來收入流相比，這些計劃關閉產生的費用是多少？

George, a couple of things here. I think the way to look at it is where the program is from a revenue projection perspective. And it is often used as a starting point to begin that discussion with our partners mutually agree on what that ending number is going to be. Oftentimes, the fees would cover near-term revenue as well as any capitalized cost that we may have had as part of the production of that program.

喬治，這裡有幾件事。我認為看待這個問題的方法是從收入預測的角度來看該計劃。它經常被用作與我們的合作夥伴進行討論的起點，以就最終數字達成一致。通常，這些費用將涵蓋近期收入以及我們在製作該節目時可能產生的任何資本化成本。

Yes, George, this is Chip. What I would add is these are very positive transactions for the business. And if you think about what's happening in the degree business is this rotation to things that we think will be much more affordable and will sell better on the platform, I guess the way I would think about it from a comp standpoint is like Chipotle doesn't get paid to shut down the stores that it wants to shut down. And we do feel like we're doing that very effectively now.

是的，喬治，這是奇普。我要補充的是，這些交易對企業來說是非常正面的。如果你想想學位業務中正在發生的事情，那就是我們認為會更便宜並且在平台上賣得更好的東西會輪換，我想我從補償的角度來考慮它的方式就像Chipotle 所做的那樣。關閉它想要關閉的商店並沒有得到報酬。我們確實覺得我們現在正在非常有效地做到這一點。

Your next question is from the line of Ryan MacDonald with Needham.

你的下一個問題來自瑞安·麥克唐納和李約瑟的對話。

Maybe just double-clicking on the Alt Cred business and sort of the weakness in the boot camps. Can you just kind of explain a little bit more on what might be going on there, especially as we've seen sort of -- I think in sort of other direct-to-consumer education players starting to see maybe some counter cyclicality and some tailwinds in those segments. Maybe just a little bit confused by what might be driving the softness on some of the boot camps.

也許只需雙擊 Alt Cred 業務和新兵訓練營中的弱點即可。你能多解釋那裡可能發生的事情嗎，特別是我們已經看到了——我認為在其他直接面向消費者的教育參與者中，可能開始看到一些反週期性和一些這些領域的順風車。也許只是有點困惑是什麼導致了一些新兵訓練營的疲軟。

Yes, Ryan. Very, very fair question. It was entirely focused on coding. So cyber data, exec ed, all of those were up. And the AI boot camp that we launched, launched well but did not ultimately -- we just kind of rolled it out to that many folks, so coding itself is where the problem was. And we think that, that is related to coding jobs in the market, and I'm sure influenced some by AI. So the fact is it surprised us. It's definitely the story of the quarter for us. And we just have to own it, move ahead and build that business better. But the other boot camps were up.

是的，瑞安。非常非常公平的問題。它完全專注於編碼。因此，網路數據，執行人員，所有這些都增加了。我們推出的人工智慧訓練營啟動得很好，但最終沒有成功——我們只是把它推廣給了很多人，所以程式設計本身就是問題所在。我們認為，這與市場上的編碼工作有關，我確信有些人受到人工智慧的影響。事實上，這讓我們感到驚訝。這絕對是我們本季的故事。我們只需要擁有它，繼續前進，更好地發展這項業務。但其他新兵訓練營已經開始了。

(Operator Instructions) Your next question is from the line of Josh Baer with Morgan Stanley.

（操作員說明）您的下一個問題來自摩根士丹利的 Josh Baer。

A couple more on the program management activity. Just wanted to confirm when that revenue comes in, does it drop pretty much straight to EBITDA?

更多關於專案管理活動的內容。只是想確認收入何時到來，是否會直接下降至 EBITDA？

Josh, a couple of things. It depends on the costs that are associated with it. Depending -- so for example, we do have capitalized cost that is then taken to the P&L as part of that acceleration. Sometimes we have other fees that are associated with it, whether it's an upfront payment that we would have signed up that we amortize over a long period of time. But the flow-through margins, if you will, is higher than normal, but it's not 100%.

喬希，有幾件事。這取決於與之相關的成本。舉例來說，我們確實有資本化成本，然後將其計入損益表，作為加速的一部分。有時我們還有與之相關的其他費用，無論是我們本來會簽署並在很長一段時間內攤銷的預付款。但流通利潤率（如果你願意的話）高於正常水平，但不是 100%。

(Operator Instructions) Your next question is from George Tong.

