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$TWOU 
https://abs.twimg.com/emoji/v2/... draggable="false" alt="📚" title="Bücher" aria-label="Emoji: Bücher"> has BEEN UP A LOT WITH A +65% YTD
It is the next Blue Apron $APRNhttps://abs.twimg.com/emoji/v2/... draggable="false" alt="🧑🍳" title="Cook" aria-label="Emoji: Cook">https://abs.twimg.com/emoji/v2/... draggable="false" alt="📉" title="Tabelle mit Abwärtstrend" aria-label="Emoji: Tabelle mit Abwärtstrend">
Or is it a real #SaaShttps://abs.twimg.com/emoji/v2/... draggable="false" alt="📈" title="Tabelle mit Aufwärtstrend" aria-label="Emoji: Tabelle mit Aufwärtstrend"> such as $TWLO https://abs.twimg.com/emoji/v2/... draggable="false" alt="☎️" title="Telefon" aria-label="Emoji: Telefon"> $DDOG https://abs.twimg.com/emoji/v2/... draggable="false" alt="🐶" title="Hundegesicht" aria-label="Emoji: Hundegesicht"> or $SNOW https://abs.twimg.com/emoji/v2/... draggable="false" alt="❄️" title="Schneeflocke" aria-label="Emoji: Schneeflocke">
My take on this [LONG THREAD]https://abs.twimg.com/emoji/v2/... draggable="false" alt="👇" title="Rückhand Zeigefinger nach unten" aria-label="Emoji: Rückhand Zeigefinger nach unten">
It is the next Blue Apron $APRN
Or is it a real #SaaS
My take on this [LONG THREAD]
Let’s introduce our suspect https://abs.twimg.com/emoji/v2/... draggable="false" alt="🕵️♀️" title="Woman detective" aria-label="Emoji: Woman detective">
$TWOU is a SaaS for EdTech: It provides universities and collegeshttps://abs.twimg.com/emoji/v2/... draggable="false" alt="🏫" title="Schule" aria-label="Emoji: Schule"> with a cloud platform for building and delivering their courses online https://abs.twimg.com/emoji/v2/... draggable="false" alt="💻" title="Computer" aria-label="Emoji: Computer">
$TWOU has a $2.6B MC and has served 180k+ graduateshttps://abs.twimg.com/emoji/v2/... draggable="false" alt="🧑🎓" title="Student" aria-label="Emoji: Student">
A very simple business model! A closer lookhttps://abs.twimg.com/emoji/v2/... draggable="false" alt="👇" title="Rückhand Zeigefinger nach unten" aria-label="Emoji: Rückhand Zeigefinger nach unten">
$TWOU is a SaaS for EdTech: It provides universities and colleges
$TWOU has a $2.6B MC and has served 180k+ graduates
A very simple business model! A closer look
Making money https://abs.twimg.com/emoji/v2/... draggable="false" alt="💰" title="Geldsack" aria-label="Emoji: Geldsack">
https://abs.twimg.com/emoji/v2/... draggable="false" alt="➕" title="Fettes Pluszeichen" aria-label="Emoji: Fettes Pluszeichen"> $TWOU partners with schools to digitise their courses and gets a cut from the tuition fees for students enrolled through its online platform
Spending money https://abs.twimg.com/emoji/v2/... draggable="false" alt="💸" title="Geld mit Flügeln" aria-label="Emoji: Geld mit Flügeln">
https://abs.twimg.com/emoji/v2/... draggable="false" alt="➖" title="Dickes Minuszeichen" aria-label="Emoji: Dickes Minuszeichen"> Once $TWOU has an agreement to digitise the content, they have to spend the big https://abs.twimg.com/emoji/v2/... draggable="false" alt="💸" title="Geld mit Flügeln" aria-label="Emoji: Geld mit Flügeln"> on actually digitising the content
https://abs.twimg.com/emoji/v2/... draggable="false" alt="➖" title="Dickes Minuszeichen" aria-label="Emoji: Dickes Minuszeichen"> Then, they have to spend the https://abs.twimg.com/emoji/v2/... draggable="false" alt="💸" title="Geld mit Flügeln" aria-label="Emoji: Geld mit Flügeln"> again on recruiting students and supporting https://abs.twimg.com/emoji/v2/... draggable="false" alt="💸" title="Geld mit Flügeln" aria-label="Emoji: Geld mit Flügeln"> faculty staff and enrolled students
How does that translate into an income statement? Here is a look at Q2 ’20
https://abs.twimg.com/emoji/v2/... draggable="false" alt="✅" title="Fettes weißes Häkchen" aria-label="Emoji: Fettes weißes Häkchen"> Revenue of $183m (+35% YoY growth)
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💸" title="Geld mit Flügeln" aria-label="Emoji: Geld mit Flügeln"> Curriculum and teaching costs of $26m
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💸" title="Geld mit Flügeln" aria-label="Emoji: Geld mit Flügeln"> Servicing and support costs of $30m
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💸" title="Geld mit Flügeln" aria-label="Emoji: Geld mit Flügeln"> Technology and content development cost of $37m
EBIT of ($49m)
Obviously, high marketing spend are not that alarming as
However, does this hold for $TWOU? Here is what they have to say about their marketing spend
“In our Graduate Program Segment (GPS), our marketing and sales expense in any period generates student enrolments eight months later, on average.”
