Thank you, Marcus. Hello, everyone, and welcome to 2U's first quarter 2014 earnings call.

Following my introduction, I'll turn the call over to our CEO, Chip Paucek, who along with our COO, Rob Cohen, and CFO, Cathy Graham, will walk you through the financial results and guidance on the earnings release distributed this afternoon.

You can find a copy of this earnings release in the Investor Relations section of our website at investor.2u.com. Recorded webcast of this call will be available in the Investor Relations section of our website for 3 months from today.

Also, we routinely post announcements and information on our website, which we encourage you to access and make use of.

Before we begin, I'd like to point out that during the course of this call we will make forward-looking statements regarding future events and the future financial performance of the company. These forward-looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements.

We caution you to consider the important risk factors that could cause actual results to differ materially from those in the forward-looking statements.

In particular, we refer to you the risk factors described in the financial perspective for our initial public offering filed with the SEC on March 28, 2014, the quarterly report on Form 10-Q that we filed today and other filings with the SEC. Any forward-looking statements that we make today are based on the assumptions that we believe to be reasonable as of this date.

We undertake no obligation to update these statements as a result of new information or future events.

During this call, we will also present GAAP and non-GAAP financial measures. The non-GAAP measures are in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

The non-GAAP results, as related reconciliations to GAAP can be found in our press release. And with that, let me turn the call over to Chip Paucek.

Thanks, Chance. I'd like to welcome all of you to our first earnings call as a public company.

Before I get into our Q1 financial highlights, given that this is our first call as a public company, I want to take a moment to remind you of who we are. 2U enables top colleges and universities to build what we believe are the world's best online degree programs.

Our approach? We like to think of it as No Back Row.

We all know the back row, the seats closest to the exit, a refuge for minds that wander, home of the unraised hand. What if we can eliminate that back row, and move every student forward to realize his or her potential?

Our SaaS platform and bundled tech-enabled services allow our university partners to do exactly that, expanding their reach globally, delivering what we believe to be the highest quality online education experience.

In doing so, we're brand stewards for some of best universities in the world, including USC, UNC Chapel Hill, Georgetown, George Washington, Berkeley. Our partners have made online students equal to their on-campus counterparts, something that typically doesn't happen.

This is the real thing on every level. It's the same degree, same faculty, same quality and therefore, the same price as on-campus.

Because of the intimate experience enabled by our software, these students aren't just becoming graduates. They're becoming Trojans, Tar Heels, Hoyas, Colonials, Golden Bears and so on.

Segregation of online students has officially ended. Online students have gone from out of sight and out of mind, to right smack dab in the front row.

From a business model perspective, 2U shares tuition revenue with its university partners over a 10 to 15-year period for each program. 2U handles all the technology, student and faculty support, in-program placement, job placement, content creation and student acquisition, making it both profitable and mission driven for our university partners.

The partner handles all the things you would want a university to do, including admission, financial aid, accreditation and most importantly, brilliant faculty instruction.

While we work to acquire qualified students upfront, we receive 60% to 70% of the lifetime value of the student as they study and take their courses. Outcomes matter to 2U.

I'll now make a few comments on our financial performance for the first quarter, which was very strong all-around. We exceeded our internal estimates across the board, including top line revenue and its primary driver, full course equivalents.

We also spend effectively, allowing us to come in nicely ahead of plan on our adjusted EBITDA levels and net income measures.

I'm pleased to announce that we delivered $26.3 million in revenue for the quarter, with a $3.8 million adjusted EBITDA loss. This strong performance, and our increased expectations are now reflected in the full year guidance we've given for both top and bottom line.

Clearly, we're focused on growth. But as CEO, I think it's really important for me to say that we're not just committed to year-on-year revenue growth, but also to decreasing losses and moving this company towards overall profitability.

Now I'd like to spend a minute on new programs and new program offerings. We committed to launch a minimum of 4 new programs a year on an ongoing basis.

In addition, you'll see other announcements from us that are not new programs, but rather, additional offerings within an existing program. To help you understand everything that we enabled for our partners, we provided a list of programs and program offerings as a attachment to the earnings release.

Cathy will explain how to think about the financial impact of additional offerings within existing programs in just a moment.

We currently have 15 total programs signed, 11 of which are already launched, with 4 more scheduled to launch later this year and in 2015. A key part of our portfolio strategy is to build additional programs in most of the degree verticals where we operate.

It's clear that not every student is right for every school. By launching more important programs in the same academic discipline, we not only further our mission, but unlock substantial leverage in the business model by converting more of the leads we're already generating into students.

First, University of California, Berkeley's, Master of Information and Data Science. Launched in January, this program was a, "greenfield opportunity," which means it was new degree program for Berkeley, and they're offering it exclusively online.

We expect to see more of these green fields in the future; Number two, George Washington University's Executive Master of Health Administration. Launched in April, this is our second degree with GW, following the successful Master of Public Health we did with them last year.

That happened to be my alma mater, so that makes me happy; Number three, Simmons College's Master of Social Work. Scheduled to launch in July of 2014, this is our second degree program with Simmons, joining the Master of Science in Nursing, launched in 2013.

