Good day, thank you for standing by. Welcome to the second quarter 2021 earnings report conference call. At this time, all participants are on listen-only mode. After the speakers' presentation, there'll be a question-and-answer session. To ask a question during the session, you'll need to press star one on your telephone. If you require any further assistance, please press star zero. I'd now like to hand the conference over to your speaker today, Mr. Ken Goff, Senior Vice President, Investor Relations. Sir, you may begin. Thank you, operator. Good afternoon, everyone, and welcome to 2U's 2nd quarter 2021 earnings conference call. I'm Ken Goff, Senior Vice President of Investor Relations at 2U, and I'm joined by Chip Paucek, our Co-Founder and CEO, and Paul Lalljie, our CFO. Following Chip and Paul's prepared remarks, we will take questions. Our investor relations website, investor.2u.com, has our earnings press release and slide presentation, as well as a simultaneous webcast of this call. A webcast replay of this call will be made available for the next 90 days. Statements made on this call include forward-looking statements regarding our financial and operating results, the continued impact of the COVID-19 pandemic, our pending acquisition of edX, new educational offerings, student and university demand, and other matters. These statements are subject to risks, uncertainties and assumptions. Any forward-looking statements made on this call reflect our analysis as of today, and we have no plans or duty to update them. Please refer to the earnings press release and the risk factors described in the documents we file with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31st, 2020, and our most recent quarterly report on Form 10-Q, for information on risks, uncertainties, and assumptions that may cause actual results to differ materially from those set forth in such statements. In addition, during today's call, we will discuss non-GAAP financial measures which we believe are useful as supplemental measures of 2U's performance. These non-GAAP measures should be considered in addition to, and not as a substitute for or in isolation from GAAP results. You can find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP results, in our earnings press release and on the investor relations page of our website. With that, let me hand it over to Chip. Thanks, Ken. 2U has always had a bold vision for the future. I want to start today's call with some reflections on where that vision started, where we've been, and what the future holds, given our edX news. We started this company in 2008 to create the world's best online education, and we've been defying the odds ever since. Back then, high-quality online education wasn't a thing. People said online education was bad. It couldn't be great. Couldn't create the same outcomes, the same relationships, the same quality. Nearly a decade and a half later, our 550-plus programs have become industry-leading examples of online education done right at scale, driving life-changing outcomes for people. With nonprofit universities at the core of what we do, we're proving that higher education can be blended, connected, accessible, affordable, and sustainable. From the beginning, we've invested in building our partners' brands. We've generated over $5 billion in tuition bookings for their institutions as we've helped transform the lives of over 350,000 students, all while delivering great outcomes and increasing retention and graduation rates. You see this impact in our Gallup research. 97% of students in 2U-powered degree programs report positive career outcomes, and 92% would do it all over again. At every step along our journey, 2U has been growing and evolving. We got very good at what we do. We scaled our proprietary machine learning-based performance marketing engine to not just find any student, but the right student. We figured out clinical placements at scale. We built 185-plus degree offerings. As we saw the market evolve and the demand for lifelong learning increase, we recognized that nonprofit universities needed to move beyond the degree. We made a strategic acquisition and entered the executive education space with Short Course. More recently, as reskilling and upskilling have become a worldwide imperative, our Bootcamp acquisition has established us as the largest provider of university-led tech skills training in the U.S. In the past 12 months alone, our partners' bootcamps have reached more than 23,000 students and provided over 30,000 free job referrals, all while creating new pathways for historically underrepresented communities to enter the tech industry. Our journey continued with a move into the largest part of higher education, undergrad. We launched Simmons and built their entire campus and online experience, a first for 2U. We launched the London School of Economics, scaling it to one of our largest degree programs. Most recently, we helped Morehouse College bring its Beyond Borders vision to life by launching its first online degree, which are now becoming some of the fastest-growing programs in our history. We also quietly started building out an enterprise channel, first with our Short Courses, then with our bootcamps, including our groundbreaking partnership program with Netflix. We did all of this without establishing 2U as a consumer brand. As a result, people often don't fully appreciate our scale, reach, and impact because they don't aggregate our activity around the 2U brand. The only time they see 2U is when they're thinking about TWOU, our NASDAQ ticker. What matters is that we're doing this right, the right intentions, the right motivations, and most importantly, regardless of the skeptics of profit-making businesses, the right outcomes. We are delivering on our mission to eliminate the back row in higher education. Of course, during our long journey, the world around us also continued to evolve. Back in 2012, the massive open online course revolution happened. MOOC platform companies were born and caught lightning in a bottle. They were founded to bring access to the world's education to the masses. There were big companies in the MOOC story, one for-profit, one nonprofit. Their tax status isn't really the story. Their impact, however, is. They both generated worldwide attention, a worldwide following, a worldwide base of learners. They both created additional pathways for people around the globe to get educated. They both became huge brands, and they both had a global impact on higher ed and millions of lives. In 2020, COVID-19 happened, taking digital