（操作員說明）您的下一個問題來自 George Tong。

Just a quick follow-up. So with program management, what inning would you say you're in, in rightsizing the number of programs? How much of your overall portfolio of degree programs do you think will need to be pruned in order to get to a comfortable mix of program you guys have?

只是快速跟進。那麼，對於專案管理，您認為在調整專案數量方面您處於哪一階段？您認為，為了獲得一個舒適的課程組合，您認為需要整個學位課程組合修剪多少？

Yes, George. George, we're in the late innings.

是的，喬治。喬治，我們已經進入最後幾局了。

Late innings. Okay.

末局。好的。

Yes. Yes, this has been a very active process. So we're feeling good about how we've done and feel like it's the right call for cash, the right call for the balance sheet, the right call for long term, the business. This market's changed substantially over the 16 years that we've done this, and we're pretty thrilled, honestly, with the results from the standpoint of new pipeline.

是的。是的，這是一個非常活躍的過程。因此，我們對自己的表現感到滿意，並認為這是對現金、資產負債表、長期業務的正確選擇。在我們這樣做的 16 年裡，這個市場發生了巨大的變化，老實說，從新管道的角度來看，我們對結果感到非常興奮。

The health of the existing portfolio is very strong. You have some programs that are higher priced, but occupy a certain part of the market or our really incredible brands, but affordability is certainly key. And that's why we're trying to give you a little bit of color on the same-store sales idea. Because the first time, since before COVID, that we're seeing year-on-year growth, so we do think it's -- that whole mid-single digits notion is starting to appear, and we do think we do think there is some countercyclicality to answer Ryan MacDonald's question.

現有投資組合的健康狀況非常強勁。有些項目價格較高，但佔據了一定的市場份額，或者是我們真正令人難以置信的品牌，但負擔能力肯定是關鍵。這就是為什麼我們試圖為您提供有關同店銷售理念的一些資訊。因為自從新冠疫情之前以來，我們第一次看到同比增長，所以我們確實認為整個中個位數的概念正在開始出現，我們確實認為我們確實認為有一些反週期來回答瑞安·麥克唐納的問題。

And -- but you'll also note that affordability is pretty key today. And so this rotation, while in the late innings, we think, is really positive long term. I mean, I guess I would also take an opportunity to take the degree business, just to highlight the sheer volume of new programs that we're bringing in. We've certainly never seen anything like that.

而且—但您也會注意到，負擔能力在今天非常關鍵。因此，我們認為，從長遠來看，這種輪換在最後幾局確實是積極的。我的意思是，我想我也會藉此機會攻讀學位業務，只是為了強調我們引入的新項目的數量之多。我們當然從未見過這樣的事情。

So you're talking about 80-plus in 2024. You're talking about $120 million of revenue at the steady state. And what's great is many of these programs exist already. So we can get them launched and bring in revenue with very little J-curve. So it's just a -- it's a different business than it is compared to the one that we started years ago.

所以你談論的是 2024 年的 80 多個。你談論的是穩定狀態下的 1.2 億美元收入。很棒的是，其中許多計劃已經存在。因此，我們可以用很少的 J 曲線啟動它們並帶來收入。所以，與我們幾年前開始的業務相比，這是一項不同的業務。

Chip, and probably, we should add a little bit of the outlook, right? Because we've seen the [submits], we've seen the leading indicators that basically indicate for us, George, that the portfolio, if one were to pro forma for portfolio management, the degree portfolio is expected to grow mid-single digits next year. And that is all because of the types of programs we have, the average tuition in those programs and our ability to market those programs because they fit and align well with our strategy.

奇普，也許我們應該添加一點前景，對吧？因為我們已經看到了[提交]，我們已經看到了領先指標，喬治，這些領先指標基本上向我們表明，如果要進行投資組合管理的形式，學位投資組合預計將增長中個位數明年。這都是因為我們擁有的課程類型、這些課程的平均學費以及我們行銷這些課程的能力，因為它們非常適合我們的策略。

Your next question is from the line of Ryan MacDonald.

您的下一個問題來自瑞安·麥克唐納 (Ryan MacDonald)。

Yes, just maybe on the second question, I was going to -- really around -- as we think about the plan for degree program launches, the 80 next year and potentially 80 and 25 again, how much of that was already contemplated from an investment perspective in your budget versus how much of the cash generated from the portfolio management is going to be utilized towards launching those programs versus sort of strengthening the balance sheet, if you will?

