The online education provider 2U is planning major payroll and marketing budget cuts to counter falling enrollment in online learning, company leaders said Thursday on a quarterly earnings call as reported by EdScoop
The company has around 4000+ employees per their Linkedin Profile – 20% reduction in workforce would be around 800+.
During the call, 2U executives announced the company would be undergoing “radical changes” in order to boost profit — including reducing personnel costs by 20% before the end of the year, and completely changing 2U’s marketing approach.
Strategic Update from Company’s Earnings Deck
2U also announced today the implementation of a plan to accelerate its transition to a platform company and align its cost structure and strategy. The plan reorients the company around the edX platform, allowing it to pursue a portfolio-based marketing strategy that drives traffic to the edX marketplace. The plan is designed to achieve durable growth that increases profitability by simplifying the current executive structure to reduce silos, reducing employee headcount, optimizing marketing spend and rationalizing the company’s real estate footprint.
As part of the plan, Harsha Mokkarala, 2U’s current Chief Data Scientist, will now serve as the company’s Chief Revenue Officer, and Anant Agarwal, founder of edX and 2U’s current Chief Open Education Officer, will serve as Chief Platform Officer. In their new roles, Mr. Mokkarala will focus on optimizing marketing spend while continuing to drive growth and Mr. Agarwal will be responsible for leading the company’s unified product and technology strategy.
The company expects that implementation of the headcount reductions will be completed in the third quarter of 2022 while the remainder of the plan is expected to be completed by the end of 2022. The company expects to generate marketing efficiency and an additional $70 million in annualized cost savings, primarily due to savings associated with headcount reduction and reduced real estate costs. The company estimates it will incur aggregate restructuring costs associated with the plan ranging from approximately $35 million to $40 million.