2U, an online education company, experienced a significant decline in its shares by 27%, reaching $1.73 during premarket trading, following the announcement of larger-than-anticipated losses in the third quarter.
Financial Performance
In the third quarter, 2U reported a loss of $47.4 million, equivalent to 58 cents a share. This is in contrast to a loss of $121.7 million, or $1.57 a share, during the same period last year. Analysts surveyed by FactSet had projected a loss of $31.6 million, or 39 cents a share. Adjusted losses amounted to 15 cents a share, slightly higher than the estimated 13 cents.
Although revenue for the quarter stood at $229.7 million, which is lower than last year's $232.2 million and the expected $224 million, it is important to note that analysts' predictions were not far off from the actual figures.
Financial Outlook
For the upcoming year, 2U anticipates revenue ranging from $965 million to $990 million. Analysts are slightly more conservative in their estimates, predicting revenue around $977.8 million. In terms of losses for 2023, 2U expects a range between $250 million and $240 million, while analysts forecast a loss of $237 million.
Cash Reserves
By September 30th, the company's cash, cash equivalents, and restricted cash had decreased to $53.9 million from $182.6 million as of December 31, 2022. This decline was primarily due to a $187 million term loan repayment and the refinancing that took place in January 2023.
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