This program importantly, is our second in the social work vertical, accompanying the MSW offered by our long-time partner University of Southern California; number four, again with Simmons College, the RN to BSN. With classes scheduled to start in October, this will be the first undergrad program we enable.

Importantly, this program also includes an RN to MSN option, allowing students who do not currently have a bachelors to pursue an advanced practice nursing masters degree in a continuous program. It's a very significant opportunity for 2U.

It's the company's first undergraduate degree program. It's a large market for degree conferrals in that most U.S.

nurses have a 2-year degree. This program will allow them to finish the bachelors and help them rise up in the ranks of their organization.

Also, it allows us to significantly expand our funnel for the MSN advanced practice degree. Finally, it's the third offering with the fantastic Simmons College of Boston, a historic and great institution that has truly leaned in, in every way possible, onto the leadership of President Helen Drinan.

In addition to these full programs, I also like to highlight a notable new offering that are -- expands our existing program with the Washington University School of Law. 2U will be enabling its first degree with a non-U.S.

university and its first dual degree. Washington University in St.

Louis and Tecnologico de Monterrey have partnered to offer a Dual Master of Laws LL.M. degree.

This will give students in Latin America, the ability to receive their international and U.S. legal training together, resulting in degrees from both schools.

We've always believed the company would launch degrees with universities outside of the United States, and this is step was one of the finest institutions in Latin America is the first for us.

Now onto 2015. We have 2 new programs and 3 new offerings in existing programs signed and targeted for a '15 launch.

As disclosed in our prospectus, we've signed with Syracuse University's S.I. Newhouse School of Public Communications to launch a Master of Communications degree later next year, pending university and state process.

This is a new vertical for 2U.

I'm thrilled to announce today that we've signed with Syracuse University's Martin J. Whitman School of Management to enable their Master of Business Administration.

This is a great opportunity for us to partner with a great university brand and expand access to high-quality degrees in one of the largest academic disciplines. Notably, this is our second MBA program, and a very big opportunity for the company.

The Chancellor and President of Syracuse University, Kent Syverud, was the Dean at Washington University in St. Louis School of Law, where he launched our groundbreaking LL.M.

program, and he's been a strong supporter. We're very excited to work with Dean Ken Kavajecz and his team to announce -- to build a fantastic, flexible MBA program.

For new offerings in existing programs, in April, we announced our first doctorate degree, giving us presence across the full spectrum of higher education, from undergraduate to doctorate. The doctorate education or Ed.D is with the USC Rossier School of Education, and will launch in January of 2015.

Rossier was our first partner, so it's really particularly sweet for me to announce our first doctorate with our original partner. We really love what it says about our business, that are partners are expanding with 2U.

We believe it shows they're happy and are looking for additional growth opportunity.

On that note, in our prospectus, we also disclosed that we'll be enabling a Doctor of Social Work with our second partner, USC School of Social Work. This new offering in USC's highly successful MSW program should launch in late 2015.

Dean Marilyn Flynn continues to innovate with the USC School of Social Work.

And we're making some additional news today with a new offering in our MBA relationship with the University of the North Carolina's Kenan-Flagler Business School. In 2015, we'll launch a Master of Accounting with Kenan-Flagler.

We're excited to expand our Kenan-Flagler relationship and expand the opportunities that students have there. New Dean Doug Shackelford was the Associate Dean of MBA UNC before taking over the role of Dean, and he's truly a digital pioneer.

We're excited about the pipeline. You can expect additional announcements throughout the year.

With that, I'll hand things over to our President and COO, Rob Cohen, for some first quarter operating highlights.

Thanks, Chip. I want to start off by talking about Net Promoter Score or NPS for short, which is how we measure satisfaction across our programs.

Our blended students and faculty NPS during Q1 was 71.5, up from 68.5 in the fourth quarter. This rivals some absolute industry stalwarts, including Apple's iPad [ph], Netflix and Amazon.

Let's remember that NPS is a high [indiscernible] . Anything above 0 is good, and anything above 50 is world-class.

We believe the more satisfied students and professors are, the more likely student outcomes are excellent.

From an operations standpoint, our dedicated team is providing active ongoing support for 11 online graduate degree programs. Here are some quick stats to illustrate this undertaking.

83% of all students that started one of our programs have graduated or are still enrolled as of March 31. We are enabling, on average, over 1,000 live classroom sessions a week.

To remind you, these sessions are live interactions between faculty and students, in intimate classes that average only 10.5 students.

At the end of March, our partner programs had enrolled 9,568 students inception-to-date. We expect to surpass 10,000 students inception-to-date during this second quarter.

And we have successfully placed students nearly 17,000 times, in over 10,000 placement sites.

Our team and company have received numerous accolades over the past few months, and I'd like to highlight 2. Last month, we were announced as the winner of the Partnerships Award for the second consecutive year at the GSE Education Innovation Summit.

Also last month, all of us at 2U were thrilled that Glassdoor honored Chip as one of the 5 highest rated CEOs amongst small-to-medium sized companies. The ranking relies on the input of employees, from providing feedback on Chip's leadership versus Glassdoor's anonymous online review survey.

Chip received a 97% approval rating from 2U employees, ranging from interns to upper management.