transformation from a nice-to-have to a strategic imperative for all of higher ed overnight. We believe the pandemic reinforced to the world and higher ed the value of 2U's model and our approach to building sustainable, high-quality online education. It also drove millions of additional learners to the MOOC platforms. edX, the leading nonprofit MOOC platform, alone added millions of new learners and signed up nearly 1,000 universities to its edX for Campus offering, allowing schools worldwide to teach edX courses on campus. When Anant Agarwal, the founder and CEO of edX, and I started talking about this transaction, we recognized the transformational moment happening in higher ed, and we saw a clear vision for creating greater access to affordable, high-quality online education built on a shared alignment around our missions. We're turning that vision into reality. When the deal closes, we'll have a company with all the necessary ingredients to drive the digital transformation of higher education, a powerhouse global consumer brand, combined with the most comprehensive and complementary set of free to degree offerings and an unmatched bundle of tech-enabled services. 2U and edX are perfectly fitting puzzle pieces. More than that, together, we believe we will accelerate the opportunity, the scale, and most importantly, the impact. edX will be the fuel that helps supercharge our company and will supercharge our impact. Yes, it will redefine 2U and the industry. Let's talk a bit more about how. edX is a massive global brand, a top five education brand. Yes, as a leading education platform, it has huge traffic. In my opinion, the word brand is about relationships more than anything else. edX creates tremendous opportunities for learning for everyone. With the addition of edX, we'll have a relationship with anyone in the world who wants to learn. They'll become part of 2U's ecosystem. Instead of us paying premiums to the social networks to find them, they'll come to us organically. edX creates network effects. We'll apply those to 2U, a business that today knows how to digitally transform a university and offers a complete suite of services, products, and competencies for the great university to thrive. 2U can substantially increase the free course portfolio, creating more learning and thus creating more opportunities to introduce learners to our university partners' other programs across the broadest spectrum of offerings in the industry. edX will create a flywheel in our enterprise business. More courses means more learners, means more companies, means more jobs for students, which means a bigger, better business opportunity. edX will create a flywheel in our campus ambitions. More courses means more campuses utilizing our courses for their students, which means more learners, which means more opportunities for our partners, including both existing edX and 2U partners. edX will create an incredible opportunity to not only deploy Open edX throughout our platform, but also to work with Harvard, MIT, and our partner institutions to develop platform features and functionality that drive pedagogical improvements and innovations that improve student outcomes. edX will create new product categories for 2U, MicroBachelors and MicroMasters, and disruptively priced master's programs in tech, data, and business. These are innovative and affordable ways to offer greater access to higher ed, and they're particularly appropriate for emerging economies and learners abroad. edX will accelerate our international ambitions. Today, while massive in the U.S., edX is even bigger abroad. As one example, edX has almost the same learners and traffic from India as the United States. Our localization efforts will help us more efficiently grow the Short Course business internationally. The first localized courses, some from Stanford, are doing well. edX will fuel this effort. edX will create a strategically valuable increase in our partner base to 226 partners from 84, including many of the world's best companies like IBM, Google, and AWS. It's also notable that the edX partners will have access on a fee basis to our world-class competencies of the 2U OS operating system. Finally, as I said before, but is worth repeating, edX will make us a global consumer brand overnight. Now, let's talk about the industry. Following the closing of the edX transaction, we believe that no company will be better positioned than 2U on a worldwide basis to lead the digital transformation of higher education. We will bring a complete approach and one built on the backs of hard work of 14 years to build a full system for true digital transformation. We're aligned in this effort with the great institutions of Harvard, MIT, the edX partner community, and the 2U partner community. Purpose and mission is more important than tax status. Our ability to drive innovation and efficiency will help provide competitive advantage to great nonprofit universities that drive the best outcomes for students. Mission alignment matters. This deal is more than that. It signals a new era and a clear race. While the space race between Branson and Bezos has certainly captured everyone's attention, this race is about changing this world. Who will become the primary consumer learning platform of the next 20 years? We believe our ability to serve great universities, to scale their global reach and impact across every possible product offering with a comprehensive and proven approach to do it, will solidify us as that partner and redefines what it takes to win in the market. We've built an unmatched, world-class machine learning marketing system, putting universities at the center. We've built a world-class, outcomes-driven student engagement and placement system. We're building a world-class career engagement network. With edX, we will layer on top of that their worldwide brand, products, and marketplace, and 40 million learners. Learners, faculty, universities, and employers coming together on our platform because quality matters, the approach matters, and we have the portfolio of tech, services, and products to deliver high-quality outcomes at scale. In this race, I like our odds. Before I turn it over to Paul, let me touch briefly on our current results. I thought these were pretty stellar. 