是的，也許就第二個問題而言，當我們考慮學位課程啟動計劃時，我打算——實際上是——明年的80 個學位課程，可能再次是80 個和25 個學位課程，其中有多少是已經考慮過的您預算中的投資觀點與投資組合管理產生的現金有多少將用於啟動這些計劃與加強資產負債表（如果您願意的話）？

So Ryan, a couple of things. I think we had given 50 earlier on in the year, so -- we did expect a very large number. I think the key driver here is our flex degree model. It allows us to launch programs cheaper and faster. I would say also that because we -- a lot of what we're launching next year, we have a large percentage that's takeovers and it comes from one particular school, it allows us to do this much cheaper than the average that we had mentioned.

瑞安，有幾件事。我想我們在今年早些時候就已經捐出了 50 個，所以——我們確實預計會有一個非常大的數字。我認為這裡的關鍵驅動因素是我們的彈性程度模型。它使我們能夠更便宜、更快地啟動專案。我還想說，因為我們明年推出的很多東西，我們有很大一部分是收購，而且它來自一所特定的學校，它使我們能夠比我們提到的平均價格便宜得多。

We had mentioned a flex degree has a cash flow point of between $500 million to $1 million and it's now much lower because you have one school and it's a takeover. It means that it has the infrastructure for that initial demand. It is not -- you don't have to build that initial demand from scratch.

我們曾提到彈性學位的現金流點在 5 億至 100 萬美元之間，但現在要低得多，因為你有一所學校，而且是收購。這意味著它擁有滿足初始需求的基礎設施。事實並非如此——您不必從頭開始建立最初的需求。

Your next question is from the line of Josh Baer.

你的下一個問題來自喬許·貝爾（Josh Baer）。

I just want to make sure...

我只是想確定一下...

Sorry about the musical chairs here, Josh, with the questions.

喬希，我很抱歉這裡有搶椅子的問題。

Yes, no worries. I just wanted to make sure I had straight, like, the amount of revenue this year from the portfolio management activity. So 80 in Q4, 26 was in Q3. Was there any in the first half? And then just wanted to make sure, like, the $49 million from cash flow that could come from more portfolio management activities, is that the right way to think about the potential future, like, best guest revenue as well?

是的，不用擔心。我只是想確保我今年從投資組合管理活動中獲得的收入是直接的。所以第四季有 80 個，第三季有 26 個。上半場有嗎？然後只是想確保，例如，更多的投資組合管理活動可能帶來 4900 萬美元的現金流，這是考慮潛在未來（例如最佳賓客收入）的正確方法嗎？

Yes. So Josh, we had about $7.6 million in the first half of the year. The net revenue impact in 2023 is about $100 million and the cash impact is a little higher because the cash includes -- it's a higher dollar amount than the actual revenue recognized within the period. So the $49 million represents the additional deals that are expected to be signed in the fourth quarter.

是的。喬什，我們上半年大約有 760 萬美元。 2023 年的淨收入影響約為 1 億美元，現金影響略高，因為現金包含的金額高於該期間內確認的實際收入。因此，4900 萬美元代表了預計第四季度簽署的額外交易。

But the revenue in the fourth quarter already had USC included. So essentially, the cash that we expect, the $96 million from the deals already signed and the additional $49 million, it adds up to $145 million, which is higher than the revenue that's recognized.

但第四季的收入已經包含了南加州大學。因此，從本質上講，我們預期的現金、已簽署交易中的 9,600 萬美元以及額外的 4,900 萬美元，總計達 1.45 億美元，高於已確認的收入。

Okay. Got it. I just wanted to check in on Alternative Credentials. I mean, I know -- like, definitely hear that there was some negative impacts from the coding in the quarter, just kind of continuing to monitor each quarter the margins and sort of the expectation that, that would flip positive. Like, are we still on track? And, like, what really will it take to have Alternative Credentials as a profitable business?

好的。知道了。我只是想檢查一下替代憑證。我的意思是，我知道 - 就像，肯定聽說本季度的編碼產生了一些負面影響，只是繼續監控每個季度的利潤率並期望這會帶來積極的影響。例如，我們還在正軌上嗎？而且，像什麼才能讓替代證書成為一項有利可圖的業務呢？

So Josh, a couple of things. The short answer is no. We are not on track for this year, simply because we have seen the weakness on the revenue side of the equation here. But as Chip mentioned in his prepared remarks, we are committed to doing whatever it takes to make this business profitable. And as a segment, the Alternative Credential segment, with the growth that we expect to come from our enterprise business next year and the rightsizing of the cost structure, we expect to be positive as soon as possible. I would say the first half of the year, we can get there.