Finally, I'm pleased to announce that inception-to-date tuition bookings for our university partners through March 31 was $531 million, a true testament to the value this company creates for our partners. Cathy?

Thanks, Rob and good afternoon, everyone. For the first quarter, we recognized revenue of $26.3 million, a 38% increase over the same quarter of 2013.

As expected, the majority of our revenue continued to come from our first launch cohort, consisting of the 4 programs launched before 2013, which made up 88.5% of revenue for the quarter.

Our revenue growth was driven by increases in full course equivalent enrollments, or FCEs, and to a lesser extent, in average revenue per FCE. In the first quarter, FCEs increased by 28% over the same quarter of 2013, due both to growth in existing programs and to the addition of new programs and program offerings in 2013 and this first quarter.

For additional detail on FCEs and FCE trends, we provided 8 quarters of FCE history as part of our earnings release. We've also provided our platform revenue retention rates for the first quarter, to give you more insight into the performance of our most established programs.

Full explanations of these metrics can be found in the MD&A section of today's 10-Q filing.

Average revenue per FCE increased by 7% compared to the prior year, due primarily to a 5% weighted average increase in our partners' tuition rates. This -- the remaining increase was due to an increase in credits per course during the quarter.

This measure will vary quarter-to-quarter, based on which specific courses within various programs are being taught, in that order.

Net loss attributable to common stockholders was $7.1 million, compared to $3.8 million for the first quarter of 2013. On a per share basis, our loss for the first quarter was $0.93, compared to $0.52 for the same quarter of 2013.

Considering the impact of shares we sold in and warrants revalued with our IPO, pro forma net loss per share was $0.20. I'd like to make clear that our pro forma per share loss is simply net loss adjusted only for warrant expense, divided by pro forma shares.

It does not exclude equity compensation expense of approximately $1.2 million during the quarter.

The year-over-year expansion in our net loss was expected and resulted primarily from having twice as many programs in the early development stage as we did in the 2013 quarter. We make significant investments in new and prelaunch programs, with expenses significantly outpacing revenues during this phase.

As expected, having more programs in early development increased our loss on a year-over-year basis, but set the stage for accelerated future revenue growth.

While early-stage investments were the key driver of net loss expansion, there were 2 noncash items that contributed as well. First, we recognized $688,000 in warrant expense, related to revaluing preferred stock warrants held by our senior lender for conversion to common stock warrants.

This analysis, reflected in the interest expense line item on our P&L, along with interest expense related to a $5 million borrowing we made on our credit line, that was repaid within the quarter.

Grants made for new hires, promotions and retention, as we expanded our management team to support our new programs, and the increasing valuations attributed to our common shares as we approached our public offering. Our adjusted EBITDA loss for the quarter was $3.8 million, compared to $2.4 million for the same quarter of 2013.

As with net loss, much of the expanded adjusted EBITDA loss was driven by increased expenses, related to having a greater number of programs in the early development stage. However, as you'll see, looking at full year guidance, which shows an improvement in our year-over-year adjusted EBITDA loss, we expect this dynamic to be temporary as we move forward with a consistent launch schedule.

Quickly commenting on the balance sheet, our cash position, pro forma for the public offering, was $106.2 million. This included proceeds of partial exercise of the underwriters' overallotment option, in which they purchased approximately 626,000 shares from us, and 435,000 from selling shareholders.

I'd like to remind you that we recognize revenue for each program from the first day of classes to the last, and receive payment from our partner universities after the start of their academic terms. Each partner program has a unique academic calendar, predominantly offering 4 academic terms per year.

Depending on where our partners are in their academic calendars, at the end of each calendar quarter, we could have wide variations in cash, accounts receivable and deferred revenue from quarter-to-quarter. We suggest that you look at changes in these accounts as a group, to better understand our balance sheet position.

As this is our first opportunity to speak directly to some of you, I want to make sure everyone has a basic understanding of the financial life cycle of a program.

This will help you understand how our announcement of new programs and additional offerings within existing programs play into our financial models. We start investing in new programs about 9 months before they launch.

Over the next 3 to 4 years, we will invest, on average, net negative cash of between $4 million and $9 million in a program. Primary programs, which are the first programs we launched in a degree vertical, are at the high end of this range, and on the longer end of that 3 to 4 year to breakeven period.

Additional programs in existing degree verticals are at the lower end of both the investment and time to breakeven ranges. Though our cost of technology and content development is similar for both primary and additional programs, marketing spend becomes materially more efficient when we add a second program.

As we own the leads we generate, we can max more interested students with appropriate programs when we offer more than 1 program in a degree vertical. And because we have already built a lead base for our first program, second programs can scale more quickly and at lower incremental cost.

We expect the programs we enable to reach steady-state scale in an average of 6 years into our 10 to 15-year-contract terms.

As Chip said earlier, we often have multiple offerings within a single program that leverage similar content, marketing channels, or both. These additional offerings are one of the ways we drive our partner programs towards reaching their full potential.

When we launch a new program, we often anticipate additional offerings as a part of our financial model for that program. So unless we tell you otherwise, you should assume that these additional offerings are already built into the program's long-term financial expectations.