30% growth in Q2 and a much larger than expected profit. Yes, profit. Driving 30% growth at this size in ed tech is not easy, and the comps for the year are hard given the impact of COVID-19 last year. There's clearly some lumpiness in the Alt-cred side, given that no one really knows how COVID-19 will impact short-term global consumption of education. As you saw in Google's earnings, digital advertising costs are clearly higher across the board, driven in part by more people getting out of their houses. Coming into this year, if we knew we would grow more than 20% top line at our size with significant margin expansion to high single digits with real free cash generation, particularly with the momentum degree business provides for 2021, we all would've been thrilled. Our degree business did particularly well, with 20%+ growth and six quarters of acceleration, and a very strong launch schedule for next year. Some have projected our growth slowing to single digits for next year. The strength of our degree business alone and the number of new launches makes that hard to imagine. Looking at revenue growth plus EBITDA margin, we expect to look better next year on an organic Rule of 40 basis, with growth being solid and improved profitability, and our degree launch schedule is definitely part of that. It looks more like 2017 in terms of total number of degree offerings, and we are doing these more efficiently. We have strong leading indicators, new partners, and scaling programs like Morehouse, LSE, and Simmons that are clearly meeting a market demand. We're excited to begin working with a few new clients on the degree side, including the University of Miami for their MBA and several other grad and undergrad programs we expect to announce shortly. We expect 2022 is gonna be particularly strong for the degree segment. On AltCred, we also have some new news with a great new partner. IE University is our first partner in Spain and has signed an agreement with us to launch a suite of business and technology-related alternative credential offerings. IE University is the top private university in Spain and is best known for its business school that is consistently ranked in the top tier globally. The stellar quarter and us holding our guide, regardless of the COVID-19 uncertainty and lead cost volatility, should give you confidence in our trajectory even before the edX deal comes to fruition. That is all shorter-term thinking, and on this call, given what we've announced, I really think it's important for you to take a step back and look at the long term. The industry is growing. Universities must transform. Simply put, combining the strengths of 2U and edX will be a massive win for all of our stakeholders, investors, enterprises, universities, and most importantly, learners, and a major milestone in our evolution. We are delivering on the original promise of this company's mission of eliminating the back row in higher education, and with the edX announcement, we're not playing around. Go big or go home. We made our choice. Now I'd like to turn it over to Paul Lalljie, our fine CFO, to take you through the results, and I'll return for Q&A. Thanks, Chip, and good afternoon, everyone. We had another outstanding quarter. Revenue grew 30% over the second quarter of 2020 to $237.2 million. We saw strong revenue growth across products, with the degree segment up 26% and alternative credential up 36% on a year-over-year basis. Expense for the quarter totals $274.3 million, an increase of 18% over the second quarter of 2020, resulting in a net loss of $21.8 million, a $44.3 million improvement. Adjusted EBITDA for the quarter totaled $17.1 million, a margin of 7%, and unlevered free cash flow on a trailing 12-month basis totaled $2.5 million. In a nutshell, we reported strong revenue growth, solid EBITDA margin, and positive unlevered free cash flow on a trailing 12-month basis for the second consecutive quarter. A very strong first half of the year and continued evidence of the durability and sustainability of our business model and revenues, as well as our growing earnings power. Let's take a closer look at revenue for the quarter. Full course equivalent or FCE totaled 84,000, an increase of 26% on a year-over-year basis, with the revenue per FCE up 3%. Revenue in the degree segment grew 26% compared to the same period last year. This represents the sixth straight quarter of accelerating revenue growth. FCEs for the quarter increased 31%, while revenue per FCE decreased 3%. This decrease in revenue per FCE was due to the continued strength in our recently launched undergrad offerings, higher volume, and lower cost per credit. It wasn't just undergrad that showed strong performance this quarter. We saw strength in the number of enrollments and increased student retention rate across verticals, cohorts, and products. Student demand for high-quality online degrees remain high, with the pandemic accelerating the digital adoption curve, which we believe will have a lasting impact. In addition, university demand remains elevated, as evidenced by our recent wins, including our recently announced MBA with the University of Miami and the strength we see in the pipeline. To put the degree trajectory into perspective, for the first half of the year, this segment grew 25%, an 11-point acceleration compared to the first half of 2020. Revenue in the alternative credentials segment grew 36% on a year-over-year basis, driven by 16% increase in FCEs and 17% increase in revenue per FCE. Growth in this segment was driven by a 53% increase in Bootcamp revenue and 16% increase in Short Course revenue. Across all of our businesses, and in particular, the alternative credentials segment, we are seeing an increase in digital marketing costs, which is something many companies are dealing with as the economy reopens and advertisers reenter the market. It's important to note that we expect to stay with our framework of driving profitable growth and not chase revenue at the expense of EBITDA. Turning to costs and expenses. Total operating expense for the quarter totaled $274.3 million, an increase of 18% over last year. This marks the fourth consecutive quarter where revenue growth was at least 10 percentage points higher than expense growth. Compared to the second quarter of last year, marketing and sales expense increased 17% against revenue growth of 30% as we continue to drive efficiencies and benefit from scale. If we look back over the past eight quarters, marketing and sales expense as a percent of revenue has declined more than 12 points, and as we've discussed, there are many more opportunities to drive further improvement, especially with the acquisition of edX. Net loss for the quarter totaled $21.8 million, a $44.3 million improvement compared to the year-ago quarter. While much of this improvement came from revenue growth and margin expansion, we also benefited