What happened

Shares of online education company 2U (NASDAQ:TWOU) are looking magna cum laude this afternoon, up 10.4% as of 2 p.m. EST after the company reported earnings last night.

Expected to lose $0.09 per share (pro forma) on $208.2 million in revenue in its fiscal fourth quarter of 2020, 2U instead reported a loss of only $0.06 per share (also pro forma), and sales of $215.3 million.  

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So what

The news wasn't all good. Although 2U beat on both sales (which were up 32% year over year) and earnings, the company still lost money -- and arguably a whole lot more than a $0.06 per share pro forma loss implies. When calculated according to generally accepted accounting principles (GAAP), 2U actually lost $0.52 per share. Still, that was less than the $0.70, GAAP, per share that it lost in last year's Q4.

For the full year, meanwhile, 2U reported 35% sales growth and $3.22 per share in losses -- 16% less than last year.  

Now what

Looking ahead to fiscal 2021, 2U predicted that this year, its revenue will grow in excess of 17% year over year, to a range of $910 million to $945 million. At the midpoint, that's significantly better than the $912 million Wall Street will be looking for.

2U said it will still lose money, however -- $165 million to $185 million worth, which works out to somewhere between $2.28 and $2.56 per share based on 2U's most recent share count of 72.4 million shares outstanding.

This article represents the opinion of the writer(s), who may disagree with the "official" recommendation position of a Motley Fool premium advisory service. We're motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.