Now looking at guidance. We expect revenue for the second quarter to be between $23.3 million and $24.1 million.

At the midpoint of this range, it represents 27% growth over the same quarter of 2013. On a sequential basis, the decline in expected revenue is seasonal and anticipated.

Due to their academic calendars, our partner programs generally have more days out of session during the second quarter than any other, which impacts the timing of our revenue recognition.

For full year 2014, we expect revenue of between $105 million and -- $104.5 million and $107.5 million, reflecting the seasonal step up in quarterly revenue during the second half of the year. Of second half revenue, we expect that 48% to 49% will be recognized in the third quarter, and 51% to 52% will be recognized in the fourth quarter.

Remember, that while we will be launching additional new programs over the remainder of the year, they contribute very little in -- to revenue in their early operating quarters. The vast majority of revenue from this point in the year forward will come from already launched programs.

And I'd like to remind you that we have tremendous revenue visibility for the rest of the year. Most of our remaining 2014 revenue expectations will be generated by returning students in our partner programs who have very high and predictable retention rates.

On the bottom line, we expect a net loss of between $11.9 million and $11.2 million for the second quarter, or between $0.30 or $0.28 per share on both a basic and a pro forma basis. For the full year, we are guiding to a net loss of between $33.3 million and $31 million.

Based on our current forecast for share counts, this equates to a basic per share loss of between $1.04 and $0.97, and a pro forma per share loss of between $0.85 and $0.79.

As in the first quarter, our pro forma per share loss guidance is simply our net loss, divided by pro forma shares. To adjust to a pre-equity compensation loss, we have provided you with equity compensation estimates for both second quarter and the full year.

For both periods, losses are expected to be greater than in 2013. Though as you hear -- you'll hear, our adjusted EBITDA results for the year are expected to be better.

In large part, this is driven by increases in both depreciation and amortization, and equity compensation expense.

In combination, we expect these noncash costs to be approximately $2 million and $6.5 million, over the prior-year periods for second quarter and full-year 2014, respectively. We expect our adjusted EBITDA loss for this second quarter to be between $8.3 million and $7.7 million, slightly more than the $7.3 million we reported for the same quarter of 2013.

As in the first quarter and the year-over-year increase in our loss would be largely driven by increases related to having a greater number of new and pre-launch programs. However, when looking sequentially versus the just reported first quarter, our year-over-year adjusted EBITDA comparison is clearly improving, as we settle into a consistent launch schedule.

Reflecting this trend, we now expect an adjusted EBITDA loss of between $19.7 million and $17.7 million for the full year 2014. At the midpoint of the range, this represents an improvement over 2013 of approximately 12%.

With that perspective on what we believe are very positive expectations, I'll hand things back over to Chip for some closing comments.

So before we wrap up and take questions, I want to share a quick story to illustrate how our programs are changing the lives of students. In all of our programs, students can enroll who would never have been able to without this flexibility.

Let me tell you that Cory Broussard. Cory is a father of 4.

He lives in Gonzales, Louisiana. He's a successful engineer for Shell Oil.

He's enrolled in the MBA UNC to further his educational goals, while maintaining his challenging job. Cory spent 14 days a month working on a oil rig in the middle of the Gulf of Mexico.

As Cory told me, personally, we make it possible for him to change his life and fulfill his goals, all while keeping the great job that supports his family. The reality is, because of 2U, students don't have to quit their jobs to attend a top 20 B-school, which would have never been possible for Cory and many others like him.

I mean, think about it: Live class from an oil rig. I'd like to thank Cory for a allowing us to talk about his life, say hello to his beautiful wife, Roxy, [ph] and congratulate him on his expected graduation in October.

From a business perspective, 2U is not just taking share of existing market. We're also making markets by allowing students like Cory to fulfill their dreams.

That is why we get up in the morning. We believe there's a critical long-term correlation between our financial success and our partner to student outcome.

Outcomes matter more than anything else. And Cory's proof of that.

Let's eliminate the back row together, #nobackrow.

With that, Cathy, Rob and I will be happy to take your questions.

Chip, can you give us a sense as to whether the conversations that you're having with some of the targeted schools, and if the schools that you target are getting easier? and if you can maybe tell us about the durations of those conversations and whether they're lengthening, shortening, both as a result of the public offering and as a result of the momentum the company seems to have?

The answer is yes. I wouldn't say so much the results of the public offering, but more just based on the quality that we're delivering for our existing clients.

So our Syracuse announcement today is actually the fastest negotiation we'd ever had. It was very short in total duration.

So from -- not just the contract negotiation, but both contract negotiation and time from contract to launch are shorter now than they've ever been. So pretty excited about what's happening in the pipeline overall.

And then also, if you could maybe give us a sense of how the hiring has gone? I know that, as you launch a lot of these programs, it takes a substantial amount of pretty quick hiring for you to get a lot of people on board.

Is that -- how is that progressing? And do you think that you've -- you'll be able to ramp-up as quickly as you're adding these new programs and verticals?

Yes. It's pretty interesting that also, when we launched second programs in an existing vertical, part of what actually happens is, it ramps more quickly overall.

