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2U Reports Results for Fourth Quarter and Full-Year 2023

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LANHAM, Md., Feb. 12, 2024 /PRNewswire/ — 2U, Inc. (Nasdaq: TWOU), a leading online education platform company, today reported financial and operating results for the quarter and full-year ended December 31, 2023.

“I am proud to lead 2U through the next chapter of its journey,” said Paul Lalljie, Chief Executive Officer of 2U. “We finished the year with strong performance, particularly in our executive education business, and a new organizational structure designed to enhance transparency and alignment across the company. We are resetting and enhancing our operations with renewed financial discipline. Looking ahead, we believe this renewed focus, along with our market-proven offerings, robust partner network, and scalable technology and services, will allow us to take advantage of increasing demand for high-quality online education and continue to deliver on our mission.”

“Our immediate focus in 2024 is to strengthen the fundamentals of our business in order to extend our debt maturities and restore a healthy balance sheet,” added Matthew Norden, Chief Financial Officer of 2U. “The measures we have already implemented are good first steps to enhancing our operational efficiency and improving our adjusted EBITDA and free cash flow, but we are not done. We are undergoing a comprehensive review of our business to streamline and consolidate costs, implement rigorous criteria for new programs, and optimize staffing levels in key functional areas while maintaining the quality of our offerings to partners and students. We are approaching the future with new financial discipline, providing us with the foundation to actively manage our upcoming maturities and build a scalable business.”

Results for Fourth Quarter 2023 compared to Fourth Quarter 2022

Revenue increased 8% to $255.7 millionDegree Program Segment revenue increased 19% to $163.5 millionAlternative Credential Segment revenue decreased 7% to $92.2 millionNet loss was $42.4 million, or $0.52 per share, and includes non-cash impairment charges of $62.8 million

Non-GAAP Results for Fourth Quarter 2023 compared to Fourth Quarter 2022

Adjusted EBITDA increased 54% to $90.2 million; a margin of 35%Adjusted net income was $49.5 million, or $0.48 per share

Results for Full-Year 2023 compared to Full-Year 2022

Revenue decreased 2% to $946.0 millionDegree Program Segment revenue decreased 2% to $561.0 millionAlternative Credential Segment revenue decreased 2% to $384.9 millionNet loss was $317.6 million, or $3.93 per share, and includes non-cash impairment charges of $196.9 million

Non-GAAP Results for Full-Year 2023 compared to Full-Year 2022

Adjusted EBITDA increased 37% to $170.8 million; a margin of 18%Adjusted net income was $15.4 million, or $0.19 per share

Discussion of 2023 Results

Revenue for the quarter totaled $255.7 million, an 8% increase from $236.0 million in the fourth quarter of 2022. Revenue from the Degree Program Segment increased $26.4 million, or 19%, and included $54.6 million of revenue recognized from the mutually negotiated exit of certain degree programs, also referred to as portfolio management activities. Revenue from the Alternative Credential Segment decreased $6.7 million, or 7%, primarily due to lower enrollments in coding boot camp offerings, partially offset by 8% growth in FCE enrollments in executive education offerings.

Revenue for the year totaled $946.0 million, a 2% decrease from $963.1 million in 2022. Revenue from the Degree Program Segment decreased $10.6 million, or 2%, and included $88.0 million of revenue recognized from portfolio management activities. Revenue from the Alternative Credential Segment decreased $6.6 million, or 2%, primarily due to lower enrollments in coding boot camp offerings, partially offset by 8% growth in FCE enrollments in executive education offerings.

Costs and expenses for the quarter totaled $278.2 million, a 21% increase from $230.6 million in the fourth quarter of 2022. Fourth quarter costs and expenses included $62.8 million of non-cash impairment charges to goodwill for which the company did not have a corresponding expense in the fourth quarter of 2022. The remaining change in costs and expenses, a decrease of $15.2 million, was primarily driven by a $27.2 million decrease in personnel and personnel-related expense and a $4.6 million decrease in depreciation and amortization expense. These decreases were partially offset by a $9.6 million increase in restructuring charges, primarily driven by changes to the company’s organizational structure, a $4.0 million increase in paid marketing costs, and a $3.1 million increase in transaction and integration expense.

