2U, a company that offers software to universities to host online classes, just filed the paperwork for an IPO. It hasn't offered details on share price, or how many shares, but it's looking to raise up to $100 million it said.
2U definitely plays in a growing area of online education. It doesn't offer the online degrees itself — it sells the underlying tech, a cloud service, that let's universities offer online classes and degrees.
On the upside, contracts with universities are a big commitment. It asks the university to sign agreements that last 10 and 15 years. A university isn't going to take the decision to switch its online tech provider lightly.
On the downside, 2U doesn't have that many customers yet, though the ones it does have are huge. It lists eight universities that use its platform to offer semester classes, including names like University of Notre Dame and Northwestern. It has another nine that offer full online graduate degrees including Georgetown, Berkeley and USC. None have been customers long, as the Semester Online program only opened up last fall.
More downside: it's burning through the cash at a pretty good clip. It raised almost $100 million in venture funds since it was founded in 2008, including a big $32.5 million round in 2011, $26 million in 2012, and another $5.3 million in 2013.
It says it had $7 million in cash in the bank as of December 2013.
Here's what it says about its financials:
For the years ended December 31, 2011, 2012 and 2013, our revenue was $29.7 million, $55.9 million and $83.1 million, respectively. For the years ended December 31, 2011, 2012 and 2013, our net losses were $24.9 million, $23.1 million and $28.0 million, respectively, and our Adjusted EBITDA loss, a non-GAAP measure, was $22.5 million, $18.8 million and $21.2 million, respectively.