Shares of 2U (NASDAQ:TWOU) were down 24.2% as of 12:45 p.m. EDT Wednesday after the online education platform company announced better-than-expected first-quarter 2019 results, but reduced its full-year outlook.
On the former, 2U's quarterly revenue climbed 32% to $122.2 million, translating to an adjusted net loss of $8.6 million, or $0.15 per share, widened from a $0.12 per-share loss in the same year-ago period. 2U's own guidance, provided in February, called for an even bigger net loss of $0.18 to $0.19 per share on revenue of $121.5 million to $122.1 million.
2U co-founder and CEO Chip Paucek called it a "another strong quarter," adding: "Our business is transforming and diversifying in exciting ways that further cement 2U's market-leading position and allow us to better meet the demands of lifelong learners, all while delivering sustainable growth and great outcomes in shared alignment with our partners."
To that end, 2U has not only continued to strike new partnerships in recent months -- most recently including new degree programs with Arcadia University and Case Western Reserve University -- but also agreed last month to acquire skill-based tech course specialist Trilogy Education for $750 million.
Looking ahead to the full year, however, 2U now expects 2019 revenue ranging from $534 million to $537 million, a reduction from its previous outlook for a range of $546.6 million to $550.8 million. 2U is also targeting an adjusted net loss per share of $0.31 to $0.34 for the full year, which is technically improved from its old $0.33 to $0.37 range.
During the subsequent conference call, management explained 2U is seeing softer average enrollments in a few of its largest domestic graduate programs (DGPs) -- though the influence of those programs has waned as 2U continues to launch new DGPs with other partners.
But given the top-line guidance reduction in these early stages -- and with the caveat that this doesn't appear to change 2U's long-term potential -- it's no surprise to see the market bidding down 2U stock in response right now.