Costs and expenses for the year totaled $1.17 billion, a 4% decrease from $1.22 billion in 2022. This $49.5 million decrease in costs and expenses includes a $58.6 million increase in non-cash impairment charges to goodwill and indefinite-lived intangible assets. The remaining change in costs and expenses, a decrease of $108.1 million, was primarily driven by a $66.6 million decrease in personnel and personnel-related expense, a $25.5 million decrease in paid marketing costs, a $12.8 million decrease in depreciation and amortization expense, and an $11.5 million decrease in lease and facility expense.

Liquidity and Cash Flow

As of December 31, 2023, the company’s cash, cash equivalents, and restricted cash totaled $73.4 million, a decrease of $109.2 million from $182.6 million as of December 31, 2022. As of December 31, 2023, the company’s total debt was $904.7 million, including borrowings of $40.0 million under the company’s revolving credit facility.

In January 2024, the company entered into a receivables factoring transaction with Morgan Stanley Senior Funding (“Morgan Stanley”) whereby Morgan Stanley has committed to purchase up to $86.2 million of receivables owing to the company related to portfolio management activities at a purchase rate of 88%.

The company expects that if it does not amend or refinance its term loan, or raise capital to reduce its debt in the short term, and in the event the obligations under its term loan accelerate or come due within twelve months from the date of its financial statement issuance in accordance with its current terms, there is substantial doubt about its ability to continue as a going concern. The company’s financial statements will be included in the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023. 

Business Highlights

Transitioned to a new organizational structure with an executive leading each of the company’s business segments. Andrew Hermalyn has been appointed President of the Degree Program Segment, and Aaron McCullough has been appointed President of the Alternative Credential Segment.Announced new offerings under our flexible degree partnership model:The University of Birmingham – seven new online master’s degrees across in-demand fields including data science, digital media, and marketing;The University of Surrey – fifteen online master’s degrees to be launched over three years, plus more than 15 professional certificate programs in the fields of technology, business, healthcare, communications technologies, and sustainability.Added 98 new edX courses from 41 unique institutions.Added new edX members including the University of Birmingham, Howard University, and Avado.

Forward-Looking Guidance

As of February 12, 2024, the company is initiating its first quarter and full-year 2024 guidance as follows:

First quarter 2024

Revenue to range from $195 million to $198 millionNet loss to range from $60 million to $55 millionAdjusted EBITDA to range from $10 million to $12 million

Full-year 2024

Revenue to range from $805 million to $815 millionNet loss to range from $90 million to $85 millionAdjusted EBITDA to range from $120 million to $125 million

The company is undergoing a comprehensive performance improvement exercise, the potential results of which are not reflected in the guidance above. This effort aims to improve our profitability through cost control and contribution margin improvement across both segments, optimize our operating model, ensure staffing levels align with business priorities across functional areas, and deleverage our balance sheet. In addition, guidance assumes the following: (i) no new portfolio management activities in 2024 and (ii) revenue from 2023 portfolio management activities of $10 million in the first quarter of 2024 and $15 million in full-year 2024.

For full-year 2024, we anticipate approximately $45 million in capital expenditures and weighted average shares outstanding of 85 million.

