The Brutal Spring and Summer for OPMs and MOOCs
There was a lot of news last week from Coursera’s and 2U / edX’s quarterly earnings calls, and I plan to dive deeper in the next week or so on that subject. But first it strikes me that we’re seeing consistently bad news for Online Program Management (OPM) companies and the associated MOOCs, particulary in terms of enrollment and revenue news since the spring of this year. I don’t think there is one overriding explanation, but the effects are worth considering together. Let’s look in rough order of the news dates.
Grand Canyon Education reported their services revenue increase year-over-year in the most recent quarterly earnings (page 25), but the underlying enrollment at its partner schools (primarily Grand Canyon University) was down 4.5% year-over-year.
Pearson reported in its Q1 Trading Update that while its OPM business was growing, the company is losing its largest customer, Arizona State University. ASU by many estimates represents roughly one third of Pearson’s OPM revenue at roughly $110 m per year, and that relationship is going to end by June 2023.
Wiley reported in its annual report (through April 30, 2022) on page 69 that its University Services segment (the new branding for their OPM business) saw decreasing revenue year-over-year based on an 8% drop in online enrollment.
Coursera reported in its second quarter release that it missed its estimates for revenue, and it dropped its guidance for revenue growth, with their degrees (OPM) business losing 4% year-over-year revenue.
2U / edX reported in its second quarter release that its degree segment revenue dropped 2% year-over-year (the traditional OPM business), and they dropped full-year 2022 guidance for overall revenue by 10%. There was a big pivot and acceleration along with the earnings announcement that changes the company focus to be much more on profitability, largely driven by layoffs of roughly 20% of staff and a reorganization under edX (they raised guidance on EBITDA by 30% for the full year). Total degree enrollments dropped year-over-year and quarter-over-quarter – both from smaller headcount and from reduced activity (fewer credit hours attempted per student).
And finally (for today), FutureLearn – the company created by the Open University and acting as a Europe-centric MOOC and OPM – is in a dire financial position. Donald Clark reported on FutureLearn’s annual report released July 31st:
Neil Mosley also reported on the annual report with an excellent Twitter thread:
Aggregate Picture – What we don’t have are updates from US-based privately-held OPMs, but the collection of public news that we do have seems to have some consistent trends. Revenue and enrollments from the academic side of OPMs (as opposed to enterprise or corporate sales) are down, and macroeconomic trends are a big part of the problem. But not all of the problem. Don’t be misled, this is a challenging market.