from a $27.9 million non-operating gain on the sale of a 2019 investment in Keypath Education. Adjusted EBITDA for the quarter totaled $17.1 million, a $19.2 million improvement from last year, and a margin of 7%. We expect to continue to deliver EBITDA as we manage through the reopening dynamics of the economy. As I mentioned earlier, we will continue to be disciplined in how we allocate and manage profitable growth across the portfolio. Moving on to segment margin. Margins in the alternative credentials segment improved two points sequentially. Margins in the degree segment came in at 19% for the quarter, driven by increased enrollment, better retention rates, and cost efficiency initiatives. I mentioned earlier that the degree revenue growth in the first half of 2021 was 11 points higher than the first half of 2020. Well, that revenue acceleration was coupled with a 14-point margin improvement. Headcount at the end of the quarter totaled 3,720 compared to 3,677 from the year-ago quarter. Turning to the balance sheet. At the end of the June quarter, cash and cash equivalents totaled $971.3 million, up from $505.1 million at the end of the March quarter. This increase was primarily due to $475 million loan that we closed in connection with signing the purchase agreement for the edX acquisition. Operating cash flow for the quarter was a use of $9.8 million, which was significantly impacted by timing-related increases in net working capital. Cash provided by investing activities was $19.9 million, driven by the proceeds from the sale of our investment in Keypath, partially offset by $17.3 million in capital expenditures. Accounts receivable at the end of the quarter totaled $101.4 million, up $26.7 million from the end of the previous quarter. This increase was primarily driven by the timing of our clients' academic calendar, as well as the typical increase in accounts receivable from revenue growth. Unlevered free cash flow on a trailing 12-month basis totaled $2.5 million. This is particularly impressive given the net working capital headwinds I just discussed. The increase in accounts receivable alone was a drag of $30.5 million in free cash flows for the trailing 12 months. For a discussion of guidance. We are acutely aware of the uncertainties that companies are facing with the spike in COVID-19 cases due to the Delta variant. In the face of similar uncertainty last year, we withdrew our guidance. This year, we believe we can maintain our guidance at prudent levels. We have good momentum in our degree business. As I've said in prior quarters, it is a business that takes time to build up momentum, but when it gets going, it goes for a while. Based on new partnerships and other leading indicators, we believe that the momentum we're seeing in the degree business is sustainable. At the same time, we see businesses across a range of industries try to get a handle on the Delta variant and what it might mean for the path and pace of reopening of economies around the world and for consumer behavior. After carefully considering the operating environment and other factors, we are reaffirming our guidance for 2021, originally provided on our first quarter earnings call and affirmed on June 30th. We expect revenue to range from $925 million-$955 million, growth of 21% at the midpoint. Adjusted EBITDA is expected to range from $55 million-$65 million, a margin of 6% at the midpoint of adjusted EBITDA and revenue. Given the efficiency improvements we've been able to drive in new launches, we expect capital expenditures to be approximately $75 million, which is slightly lower than our initial projections coming into the year. Weighted average shares outstanding is expected to be approximately 75 million shares. To conclude, we reported another strong quarter, adding more proof points for the durability and sustainability of our business model. You may see some variability in our revenue growth rate from quarter to quarter due to things like the Delta variant and advertising costs. That variability will be around a fundamentally strong trend line over the long term. Moreover, we are delivering efficiency improvements in new launch costs and overall expense growth well below revenue growth, all of which is translating into improved margin, profitability, and cash flow. As we work towards the closing of the edX transaction, we believe that edX will enhance our long-term strategic position in the ed tech space. With that, we'll open the call for questions. Operator? Thank you. As a reminder, to ask a question, you'll need to press star one on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Your first question comes from the line of Stephen Sheldon with William Blair. Hey, thanks. Chip, you made the comment that it's looking like 2017 in terms of, I think, program launches. Can you maybe frame that a little bit more and help us understand the potential impact that new program launches could have to growth at a high level as you think about the next few quarters and into 2022? Hey, Chip, I think you're on mute. Thank you, Paul. Sorry. Sheldon, thank you for the question. You might have seen, a couple days ago, we announced the University of Miami MBA, and that's an example of a program that we think is a sizable program and looks more like what in the old days we would've called a DGP is. What's great about it is it will launch in January, which is an outstanding way to start 2022 for us. The pipeline demand right now is very strong. We've definitely seen universities focusing on how to do something longer term that is less of a pandemic response and more. There was an article in The Chronicle of Higher Education just yesterday about the fact that the schools that are doing well in the pandemic are schools that built digital activity over the last decade, and they're reaping the benefit of that. The reality is, if schools haven't built a digital presence, they have to transform. It's expensive, it's hard, it's complicated. Many times, on your own, it doesn't work without great partners like 2U. We're very proud that today we still, I think, underappreciated across our stakeholders is that we've never lost a degree program, not one degree partner. A university partner that offers degrees with 2U, we're still with everybody since 2008. We're excited about what the pipeline means for the degree program business next year. Look forward to continuing to delivering for people as they figure out how to transform themselves. Now, I would also tell you that from an efficiency standpoint, we are getting better at doing this, and we're figuring