“We then generate revenue as students progress through their programs, which generally occurs over a two-year period following initial enrolment.” - SEC Fillings
https://abs.twimg.com/emoji/v2/... draggable="false" alt="📊" title="Balkendiagramm" aria-label="Emoji: Balkendiagramm"> GPS represents $116m out of their $183m in revenue (64% of rev.)
“In our Alternative Credential Segment (ACS), our marketing and sales expense in any period generates student enrolments as much as 24 weeks later, on average.“
“We then generate revenue as students progress through their courses, which typically occurs over a two- to six-month period following initial enrolment.” - SEC Fillings
https://abs.twimg.com/emoji/v2/... draggable="false" alt="📊" title="Balkendiagramm" aria-label="Emoji: Balkendiagramm"> ACS represents $67m out of their $183m in revenue (36% of rev.)
Leading to a WEAK marketing performance https://abs.twimg.com/emoji/v2/... draggable="false" alt="📉" title="Tabelle mit Abwärtstrend" aria-label="Emoji: Tabelle mit Abwärtstrend">
https://abs.twimg.com/emoji/v2/... draggable="false" alt="🏔" title="Schneebedeckter Berg" aria-label="Emoji: Schneebedeckter Berg"> The business generates sales 6 to 8 months after their marketing spend
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💳" title="Kreditkarte" aria-label="Emoji: Kreditkarte"> With the acquisitions of Trilogy and GetSmarter they are getting into Short Courses and Bootcamps (ACS) which translates a bit faster into cash
However, should $TWOU nat have focussed first on these short courses? Is $TWOU a real #SaaS stock?
https://abs.twimg.com/emoji/v2/... draggable="false" alt="🚨" title="Polizeiautos mit drehendem Licht" aria-label="Emoji: Polizeiautos mit drehendem Licht"> The space here is already crowded with Coursera and EdX being well established
https://abs.twimg.com/emoji/v2/... draggable="false" alt="📈" title="Tabelle mit Aufwärtstrend" aria-label="Emoji: Tabelle mit Aufwärtstrend"> It looks like Coursera and EdX are the real SaaS in the game, see for yourself https://abs.twimg.com/emoji/v2/... draggable="false" alt="👇" title="Rückhand Zeigefinger nach unten" aria-label="Emoji: Rückhand Zeigefinger nach unten">
Coursera and EdX’s user acquisitions strategy might be better as well:
https://abs.twimg.com/emoji/v2/... draggable="false" alt="📚" title="Bücher" aria-label="Emoji: Bücher"> You want to learn something new, let’s say “data science for beginners” https://abs.twimg.com/emoji/v2/... draggable="false" alt="👉" title="Rückhand Zeigefinger nach rechts" aria-label="Emoji: Rückhand Zeigefinger nach rechts">Just type that into Google
Are Coursera and EdX the real #SaaS?
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💻" title="Computer" aria-label="Emoji: Computer"> Provide a platform and do not create the majority of the content themselves
https://abs.twimg.com/emoji/v2/... draggable="false" alt="🕹" title="Joystick" aria-label="Emoji: Joystick"> Rapid customer acquisition with free trials and increased spending per student over time as they from small courses to specialisations to full degrees
Is $TWOU more of a $APRN?
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💰" title="Geldsack" aria-label="Emoji: Geldsack">Large customer acquisition costs
https://abs.twimg.com/emoji/v2/... draggable="false" alt="⏳" title="Sanduhr mit fließendem Sand" aria-label="Emoji: Sanduhr mit fließendem Sand"> 8 months before locking in customer
https://abs.twimg.com/emoji/v2/... draggable="false" alt="⚙️" title="Zahnrad" aria-label="Emoji: Zahnrad"> They create, promote and support all of their products, meaning big https://abs.twimg.com/emoji/v2/... draggable="false" alt="💸" title="Geld mit Flügeln" aria-label="Emoji: Geld mit Flügeln"> spend
Of course, this is a market and the recent +65% gain shows that others are more bullish https://abs.twimg.com/emoji/v2/... draggable="false" alt="🐂" title="Ochse" aria-label="Emoji: Ochse">
Closely monitoring the EdTech space and hope to see Coursera go publichttps://abs.twimg.com/emoji/v2/... draggable="false" alt="👀" title="Augen" aria-label="Emoji: Augen">
I’d be very happy to discuss!https://abs.twimg.com/emoji/v2/... draggable="false" alt="🔥" title="Feuer" aria-label="Emoji: Feuer">
Closely monitoring the EdTech space and hope to see Coursera go public
I’d be very happy to discuss!
Hope you liked this thread!
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Here is the down case on $TWOU - would love to hear your take on that! https://abs.twimg.com/emoji/v2/... draggable="false" alt="🗣" title="Silhouette eines sprechenden Kopfes" aria-label="Emoji: Silhouette eines sprechenden Kopfes">
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@TheMarkCooke
@KermitCapital
@SeifelCapital
@fatbabyfunds
@AdnanAzam1986
@JorelLaraKalel
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