And that actually requires -- we ramp the hierarchy for that particular program. And we launched a second program in social work, and now we're in the midst of launching a second program in business.

And of course, a second program in nursing, which all require faster hiring. And we've been able to keep up the pace, and haven't had any issues related to that whatsoever.

I could tell you, the company didn't launch any programs in 2012, and that was very purposeful. We had 3 great universities, 4 programs in 3 great university so we wanted to, #1, make sure that we delivered in 2013 the same qualities we had done in those early programs.

And then we built an infrastructure that allowed us to scale and prepared us pretty well for 2014. So we're right on track.

And if you could just maybe talk about -- I know that you guys have a pretty proprietary algorithm selection tool that gives you a lot of insight into which schools to partner with. And I know that's something that you've been tracking for quite a while now, so as soon as you develop it.

Is that -- how is that been trending? Has it been accurate?

Is the correlation still as strong as it has been over the last couple of quarters, and are you still using it intensely to pick the school that you're targeting?

Yes. We actually think in the last quarter or so, we've improved it quite a bit.

So we used the proprietary program selection algorithm to select the programs, whether it be our second programs in the vertical, or some of our newer relationships, including the Whitman School of Management and Syracuse. So the algorithm, if anything, is looking certainly more predictive as of late.

So we feel very good about it going forward. We do think that it is, from a standpoint of a competitive edge to 2U and our partners, pretty important.

And, Cathy, one for you, if I may. I think some of these new services may have crossed or just having some of the number incorrect in terms of your guidance.

Just to clarify what you said in the prepared remarks, the 79 to 85 for -- on the loss for the year, that's including your stock-based compensation? If you excluded that stock-based compensation I think, my number works out somewhere into the low 60s at the midpoint.

Is that a comparable number we should be looking at?

Yes. That is the comparable number to be looking at.

So just to clarify again, our calculation is net income adjusted only for warrant expense and not excluding equity compensation expense. And we have provided you -- divided by pro forma shares, and we have provided you with estimates of equity compensation expense for both the second quarter and the year in guidance, so that you can make those adjustments.

First, I was wondering if you could talk a little bit about the competitive environment for the programs that you announced today. Or those more competitive situations?

Maybe color on who you went up against, and why you think those customers chose 2U over those competitors?

So in general, Andre, thanks, for the question. In general, we actually -- we don't participate in RFPs or competitive bidding processes.

We typically identify a school that we think is both in a vertical that is very attractive to the company and has a series of attributes that come strongly out of the program selection algorithm. Without getting into details of what they are, it makes that a particularly attractive school.

But that's half of the battle. The second half of the battle, is that the school has the leadership to pull it off, which we've learned from our 6 years of operating experience, is incredibly important in building these programs to scale.

Without question, the leadership has to be there and be willing to change their processes to reflect the fact that there's students aren't all in the local area. So a much bigger deal than might seem obvious.

By putting those 2 together, we're able to identify a school that is the partner for 2U. We're certainly not right for everyone.

We're definitively not trying to bring everyone online, that is not our model. There are others that will go down that path.

We're trying to build the world's best online degrees programs period. So in the case of Syracuse, clearly we were looking for a second program in what could be one of the larger verticals the company operates in, business demonstration is very big.

Syracuse is incredibly well known brand with a leadership team from Chancellor, Provost to Dean, that are just totally ready for the challenge. So it wasn't a case of a competitive bid, whatsoever.

There was really no one else involved in the conversation between us and Syracuse, they are ready for it and we're excited to take them to the online modality. So...

And maybe a two-part question on the doctorate programs you've announced. First, how do the terms of some of those programs differ from the masters, both in terms of the economics for you and the contract duration?

And then I know you've given some color previously, on the math, both for the revenue potential for 2U, and I believe that mostly this is just masters programs. So maybe a little insight as to how you think that your increased number of doctorate programs does not [ph] impacts that math.

So the short answer Andre, is that the contract is the same. They're the same firms.

In general, across our partner portfolio, it's their 10- to 15-year people [ph] with a 60%, 70% revenue share. I'll hand it over to Cathy to talk a little bit about how to think about the doctorate programs, specifically on a financial basis.

Yes. So Andre, sort of what I said in the call is that we view these as extensions, particularly now with the doctorate programs as we don't have the level of experience in those programs as we do with the masters programs.

So we view them as being additional offerings within our existing programs, because they leverage, in large part, the marketing funnels and the marketing activities that we are already doing. We do make some incremental investment in these.

But the investment is significantly less than we would make in launching the original program. And we do have those investments built in to our existing model.

So for the doctorate programs for the time being, you should feel that they are built into our existing expectation.

And last question. In terms of the pre-2013 programs, any color on how those have scaled and how much of the course equivalents are from those programs versus your new ones?

Well, I think that as we said here that the full course equivalent -- or that the first 4 pre-2013 programs represented about 88.5% of our revenue for the quarter. We saw overall an increase of about 28% in full course equivalents overall.

And in general, those were pretty relational between revenue growth and full course equivalent.

The only thing I would add, Andre, is our model -- obviously, the way the model works programs have history, you're building, books, and over time and we're pretty excited about what we're seeing out of not just our old programs, but some of our new 2013 program launches.