out how to do these in a more efficient manner with a lower cash footprint, and that's pretty important to our long-term objectives. Got it. When you think about the program launch, I know on the efficiency side, you're usually spending some, I think, months in advance trying to get the marketing interest when a deal after a program is announced. You think about the second half of this year, if you've got all these programs that are going to be launching next year, are you including some spend related to getting those programs up and running? I guess, how should we think about the spending to get some of these program launches? I guess I'm asking is that spend hitting in the second half of this year where the revenue generation will be more 2022? As you know, the degree business, the way the model works is that we do spend to drive. We invest in a program, and we see it steady state over, let's say, a three to five-year period, depending on the program. If you look at our undergrad programs, it's pretty amazing to see what's happening with the undergrad business, and we do expect to announce more undergrad programs, over the course of the next six months. Some of those will be in the pipeline for next year as well. We're pretty excited about what that means. You do have to invest to get the degree business rolling, and a couple of years ago, we did slow down the pace. I think people probably don't appreciate, at our size today, that the pace has really picked up. We're launching offerings from degree offerings across both undergrad and grad that look more like years past. Paul, you want to add anything? No, I think you touched on it. The bottom line is we're going to balance top-line growth with EBITDA margins and while we are spending ahead of launches and in the back half of this year, et cetera, the numbers that we have out there includes that type of spend, and we are going to be prudent. We're going to balance. Profitable growth is the name of the game for us. When you combine that with the strong positioning we have and then our combination with edX, we believe that we have a sustainable business that can endure the test of time. Got it. Thank you. Your next question comes to the line of Ryan MacDonald with Needham. Hi. Thanks for taking my questions. Chip, I'd be curious to understand the sense of trajectory in enrollments heading into the fall semester. I think we've seen when we look at grad applications, fairly healthy growth in those applications across some of those major degree verticals thus far in 2021, and starting to see some international student enrollment recovery in undergrad. Can you just talk generally about how you're feeling about the conversion of those applications into enrollments into your programs? We feel like we've got, as we mentioned on the degree side, very strong trajectory and on the Alt-Cred side, in total, we've passed now 350,000 students. We're doing this at a scale that I don't think anybody else really is in ed tech. The conversions that we've seen on the degree side continue to run at a strong pace. What's been fascinating, Ryan, is just to see how many of our partners that have been with the company for a long time really get the benefit of the experience and the quality. Their brands have improved in the online environment over the last decade, you see many programs with outstanding enrollment levels that look at record conversions. Our degree conversions are still running higher than pre-COVID levels. Demand is real strong. We've got a whole bevy of new short courses and boot camps on the way, Some of the short course topics are just really incredible. We did see, if you go back four years to our acquisition to GetSmarter, I think that was us seeing around a corner here, that universities were going to need to evolve beyond the degree. You have to be able to meet the learner where the learner needs to be met, to succeed. We think the great nonprofit university can be at the center of all that activity. When you start to layer in what's going to happen when we close the transaction with edX, it's pretty incredible. We haven't had an opportunity to talk about it that much for this community. We've been quite busy with the more important stakeholders in terms of the partners, and it's been pretty incredible. The response has been incredible so far, and I do think there's reason to believe it will change the industry, and it certainly will have a substantial impact on us because we do become a platform and a marketplace, and we do it overnight with an incredible team that comes together from edX and an incredible founder. I would tell you that I do really love what it means for opening doors to more people to create access to all of our programs, whether it be technical training from a great university in a Bootcamp or learning about diversity or women's leadership in a Short Course or getting your doctorate of physical therapy in a degree program. Yeah. I guess that's a great move to my follow-up, which is around edX. Obviously, clearly a lot of excitement as you're thinking, moving towards the close of that transaction. I guess given the conversations you've had with the existing university partners from edX, can you talk about a few of the areas where you're most excited about or you view as low-hanging fruit in terms of investment to scale components of that business? Thanks. Well, we're going to build very large numbers of new free and low-cost options that grow the marketplace. We've committed to the mission of the organization, that was actually reasonably easy for 2U to do because there is just such deep mission alignment. We're excited about the opportunity to be the complete free-to-degree solution. You could say free to PhD. We will offer more free courses. We will offer great opportunities for people to have access to all of our both programs and competencies that we build. Think about the partner base, Ryan. We go from 84 to 226. We have 78% of the top 50 universities in the world. 