喬希，有幾件事。最簡潔的答案是不。今年我們沒有走上正軌，只是因為我們看到了收入的弱點。但正如奇普在他準備好的演講中提到的那樣，我們致力於盡一切努力使這項業務盈利。作為一個細分市場，替代證書細分市場，隨著我們預計明年企業業務的成長以及成本結構的調整，我們預計將盡快實現積極的成長。我想說，今年上半年，我們就能實現這個目標。

Why do I say it that way? Because the flow-through margins in the enterprise business is higher than the rest of the Alternative Credential segment. So that's our objective. We recognized we made a commitment to do this. We hit some headwinds with the coding enrollments and we are committed to rightsizing this and getting it profitable as quickly as possible.

我為什麼這麼說呢？因為企業業務的流通利潤率高於其他替代證書細分市場。這就是我們的目標。我們認識到我們已經做出了這樣做的承諾。我們在編碼註冊方面遇到了一些阻力，我們致力於調整規模並儘快使其盈利。

Yes. The interesting thing about coding also is we brought in lead flow and we're finding it not converting the way we were used to. So it was definitely the story of the quarter, unfortunately.

是的。關於編碼的有趣之處還在於，我們引入了潛在客戶流，但我們發現它並沒有改變我們習慣的方式。不幸的是，這絕對是本季的故事。

(Operator Instructions) Your next question is from the line of Jeff Meuler with Baird.

（操作員說明）您的下一個問題來自 Jeff Meuler 和 Baird 的線路。

Can you give us any sense of, call it, operating EBITDA and revenue excluding the [make-whole] fees in 2023 for the programs that are being exited, so we have a sense of what the grow over is as we start to think of layering on the pro forma growth?

您能否給我們任何關於運營 EBITDA 和收入（不包括 2023 年正在退出的項目的 [make-whole] 費用）的任何感覺，以便我們在開始考慮時了解增長情況預計增長的分層？

So Jeff, from a revenue perspective, revenue is roughly around $100 million net because we're considering the revenue that we're recognizing as well as the revenue that we otherwise would have received from these programs. When we think of the EBITDA, as we exit the year, we're considering the cost that is associated with not operating those programs anymore, whether it's from a marketing perspective, whether it's from a university operations perspective, or whether it's from an overhead perspective associated with that.

傑夫，從收入的角度來看，淨收入大約為 1 億美元左右，因為我們正在考慮我們正在確認的收入以及我們本來可以從這些計劃中獲得的收入。當我們考慮EBITDA 時，當我們退出這一年時，我們正在考慮與不再經營這些專案相關的成本，無論是從行銷角度來看，無論是從大學營運角度來看，還是從管理費用角度來看與此相關的觀點。

The next thing we're considering is that as we think of a jumping off point here as we get into next year is the cost takeout that we've done at the end of September. So I think just to give rough numbers, it is probably a reduction of probably the EBITDA less, maybe between $50 million and $70 million from the EBITDA we end up with at the end of this year. And that creates your jumping off point into next year based on the cost that we've taken out and based on the cost that we will not incur again going forward.

我們考慮的下一件事是，當我們進入明年時，我們考慮的起點是我們在 9 月底完成的成本削減。因此，我認為僅給出粗略的數字，可能會導致 EBITDA 減少，比我們今年年底最終獲得的 EBITDA 減少 5000 萬至 7000 萬美元。這將根據我們已經扣除的成本以及我們今後不會再次產生的成本，為您創建進入明年的起點。

Operator, are there any more questions in the queue?

接線員，隊列中還有其他問題嗎？

At the current time, there are no further questions.

目前，沒有進一步的問題。

Okay. Seeing there are no other questions. We thank you for joining us today. And if you have follow-ups, please give us a call at Investor Relations. Thank you so much.

好的。看到沒有其他問題了。我們感謝您今天加入我們。如果您有後續跟進，請致電我們的投資者關係部門。太感謝了。

This concludes today's call. Thank you for joining. You may now disconnect your lines.

今天的電話會議到此結束。感謝您的加入。現在您可以斷開線路。