Chip and Rob, why don't I ask you a question? Maybe it's a derivative of Andre's question on the pricing out there.

Is [indiscernible] to talk about the current pricing environment or the take rates that you're seeing on these newer degree programs that you're signing up, compared to some of those earlier programs that you've started?

Sure. Thanks for the question.

So in general, when we say 60% to 70%, that's not because they move during the agreement itself. It's because our early programs, we had a lower rev share and our later programs have had a higher rev share, so without getting into the specifics across the board, we certainly will [indiscernible] contract negotiation standpoint.

Great. And then another question just on the competitive environment.

Again, Chip or Rob, is it possible -- when you think about what you're replacing here in terms of these new degree programs out there, what are these universities using right now for their online degree programs? Is it mostly Greenfield?

Are they not using anything, and you're just essentially replacing like a depository, like a black board that's out there? Any color on kind of what you're replacing out there would be great.

In general, sort of just sort of neutralize [ph] comment is most of schools don't have an online program. Very rarely do you see that.

Obviously, over time, more and more will. When there is some online initiative, it might be something that is homegrown.

What we're quite proud of, is as far as our competitive set, we really are the only provider of a true SaaS solution to the school, comprehensive for not just the student, the online campus that the students see, but also for the professor and for the administrator to fully operate a high-quality online program, at scale, in a quality manner that's requisite with the Berkeley or the USC. So in general, you find that most schools don't have online programs.

Now over time, we think that obviously, picks up a huge opportunity for us to continue doing what we just demonstrated with Syracuse in launching more programs. I mean, Syracuse is an interesting study in a launch of a brand-new vertical for 2U communications, which had some real market potential, and then a second program in one of the largest vertical of MBA.

Great. And then last question for me and then I'll pass the line.

You did announce on the call, so your international school first program outside the United States. I think it sounds like maybe it's just [ph] a school with one of your partners here in the United States.

I have thought international is more of an intermediate strategy for your business. So just wondering if there's any change to that thought or maybe you could update us here on how you're thinking about the international strategy and timing on that?

And timing on that opportunity what it's like?

Well, we've always felt that international was -- it's clearly part of the long-term story here without question. Today, as an example, the Washington University of St.

Louis Law School we're operating an LL.M. program that is purely, 100% for people outside of the United States borders.

It's for attorneys. It's not a degree, it's depending on the call it might be some other way.

But if you're a practicing attorney somewhere in the world and you need to work with U.S. law, having an LL.M.

from the U.S. is important to state that you understand the U.S.

laws and can demonstrate it. And you can even sit for the bar in many states in the country if you get a U.S.

LL.M.. So that program we launched really focused on the world, not focused on the U.S.

The relationship with Monterrey Tech is an extension of that program. It's our first dual degree program.

We've always believed international will be part of a story. This is a great step in that direction given that they're one of the leading institutions in Latin America.

And really, if you're an attorney in Latin America, you can get both your domestic degree and your U.S. degree at the same time, two different degrees.

And this was in affiliation to 2U work to drive between those 2 school. So we were sort of the key COGS between the 2 schools.

I appreciate the total tuition booking number you guys have discussed. But I'm getting a sense for the pent up earnings that you have in the system at this point from your established programs, and basically how the leverage in the model works.

I know it's kind of hypothetical, but I'm just wondering if you were to shut down investments in your new programs today, can you help us understand what revenues and associated expenses would look like for those core programs at this point?

So if we were sitting here looking forward at this point and looking at our tuition adjusted backlog, this is probably the best way to explain it to you. Our tuition adjusted backlog at this point, which would be attrition adjusted future revenue from students who are currently enrolled in programs.

At this point, it's somewhere in the $110 million range. So you can think of that as if we were to stop marketing and putting students on our books today, putting -- bringing in new students.

We would have about $110 million of revenue that has a low 20s cost of service against it. So that's kind of the way to think about that piece of the revenue.

What happens of course, when you sort of consolidate all of these programs into a portfolio is that what you're seeing on the loss line for the company is driven by investments in new programs, getting them launched and getting them scaled. If you think about the first launch cohort, which is the first 4 programs that we launched in sort of '09, '10 and '11, those became adjusted EBITDA positive in 2013.

And if you sort of looked at them as though they have launched at the same time as our first program in 2009, they would have about a mid 20s adjusted EBITDA margin on them now. So fundamentally, what we're seeing is that we have good, strong pretty predictable revenue on our existing program.

And the ones that are hitting maturity are hitting profitability. But on a combined basis, what you're seeing are continuing losses being driven by investments in future growth.

Now as Chip said and I'll repeat, we do have a commitment to getting the company on the path to profitability. And I think you see that demonstrated by the fact that our full year guidance for adjusted EBITDA is an improvement of about 12% at the midpoint over what we've reported for 2013.

That's great. Thank you for that color.

Just one quick follow-up, the $110 million is that just sort of -- what's the timeframe of that revenue?

So we -- when we think of backlog, you can expect to get that over probably, the next 2-plus years. The majority of it over the rest of this year, and next year, a little bit somewhat the year after that.

And that comes from the fact that, on average, our students are going to be in their programs for about 2.5 years. Some shorter, some longer.