78%. It's hard to get to 80% vaccination. Hard to get to 80% of anything. You're talking about 3,500+ offerings, 225+ partners, 1,200 enterprise clients. I think we very quietly built out the enterprise channel. That's something we've been doing for the last year and a half, and it's the fastest-growing part of 2U right now. You've got 50 million learners engaged in some form of activity with us. If you think about our brand, edX is a worldwide global learning brand. You can argue that that is the one thing that is sort of the perfectly fitting puzzle piece to this solution for 2U. We are extraordinarily excited about, once we close this, what this can mean for greater adoption of high-quality learning, improving our technology, and bringing a marketplace component to a business that is the market leader today. Your next question comes line of Brent Thill with Jefferies. Thanks. Chip, just on edX, what's the most surprising thing for you? I know you highlighted a lot of the core capabilities in strategy, is there one or two things that really kind of struck you that maybe we can't all see? Yeah --that you think over time can really help transform? Yeah. I'm not sure if you cut off. You can still hear me, Ken? I would say, Brent, edX has just been incredible. Every day, we learn of something new that is just a huge opportunity. The combination of these two entities is. I'm sort of joking, like, "Jerry Maguire, you had me at hello." It's just incredible when you bring the two of us together, what it does. Just one example, when we were so intensely dealing with the process that at one point edX for Campus had 500 university partners, and by the time we got done, we learned it had 935 universities that were offering edX for Campus worldwide, powering their campus programs using the edX content. The enterprise opportunity is very significant when you combine the number of programs we have that are built for the enterprise, and you combine that with the huge library that edX has, the partner synergy. I would say, we prepared for all different types of outcomes in terms of how the world would respond. Obviously, it was a shocking transaction to people because for most folks, they were very surprised just by the nature of what edX was and where it came from and who we are. I would tell you the response has been incredible. That surprised me, Brent. This is our third acquisition. I would say, in some ways, the response to this has been the best of the three from a partner standpoint. There's just a great opportunity for us to do right by the full partner community, the edX partners, and the 2U partners, and the combined partners. There are quite a few that we share. One final thing would be edX has relationships with great companies, some of the world's best companies to offer their content, and that's going very well, and there's a lot of demand for those courses on the edX marketplace. Whether it be IBM, Google, AWS, great content from some of the world's leading companies. You might have seen that we recently launched our first Short Course with "The Economist." We also love that option. We think we'll grow the entire suite. There's a lot there. One maybe final point would be the worldwide opportunity. 2U, when people think of 2U, because of our long history, they think of really high-quality, long-form master's programs. We do that, and we do it well, and I think we do it better than anybody. Over the years, we really have diversified the company. More than half of our learners come from outside the United States today. Just the opportunity in India alone edX has as much traffic and as many learners from India as they do from the United States, and that is purely untapped for the 2U side. We are quite excited about what that means. Great. Thanks for the deep dive, Chip. Paul, just really quickly, I know you covered the free cash flow. It has been improving for five quarters in a row, and you took a little bit of a pit stop this quarter. It just sounds like there's some short-term mechanics there in working capital that should alleviate itself over time. Can you just make sure, I just had a question, two client questions around that, if you could address it. Thank you. Yes. Very directly, it's the $30.5 million drag from accounts receivable, and that is simply the timing of the academic calendar based on our partners. It's a matter of when we collect. I think the key point in all of that, 90%+ of our AR is current. Which means by the time we get to the next quarter, we'll have that windfall in net working capital, if you will. It's not something that is systemic. It is more something of just a matter of timing, from the collections perspective. Great. Thank you. Your next question comes from the line of Fred Havemeyer with Macquarie. Fred, your line is open. Please go ahead with your question. Maybe move to the next one, operator. Apologies, I was muted there. Can you guys hear me? Yes, we can. Sorry about that. Still having to get the hang of working remotely sometimes here. Thank you guys very much. This is a unique time in the education landscape here, though we appreciate that it's certainly an uncertain time as well in some respects. With that, I'd like to ask, what do you see drawing learners to your alternative credentials offering in this environment? Do you see any signs of workers who are considering switching to new roles in new industries as part of the wave of great resignations that many anticipate to be occurring, considering some of your online learning offerings and boot courses? Well, reskilling and upskilling is a huge need for everyone in the world. You're going to have to fully retrain yourself every five years. Technology training in particular has been a critical need. Improving diversity in everyone's tech organizations has been a critical need. I feel like we've got this incredible solution for people with our technical Bootcamps. If you look, 30,000 job referrals. We're doing this at a scale that certainly no one else in ed tech is. I would say the career engagement network that we recently rolled out across our portfolio, and the edX partners and the edX learners are pretty excited about that. Giving people access to the world's best employers. It does become a bit of a flywheel because the more students you have, the more employers want to work with you. As a single university, you really can't do this. Great employers aren't going to line up at a single university, the way they will for a company like 2U that can aggregate a very large number of high-quality learners in one spot. Ultimately, all of this gets turbocharged with edX. Scale matters. We think it'll allow us to bend back the cost curve in a variety of ways. The alternative credentials are a big part of the story, in terms of the worldwide learning base. There's a bunch of incredible courses coming up. We have an incredible course from Rice, about the impact of COVID-19, that's about to debut. London School of Economics just rolled out shorter courses that are only three weeks, that are sort of a new specialty for the London School of Economics. You might have heard in there, Fred, that we did make an announcement that