2U/edX Begins New Year with Wave of Layoffs
The new layoffs follow a disastrous end of the year, marked by sharp drops in enrollments and stock price.
2U, the online education company struggling financially since acquiring edX in 2021, laid off more employees last week.
These layoffs come on the heels of a disastrous third quarter in 2023, characterized by a sharp decline in enrollments and a 50% drop in stock value, which also led to a CEO change.
While the company has not officially announced these job cuts, former employees have disclosed them on LinkedIn, adding to the previous layoffs that preceded the company’s Q3 results.
Indications of Mounting Troubles
The layoffs arrive in the wake of a major strategic overhaul. In mid 2022, 2U shifted towards a “platform strategy”, focusing on leveraging edX’s brand and reach. This strategy, as outlined by then-CEO Christopher “Chip” Paucek, involved reducing costs through workforce and office reductions, adopting a new marketing framework centered around edX’s organic presence, and lowering tuition to boost enrollments.
The third quarter of 2023 witnessed declines in enrollments for both degree programs and coding bootcamps, culminating in the departure of CEO Chip Paucek and the elevation of CFO Paul Lalljie to CEO. The company’s market value fell below $80 million, significantly lower than the $800 million it paid for edX two years earlier.
A significant blow came with the termination of 2U’s partnership with the University of Southern California (USC), a decision described as mutual. This split, however, cost USC a $40 million “break fee”. 2U maintains that this sort of split is part of its “Portfolio Management” strategy, which involves exiting financially underperforming or strategically misaligned programs.
2U’s portfolio management extends beyond USC. The company has been exiting certain degree programs, earning exit fees in the process, and is set to launch over 80 new degrees in 2024, replacing the revenue from phased-out programs. This move includes taking over programs from Pearson’s recently sold Online Program Management (OPM) business.
The company’s coding bootcamps have also experienced a decline in enrollments.
An Uncertain Future
As of the end of the third quarter 2023, 2U had accumulated over $800 million in debt. Its stock price has plummeted by 97% in the past five years, bringing its market capitalization down to a mere $62 million.
The fate of edX remains uncertain as 2U continues to struggle. When 2U acquired the platform, some predicted it could pose a threat to rival Coursera. But so far, there is little evidence that 2U has invested in edX’s growth. It remains focused on promoting its degrees, bootcamps and executive education to edX’s audience instead.
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Joe Mulloy
I can confirm layoffs at 2U. I was with edX for 6.5 years and I was laid off on Wednesday January 17th. Many long term edX engineers were paid off last week. It was a very sad day for edX.
Marcus
Sorry for that Joe. But when many long term edX engineers laid off, we can expect there will be no more investments in edX, and the danger is very real 2U shut down the platform.
Anthonie
Random but what happening to the millions of certifications that’s linked through the site if it shuts down ?
Lill
Is their plan to just shut down? Why would anyone keep working there after all the layoffs they’ve had? Lame.
Marcus
Fact is, when 2U promoted the former CFO as new CEO, we can expect that means not good news for spending or investing in edX. I think first they try now the radical cost cutting strategy, and when that is not effective, we cannot ruled out further steps. I think Coursera will be the number one in the market, the dreams to compete with them are dead.
And as Dhawal mentiond in many analysis, 2U only want the customer data with the edX acquisition to provide his own expensive programs. Independen from that, edX courses have seen significant price increases since the acquisition by 2U.
Jay
I was laid of on January 17 as well. I was notified with an email first thing followed by a mandatory meeting with an HR representative and a rep for the Executive Leadership Team. It was a virtual “come to this meeting and we will escort you out without being able to tell anyone goodbye” situation, ending with a word on how much they appreciate all that I’ve done. If there is a headcount of those who have been affected, I haven’t found it. How anyone would want to work there after this sudden shock of many, many good people being kicked out is beyond me.
lil
there seem to be a lot of people there who just can’t let go.
Martin woodhead
idiots killed a good idea thinking people would some how magically want and have the the cash to buy on line boot camps. which were available anyways
Anthonie
Wait ? …
What happens to people’s certifications if edX shuts down ?
Glenn
I would have thought diplomas and maybe certificates would be available through the partnering school. If that doesn’t work, find out who the accreditor is and speak to their liaison for that particular school.
2U representatives have repeatedly stated that 2U is an OPM, and 2U does NOT award degrees (and certificates?) directly.
If in fact this is inaccurate (which SEC filings show — misrepresentation), then the schools themselves are in danger of losing access to Title IV funds, and the accreditor needs to know about it, since it is the accreditor’s responsibility to monitor school compliance with federal regulations.
If the accreditor is giving the school a free-pass even though the school is non-compliant then the accreditor risks losing its recognition by the Secretary of Education, just like what happened to ACICS.
Akuar Anguei Lual
I was laid of on February 1 as well. I was notified with an email first thing followed by a mandatory meeting with an HR representative and a rep for the Executive Leadership Team. It was a virtual “come to this meeting and we will escort you out without being able to tell anyone goodbye” situation, ending with a word on how much they appreciate all that I’ve done. If there is a headcount of those who have been affected, I haven’t found it. How anyone would want to work there after this sudden shock of many, many good people being kicked out is beyond me.
Marcus
I hope i can post here two links to interesting articles about the situation of 2U Inc, because the company faces a bankruptcy:
– https://www.cnbc.com/2024/02/15/2u-earnings-miss-adds-pressure-to-debt-rankled-online-education-firm.html
-https://bnnbreaking.com/finance-nav/2u-inc-the-struggling-online-course-provider-facing-bankruptcy
Francisco S
I hope edX gets back on its feet soon.
edX and other MOOCs websites are very important for the current generations who now seem to totally rely on AI for everything.
Self pace learning sites are important source of knowledge.
I hope edX and 2U win and grow. Wish them goodluck.