But that's the period over which we would recognize that revenue.

And then one other follow-up. Do you expect any impact from Department of Education rule-making sessions around state authorization for distance education.

I know that that's sort of an ongoing thing. We're approaching the final hearings there.

I'm just -- I think you handle that process for the schools, I'm just wondering if you expect any kind of disruption from that.

Thank you. Truly we build our state authorization process in the early years based on the fact that frankly, we thought everyone was doing this.

And we've been doing it, registering all of our schools in every state since the very beginning. So while any additional regulatory burden is always challenging for a company, we're extremely well prepared for it.

We routinely launch programs and only marketed programs where we are officially allowed to operate by the state. So green and red states per se.

And pretty religious about making sure that we maintain that discipline across our programs. So from a portfolio standpoint, I guess the short way to say it is, while we'd always love less regulation, we're doing it today, so we're completely prepared for it.

Just a few questions for you. So first of all, I was wondering when you guys look at your pipeline, I was wondering if you could share with us what percentage are programs and offerings in existing verticals and what percentage are outside of current verticals?

And then maybe, as a follow-up to that, like how do you think about whether it makes sense to add an incremental one in a current vertical or whether not to go after new verticals like engineering architecture and others.

So it's a balance. We're obviously focused on those plowing virgin snow in verticals that are large and that have big market potential.

We're constantly looking at greenfield, but in the case of Berkeley, which is off to a fantastic start, [indiscernible] that you certainly wouldn't get to enrollment prediction based on current market share, because there really are no degrees in that particular field until very recently. But we thought it was a pretty obvious -- I should give, [indiscernible] Dean Ken Kavajecz, Syracuse [ph] a lot of credit for sort of making us see the light there.

So individual programs -- it's a balance. So it's wanting to plow that virgin snow while simultaneously bringing in second programs, and in some cases even third programs in existing verticals where that vertical is worth doing that.

As far as new offerings in existing programs, the reason we created this chart for you was we're worried that in announcing what we do all the time, which if you go back in our history, there are many examples of new offerings in existing programs that are on that chart. Just a couple of examples, our Master of Arts and Teaching was our first degree with USC.

We've followed it up later with Masters of Arts in teaching students where English is a second language. And that program expanded that particular vertical.

And so, we've done that since the beginning. We expect to continue to.

We just didn't want to confuse you between that and the difference with our sort of new full program like in the case of whether it be first program in the vertical like Syracuse Newhouse, or second program in the vertical like Syracuse Business. So that's all about just continuing to expand the market, whether it be, because we're sharing content, which we do in some cases, like the MATT cell degrees [ph] or sharing marketing funnel, like we are in many of the verticals like in our nursing vertical where we have -- we started the family nurse practitioner, and now we have youth vertical care and midwifery.

So just to be clear, we are still committing, even though you are going to see us continue to announce sing bright the dual degree with Monterrey Tech, the fact is we are fully committed to no fewer than 4 full programs a year, whether it be first program or second program. And that's really what that list was for.

Sort of just make it clear so we don't confuse people on the street.

Very helpful, And is there a way to I know that every program and every vertical will be different. but is there any way to think about how much an offering could help scale enrollment at scale?

I mean, is there -- if you were to think about one of your programs as a minimum threshold of 500. Does an offering add another 100 to that?

Or how to think about that.

We're been careful to make sure that you understand that when we add an offering -- Cathy was pretty clear to say that it was built in new offering in existing programs, you should presume is built into the existing model for that program.

So I mean, as I said, sometimes it's because you're sharing content, sometimes because you're sharing. do you want add anything to that?

No, I think that's it. We may at times give you guidance that says, hey, we're putting something in as an offering and you should think of it as different way, you should think of it as expanding either the revenue opportunity or temporarily expanding our cost base before we get back on track.

But unless we tell you otherwise, we really -- we view these programs as having multiple components. So we will have gotten into FCE numbers and the like, we will have built those additional offerings into our expectations over the long run.

Got you. Okay.

And then I know that you're not going to drill too much into kind of a cohort. So not give us too much color around kind of each one of these individual programs.

I was wondering, when you're looking at the kind of that '11, '12 cohort, are they all kind of experienced the same level? Are there any that are executing better or worse than kind of your own expectations.

The reality is it is a portfolio, and your target say that there's an average program. Obviously, there will be some programs that are higher that others, and that is why we do tend to think about it on a cohort basis.

I can tell you, we do believe that the original 4 programs are reasonably predictive of the future. In other words, we do feel like on a cohort basis, we're excited about what we're seeing in our 2013 launches.

And now, we've got the algorithm helping us select 2014 and beyond launches.

So while we don't go into an individual program, we do believe that what we're see on the ground would give us confidence that the core 4 are predictive of what we see long-term.

And last question for me, I think, Cathy, in your prepared remarks, you talked about a component of the ARPU increase coming from tuition pricing across the program. I think you had mentioned it was up 5% year-on-year?

Now is that -- first of all, is that the right number and is that pretty consistent with what you've seen historically? What do you assume around that going forward?

It is the right number that you are using, that 5%. It comes from various tuition increases across our programs.