we hadn't press-released yet, that we've now signed IE. Which, for those investors on the call that are in Europe, they will be immediately familiar with IE, one of the best schools in Europe, the top school in Spain. Just continuing to march down the path of some of the world's best universities outside the United States. Over the last six months, we've announced a bunch and really important to provide opportunities for people to improve their careers. Both our Short Courses and our Bootcamps can do just that. Okay. Thank you for that. Around really the digital marketing strategy that you guys have been employing here. Chip Paucek, you touched on the landscape of the dynamics in digital marketing that you're noticing. We've also noticed that your digital marketing spend per enrollee has been notably better on a unit basis than in prior years. I'd like to ask around that. Can you just walk us back through what it is that you've done to achieve those improvements? With the introduction of edX, where do you think that can potentially go? A couple of things there. Let me start off and then probably Chip can add to this. Look, I think 2U has a world-class marketing apparatus. A marketing apparatus is something that has the ability to evaluate audiences, ingest online, offline data. Our data scientist team come together and run models and algorithms to decide where it's appropriate to spend money, across what channel, number of programs, marketing programs, et cetera. They have done a great job at developing these models, those things generate scale with the passage of time. It's like fine wine. It gets better with time. We are seeing some of the benefits of those marketing work that our marketing department has been putting forward here for us. At the same time, we do have a broader set of offerings. As we were preparing for this call, if we look across our portfolio, two years ago, we had 109 Short Courses. Now we have over 199. If we look back at our Bootcamp business, we used to have 104 programs in end of 2019. We now have 184. In our degree business, instead of having 177 offerings, we have 185. We are operating at scale, and the business is scaling with us very efficiently. What you're seeing here is a matter of an efficient marketing department spending prudently, and at the same time, a business that has matured from an infrastructure perspective to generate that scale. Chip, I don't know if you'd address the edX part. I think you did a great job. Okay. Got it. Next question, operator. Your next question comes line of Josh Baer with Morgan Stanley. Great. Thanks for the question. Congrats on the quarter and the edX acquisition. I wanted to start there because it's very interesting. I'm wondering how you're planning on going to market with edX, meaning does 2U motion exist and edX motion exist and it's kind of partner led, meaning more flexibility, more choice for current and future partners? Josh, edX becomes our full consumer experience. 2U is obviously our corporate entity. You can expect us to continue to grow the edX brand, put edX front and center in a whole variety of ways. The partner response on both sides has been outstanding. If you look at University of Miami is actually an interesting example of a Trilogy partner that is now on the degree side. In other words, a partner that came to us as part of our Bootcamp acquisition, and that's very common. If you look at across the business, the London School of Economics came to us as a GetSmarter partner, a Short Course partner, and now we run every undergrad program they have online. We do love the opportunity to work more broadly with each of the partners in the edX framework. From a consumer standpoint, it's hard to overstate the opportunity set in front of us. edX has a very large learner base and huge amounts of traffic. We are excellent at marketing. We are excellent at SEO. We are excellent at content marketing. We bring resources they have not had as a nonprofit. They have a very large number of product offerings that we are excited about. We think both MicroBachelors and MicroMasters will grow substantially with 2U behind them. They create credit pathways for people to get greater affordability and admission into various master's and bachelor's programs. Those credit pathways we think are very attractive. We will grow the free course base. 2U has a tremendous amount of content already paid for that exists today. Unlike every other massive open online course that will be built where you're going to the university and the university has to build that course themselves, 2U has a huge repository of content that can all be repurposed into various free versions and then build the certificates off those and build pathways from those to the degree programs. We think this allows us to create more affordability pathways for people. We do think it'll let us bend back the cost curve. You heard me mention edX for Campus and edX For Business. Those are both opportunities that we will grow. Finally, Open edX is used by over 100 million people worldwide. We do think the open source community becomes a lever in terms of building greater improvements in pedagogy, improvements in learning. We're very excited to work with Anant and his team to drive that across our business. It's important to know that 2U, really, nobody knows the name 2U. It's not a consumer brand. We're not trying to make 2U a consumer brand. The world is very familiar with edX. It is a huge global consumer brand for education. We intend to make it substantially bigger over the next 10 years. We were trying to focus people a little bit on the longer-term opportunity, not that the current quarter. I'm thrilled with the current quarter. Yay. That's great. This isn't about the next five months. It's about the next five to 10 years. If you think about what we've layered on to the existing 2U business, personally, I don't think there's anything we could do to expand and accelerate the opportunity and impact like adding edX to the fold. The edX brand itself will become the expression for 2U to the world in every way, maybe with the exception of this way. In other words, this community knows the 2U name very well, and provosts and presidents of universities know the 2U name very well, but learners do not. Many do know edX. We're excited about what that brings to the table from an organic traffic standpoint and just opportunities to teach more people. Great. Very clear. Thank you. Just one clarification. The commentary around the organic revenue growth plus EBITDA margin looking better, that was for FY 2022 