Edtech Earnings Roundup: How 2U, Chegg, Instructure and Pluralsight...

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Edtech Earnings Roundup: How 2U, Chegg, Instructure and Pluralsight Fared in Q2 2019

By Wade Tyler Millward     Aug 21, 2019

Edtech Earnings Roundup: How 2U, Chegg, Instructure and Pluralsight Fared in Q2 2019

The latest quarterly earnings for publicly traded education technology companies was especially rough for 2U, which revised its loss guidance for the year and stated that it expected enrollment challenges to its core business of running online graduate programs with universities. That sent the stock for the Lanham, Md.-based company tumbling to historic lows. (It has risen slightly to $18.39 at close of Aug. 20.)

But 2U wasn’t the only edtech player to get Wall Street talking. Here’s how the other edtech companies that went public earlier this decade fared.

Chegg

The numbers: For the second quarter, ended June 30, Chegg reported an adjusted EBITDA of $31.1 million, a 61 percent increase year over year, and raised its expected 2019 revenue to between $398 million and $402 million. Annual subscriber growth slowed slightly from 31 percent to 30 percent, with a total of 2.2 million subscribers. Since market close July 29—when the company announced earnings—its stock has fallen 4 percent to $40.42 on the close of Aug. 20.

What’s next? Later this year, Chegg will start testing a bundled product that includes its Study, Math Solver and EasyBib Plus products for a substantial subscription discount, fully deploying the bundle in 2020.

Who’s next? Chegg now has about $1.1 billion in cash and hasn’t been shy about looking into acquiring new companies to help in possible growth areas, like career-related services. Last year, it bought WriteLab for $15 million in cash.

Say what? “We predicted that print would have gone away five years into the business and this is our 10th year in the business, and here they are,” CEO Dan Rosensweig said. “We’re still doing millions and millions of textbooks, but the faster they (publishers) go digital, the better it is for us.”

Instructure

The numbers: For the second quarter, ended June 30, Instructure reported $62.9 million in revenue, up 25.6 percent from the same period last year; a non-GAAP net loss of $6.04 million, down 27 percent from the same period last year; and total billings of $232.4 million, up 25 percent from the same period last year.

The company slightly improved its full-year expectations, with revenue expected between $258 million and $260 million and a non-GAAP net loss of betwwen $24 million and $21.5 million. From the close of July 29—when the company announced earnings—to the close of Aug. 20, its stock rose 9 percent to $43.31.

What’s next? The company continues to invest in growth in the corporate space through Bridge, its employee development product. It signed contracts with several big-name clients, including Mutual of Omaha and Waze.

American Express is using Bridge for 10,000 contractor trainees while TELUS is using it for 40,000 employees across 10 countries. Tulane University and Western Governors University are among customers of Instructure Canvas (its learning management system used by higher ed faculty and students) to also adopt Bridge for their employees.

Who’s next? Analysts are looking to see if Instructure’s Canvas learning management system can keep winning contracts from one of its closest competitors, Blackboard. Market analyst Phil Hill reported that Instructure’s Canvas has a 35 percent market share by student enrollment and 28 percent share by institutions. By enrollment, Blackboard’s Learn product has a market share of 31 percent.

The company reported that it recently won deals with former Blackboard users University of Alabama, East Carolina University and University of Cincinnati for a total of 79,000 learners.

Say what? “There’s not a lot of details to share right now other than we're looking to get this right,” CEO Dan Goldsmith on Instructure’s secretive effort on its new AI-driven data analytics product, an effort codenamed DIG.

Pluralsight

The numbers: For the second quarter, ended June 30, Pluralsight reported $75.9 million in revenue, a 41.6 percent increase year over year; billings revenue of $69.1 million, up 27 percent year over year; and net loss of $15.2 million, down 33.3 percent. It expects full-year revenue between $312 million and $318 million, an increase of 36 percent over 2018.

The bad news? The company beat expectations on revenue and earnings, but missed on billings revenue by $10 million due to a shortage of sales representatives, executives said. The billings miss sent the company’s stock tumbling, but it has recovered some since. From the close of July 31—when the company announced earnings—to the close of Aug. 20, its stock has dropped 49 percent to $15.72.

Who’s next? Pluralsight and its chief revenue officer—Joe DiBartolomeo, hired in 2016—split ways amid the billings miss. The company is on the hunt for a new CRO, in addition to other hires for sales-related leadership positions. The company is also on track to close the year with 330 salespeople.

What’s next? Analysts await a unified product with GitPrime in the first quarter of 2020. And the number of high-paying customers is on the rise. Ford and MasterCard are among the 21 customers with annual billings over $1 million, a category of customer that has grown 91 percent year over year. The company says it has also doubled the number of customers paying over $500,000 to 61.

Say what? “In the interim, I’m digging in deep here myself along with a few other members of my executive team,” CEO Aaron Skonnard said. “And I’m going to be dedicating a large portion of my time—until the new CRO is here—playing the interim CRO role.”

   

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