Not all of them were at that rate, but when you look at increases in tuition, in change in mix, the number of courses being offered, FCEs in the various programs, and some additional of new programs at different rates, yes, it is 5%. I would not build in 5% tuition increases going forward for a couple of -- and we do not in our own model.

It is not necessarily what we would expect to see, since some of that does come from mix. Additionally, in the current environment, I think we would all be prudent to say that our schools are for -- are discussing what their future increases are going to be.

And not that they have arrived at conclusions or all will make the same conclusion, but we certainly would not model in ourselves a 5% price increase.

Simmons and the Bachelors of Nursing program, it's your second foray in the undergrad out their [ph] semester online. It seems much more targeted and, I guess, specialized.

Can you talk about your strategy there and your plans for the undergrad market?

Sure. Semester Online was a pilot program that we run to prove to ourselves what everybody said wasn't possible.

People said, you can't teach undergrad with these instructional method. And we're pretty excited about the fact that semester online not only proves that you the pedagogy would work, but it sort of directly lead to us being our able to work with a great historic women's college in the launch, [indiscernible] in the market that is predominantly female.

So good question, Jesse, because it is much more targeted. We all tend to thing of undergrad based on our vials and what we've done from our own history with more classic 4-year residential.

And undergrad is a very, very big market. There are many people that are pursuing different types of undergrad education.

And in some ways, from a purely business model perspective, we expect this program to look very similar to one of our graduate programs from an operations and marketing perspective, which is part of the reason that we launched it. I also would tell you that what's really nice about this particular opportunity is that the MSN is the path to huge value for an individual nurse.

You can replace the doctor in a managed-care facility or a medi-clinic, that's a big deal in terms of quality of life. And so today, we have many people coming to us for either of our MSN opportunities that just don't have ability to enroll, because they don't have a bachelors.

So we love what is does either on its own, as an individual undergrad marketing initiative, or as shared funnel and sort of long-term continuous program between RN and MSN. So that is pretty powerful for us from that perspective.

And as a follow-up to that, Chip, when you look at your pipeline of programs, are there other undergrad programs out there? Or is this kind of a unique situation, because of the type of relationship that you have with Simmons and that opportunity within the nursing vertical?

Certainly, I won't, I can't get into a individual components of the future pipeline. It's safe to say, just like it is with graduate -- sorry, with international, or doctorate, that we do expect to continue to expand our undergrad portfolio.

Truly, undergrad is a big market. We're the leading player.

We're the premier player. And, if you're a great school in the country right now thinking about going online, we're certainly your top choice.

So we do expect to continue to play more in that space. I think that's it.

Cathy, a question about your newer programs. The contract length and the tails on those, can you provide any details if it's similar to prior programs that you've signed

Yes, Jesse, I can take that one. So contract length, as we said across the board for 2U is between 10 and 16 years.

So the answer is very similar. The same from that perspective.

And that's really our taking the key component of R&D on the side of the partnership. And schools that work with us know that.

We're investing quite a bit upfront -- not upfront, but over the first 3 or 4 years net negative cash. So that long-term commitment is important to us and as well as our university partners.

They know that we're truly a partner for the long-term, and these are more like marriages.

Right. And last question for me, there are some news last week, Chip, around a $10,000-degree -- bachelor degree.

I guess what are your thoughts on pricing of education and online education over time? And maybe talk a little bit about how 2U views itself as able to maintain pricing power.

Well, I think really the key is the outcomes fundamentally matter. And when you to a great school in this country, you tend to have a pretty phenomenal outcome, so just speak about me for a second without playing the violin for myself, With the GW, got a telegram, first person in my family to go to college.

And the fact is GW fundamentally changed my life in every possible way and sort of paved the way for me to do what I'm doing today, without question. And when you go to a great school in this country, we typically have a pretty phenomenal outcome.

And we fully embody that mission in this company every day. Outcomes matter to a point where last week, we actually released something that may not be as exciting and noticeable for investors, but is incredibly to our partner organizations, incredibly important to policymakers, anyone else that will be looking at the company, our impact report we released.

We had a really solid amount of data to show the world that we're not just talking about it, we're delivering it. And we expect to deliver that every year.

So from that standpoint, that long-term correlation will be, we believe, as long as we focus on outcome and quality, it all works out in the end. So, you attend Berkeley, you get a Master of Data Science, you typically have a pretty phenomenal outcome.

Now I almost want to make light of the fact that from a tuition standpoint, while we charge the same level of tuition, if these are material decrease to students debt burdens when you don't have to pick up your life, fundamentally quit your job and move to attend to a great school. But no small things.

So you're talking about a major impact to an individuals opportunity cost and efforts. So when we think that's pretty important.

The reason, ultimately it's the same price, but as you got the same quality, no distinction between the 2 degrees -- same degree itself, same exact degree. So long-term, we really like where we sit as long as we remember to focus on what matters, which is outcome.

Thank you very much. We really appreciate everyone being with us today for our first call as a public company.

And we look forward to talking to you at conferences and at events going forward. And I encourage you to get out of that back row and come forward.

Join us in the front row. We look forward to talking to you guys downstream.

Take care, everybody.