What happened

Shares of 2U (NASDAQ:TWOU) climbed 17.8% in the month of May, according to data from S&P Global Market Intelligence, after the online education platform specialist delivered exceptional first-quarter 2018 results.

2U shares began to rise in earnest early last month after the company announced that quarterly revenue had climbed 42.4% year over year to $92.3 million, which translated to an adjusted net loss of $6.1 million, or $0.12 per share. By comparison, 2U's own financial guidance -- provided along with its previous quarterly report in February -- called for a a wider per-share loss of $0.14 to $0.13 on revenue ranging from $91.1 million to $91.6 million. 

Student wearing headphones working on a laptop with books open

Image source: Getty Images.

So what

2U announced several new domestic graduate programs (DGPs) during the quarter, including three with Baylor University, a suite of online graduate business degrees with Pepperdine, and a partnership to launch new online short courses with Rice University this fall.

Regarding the latter, 2U co-founder and CEO Chip Paucek noted that since acquiring online short course leader GetSmarter last year, the company's short course business "has emerged as a powerful contributor" to its growth story. Meanwhile, he says, new DGP launches show "no signs of slowing down."

Now what

Regarding its losses, note that 2U absorbs the majority of the cost structure for setting up its new graduate programs in exchange for receiving most of the tuition revenue that those programs collect. But even as 2U boosted its full-year guidance to call for revenue of $406.6 million to $410.6 million (up around $8 million from both ends of its previous outlook), it also increased the bottom end of its expected 2018 per-share losses by $0.01, for a new loss-per-share range of $0.13 to $0.10. As such, I think the market was more than justified in driving 2U shares to fresh all-time highs on the heels of last month's report.