compared to FY 2021 or 2021 compared to last year? It was 22 compared to 21. You know what? I think part of my commentary that spoke to you're going to see fluctuations, but it's generally around the trend line that is heading in the right direction. I think that applies here too. If you do the trailing 12 months, that Rule of 40 is almost 37. If you look at it in the current year guidance, it's 21 plus 6, that's 27. Pick a number in between there. I think that's the ballpark that we're saying, that we will continue to focus on how we can improve on that annual basis, right? That it's the annual measure that we're trying to zero in on, and we're trying to look at this from a long-term perspective of how to build a sustainable and durable business. You know what? Strong financial results is one aspect of that. Positioning is another aspect of that. The combination of edX makes us that platform company with a marketplace that is unmatched. As we come together with edX, it should improve the ability to convert across all of our product lines. Very exciting in terms of the combination, in terms of what it'll do for the Rule of 40. Your last question comes to the line of Brett Knoblauch with Berenberg Capital Markets. Hi, guys. Thanks for taking my question. Maybe just first on the AC segment. You guys are approaching quarterly revenues of $100 million. Haven't seen the same type of scale benefits as we've seen in the degree segment there. At what point would you expect to start to see some segment margin improvements in the AC segment? Brett, there are a couple of things here. I think one of the things that we've been discussing very actively on every single one of these calls, we manage the business on a portfolio basis. To some extent, we're not going to let segment margins to some extent drive the way we allocate capital. We're going to allocate capital where it is most efficient. What you're seeing right now is the scale and the leverage of the degree business coming through loud and clear. The Alt-cred business, we believe over time, will demonstrate similar type of scale and margin power. At the same time, we're building out offerings as we go through this. I use the example of the Short Course business having 109 courses less than 18 months ago, and today they have 199. Same thing with the Bootcamp side. We are investing both of those businesses, Short Course and Bootcamp, in the alt-cred side so that we can continue to build revenue in a sustainable way. We don't just want to benefit from favorable digital marketing trends. We want to benefit from learners wanting a particular type of course. We want to make sure we have those courses, and at the same time, use the digital marketing spend as the variable side of the equation. The bottom line is we are spending as a portfolio, and we're going to spend wherever we get most efficient growth. You're going to see margins fluctuate either sometimes on the degree side or sometimes on the alt-cred side. It is not something that we manage to. Understood. Thank you. The only other thing I would add, Brett, is obviously the marketing's very significant expense on the alt-cred side, and we do think that edX will have a big impact there. It's obvious, but important to note. Yeah, I was just going to comment on that as well. Then maybe on the degree side, I think you guys said sixth straight quarter of sequential growth accelerating. Can you just, I guess, put together your comments on your guidance with degree segmenting continuing momentum? Right now, it implies kind of expecting half of this year revenues are going to be pretty much flat compared to the first half, which looking back at your guys' history, has really never been the case. Is this just really you guys being extremely conservative given the kind of the Delta variant coming about? Just anything in that that maybe we should know about from a tough comp perspective? A couple of things. I'm going to touch on three different areas here. The first one is, last year when we were in a similar situation, we pulled guidance because it was just unknown to us. What we have right now is a Delta variant where you have an economy that was beginning to open, you had the Delta variant on top of it. We're not sure how that's going to play out. Number 1, we need to make sure that we are prudent if we're going to have guidance out there. We kept the guidance, we displayed prudence by keeping the range where it's at. That's number 1. Number 2, the key for us is to examine each of our businesses from a very fundamental perspective. The revenues that we're generating that gave us 30% year-over-year growth in the current quarter, the second quarter, is that a sustainable thing? What are the things that drove that? When we look back at the things that drove that, the number of partners, the number of courses, the students that are enrolled, those are sustainable things that we have. When someone enters the degree segment, they stick around for about 2.5 years on average and generates revenue for that period of time. The third point I'm going to make is if you look back at the second half of last year, you had the launch of Simmons in the back half of the year, and we had ancillary revenue in degree segment from COVID-related activities where we were helping other partners. Those are two things that created tough comps on a year-over-year basis. The last point I'm going to make is more of a historical big picture point. If you look back at the historical trends of 2U, the fourth quarter, back half of the year used to be a generally higher half for us, simply because we launched a large number of programs within a given calendar year that would generate revenue in that back half of the year. Our launch cadence, as you know, has been reduced in the last two years, which would have more of a flattening or more of a leveling or a slightly up back half of the year instead of the unusually high back half of the year that you've seen historically. Those are three points that I would make. The bottom line is the degree business is very well positioned. We have great university partners. You saw with the recent announcement, we're still having strong demand there, and we expect that business to continue to do well even as we enter 2022. There are no further questions at this time. I will now turn the call back over to management for any closing remarks. Thank you very much, everyone. We look forward to talking to you about the story out on the road. This concludes today's conference call. Thank you for participating, and you may now disconnect. Goodbye.