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.

• EdX