Non-GAAP Measures

To provide investors and others with additional information regarding 2U’s results, the company has disclosed the following non-GAAP financial measures: adjusted EBITDA (loss), adjusted EBITDA margin, adjusted free cash flow, adjusted unlevered free cash flow, adjusted net income (loss), and adjusted net income (loss) per share. The company has provided a reconciliation of each non-GAAP financial measure used in this earnings release to the most directly comparable GAAP financial measure. The company defines adjusted EBITDA (loss) as net income or net loss, as applicable, before net interest income (expense), other income (expense), net, taxes, depreciation and amortization expense, transaction costs, integration costs, restructuring-related costs, stockholder activism costs, certain litigation-related costs, consisting of fees for certain non-ordinary course litigation and other proceedings, impairment charges, debt modification expense and loss on debt extinguishment, and stock-based compensation expense. The company defines adjusted EBITDA margin as adjusted EBITDA divided by revenue. The company defines adjusted free cash flow as net cash provided by (used in) operating activities, less capital expenditures, payments to university clients, and certain non-ordinary cash payments. The company defines adjusted unlevered free cash flow as adjusted free cash flow less cash interest payments on debt. The company defines adjusted net income (loss) as net income or net loss, as applicable, before other income (expense), net, acquisition-related gains or losses, deferred revenue fair value adjustments, transaction costs, integration costs, restructuring-related costs, stockholder activism costs, certain litigation-related costs, consisting of fees for certain non-ordinary course litigation and other proceedings, impairment charges, debt modification expense and loss on debt extinguishment, and stock-based compensation expense. Adjusted net income (loss) per share is calculated as adjusted net income (loss) divided by diluted weighted-average shares of common stock outstanding for periods that result in adjusted net income, and basic weighted-average shares outstanding for periods that result in an adjusted net loss. Some of the adjustments described above may not be applicable in any given reporting period and may vary from period to period.

The company’s management uses these non-GAAP financial measures to understand and compare operating results across accounting periods, to understand cash that is generated by or available for operational expenses and investment in the business after capital expenditures, for internal budgeting and forecasting purposes, for short- and long-term operating plans, and to evaluate the company’s financial performance. Management believes these non-GAAP financial measures reflect the company’s ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in the company’s business as they exclude expenses that are not reflective of ongoing operating results. Management also believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating the company’s operating results and prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies.

The use of adjusted EBITDA (loss), adjusted free cash flow, adjusted unlevered free cash flow, adjusted net income (loss), and adjusted net income (loss) per share measures has certain limitations, as they do not reflect all items of income and expense that affect the company’s operations. The company compensates for these limitations by reconciling the non-GAAP financial measures to the most directly comparable GAAP financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from, measures prepared in accordance with GAAP. Further, these non-GAAP measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore comparability may be limited. Management encourages investors and others to review the company’s financial information in its entirety and not rely on a single financial measure.

Conference Call Information

What:

2U’s fourth quarter and full-year 2023 financial results conference call

When:

Monday, February 12, 2024

Time:

4:30 p.m. ET

Live Call:

(888) 330-2446

Conference ID #:

1153388

Webcast:

investor.2U.com

About 2U, Inc. (Nasdaq: TWOU)

2U is a global leader in online education. Guided by its founding mission to eliminate the back row in higher education, 2U has spent 15 years advancing the technology and innovation to deliver world-class learning outcomes at scale. Through its global online learning platform edX, 2U connects more than 83 million people with thousands of affordable, career-relevant learning opportunities in partnership with 260 of the world’s leading universities, institutions, and industry experts. From free courses to full degrees, 2U is creating a better future for all through the power of high-quality online education. Learn more at 2U.com.

Cautionary Language Concerning Forward-Looking Statements

This press release contains forward-looking statements regarding 2U, Inc.’s future business expectations, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this press release, including statements regarding future results of operations and financial position of 2U, including financial targets, business strategy, and plans and objectives for future operations, are forward-looking statements. 2U has based these forward-looking statements largely on its estimates of its financial results and its current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs as of the date of this press release. The company undertakes no obligation to update these statements as a result of new information or future events. These forward-looking statements are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially from the results predicted, including, but not limited to:

trends in the higher education market and the market for online education, and expectations for growth in those markets;the company’s ability to maintain minimum recurring revenues or other financial ratios through the maturity date of its amended term loan facilities;the acceptance, adoption and growth of online learning by colleges and universities, faculty, students, employers, accreditors and state and federal licensing bodies;the impact of competition on the company’s industry and innovations by competitors;the company’s ability to comply with evolving regulations and legal obligations related to data privacy, data protection and information security;the company’s expectations about the potential benefits of its cloud-based software-as-a-service technology and technology-enabled services to university clients and students;the company’s dependence on third parties to provide certain technological services or components used in its platform;the company’s expectations about the predictability, visibility and recurring nature of its business model;the company’s ability to meet the anticipated launch dates of its offerings;the company’s ability to acquire new clients and expand its offerings with existing university clients;the company’s ability to successfully integrate the operations of its acquisitions, including the edX acquisition, to achieve the expected benefits of its acquisitions and manage, expand and grow the combined company;the company’s ability to refinance its indebtedness on attractive terms, if at all, to better align with its focus on profitability and address impending maturities;the company’s ability to service its substantial indebtedness and comply with the covenants and conversion obligations contained in the indentures governing its 2.25% convertible senior notes due 2025 and 4.50% convertible senior notes due 2030 and the credit agreement governing its revolving credit facility; the company’s ability to implement its platform strategy and achieve the expected benefits; the company’s ability to generate sufficient future operating cash flows from recent acquisitions to ensure related goodwill is not impaired;the company’s ability to execute its growth strategy, including internationally and growing its enterprise business;the company’s ability to continue to recruit prospective students for its offerings;the company’s ability to maintain or increase student retention rates in its degree programs;the company’s ability to attract, hire and retain senior management and other key personnel;the company’s expectations about the scalability of its cloud-based platform;potential changes in laws, regulations or guidance applicable to the company or its university clients;the company’s expectations regarding the amount of time its cash balances and other available financial resources will be sufficient to fund its operations;the impact and cost of stockholder activism;the potential negative impact of the significant decline in the market price of the company’s common stock, including the impairment of goodwill and indefinite-lived intangible assets;the expected impact of our 2022 Strategic Realignment Plan, or similar performance improvement initiatives, and the estimated savings and amounts expected to be incurred in connection therewith;the impact of any natural disasters or public health emergencies, such as the COVID-19 pandemic;the company’s expectations regarding the effect of the capped call transactions and regarding actions of the option counterparties and/or their respective affiliates; andother factors beyond the company’s control.

These and other potential risks and uncertainties that could cause actual results to differ from the results predicted are more fully detailed under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, and other SEC filings. Moreover, 2U operates in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for 2U management to predict all risks, nor can 2U assess the impact of all factors on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements 2U may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this press release may not occur and actual results could differ materially and adversely from those anticipated.

Investor Relations Contact: investorinfo@2U.com

Media Contact: media@2U.com

 

2U, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

December 31,
2023

December 31,
2022

(unaudited)

Assets

Current assets

Cash and cash equivalents

$           60,689

$         167,518

Restricted cash

12,710

15,060

Accounts receivable, net

115,944

62,826

Other receivables, net

28,293

33,813

Prepaid expenses and other assets

33,828

43,090

Total current assets

251,464

322,307

Other receivables, net, non-current

12,507

14,788

Property and equipment, net

40,233

45,855

Right-of-use assets

63,986

72,361

Goodwill

651,498

734,620

Intangible assets, net

371,198

549,755

Other assets, non-current

68,797

71,173

Total assets

$      1,459,683

$      1,810,859

Liabilities and stockholders’ equity

Current liabilities

Accounts payable and accrued expenses

$         103,378

$         110,020

Deferred revenue

81,949

90,161

Lease liability

15,158

13,909

Accrued restructuring liability

14,506

6,692

Other current liabilities

44,348

58,210

Total current liabilities

259,339

278,992

Long-term debt

896,514

928,564

Deferred tax liabilities, net

323

282

Lease liability, non-current

83,297

99,709

Other liabilities, non-current

1,165

1,796

Total liabilities

1,240,638

1,309,343

Stockholders’ equity

Preferred stock, $0.001 par value, 5,000,000 shares authorized, none issued

—

—

Common stock, $0.001 par value, 200,000,000 shares authorized, 82,260,619 shares issued

and outstanding as of December 31, 2023; 78,334,666 shares issued and outstanding as of

December 31, 2022

83

78

Additional paid-in capital

1,741,657

1,700,855

Accumulated deficit

(1,497,579)

(1,179,972)

Accumulated other comprehensive loss

(25,116)

(19,445)

Total stockholders’ equity

219,045

501,516

Total liabilities and stockholders’ equity

$      1,459,683

$      1,810,859

 

2U, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share amounts)

Three Months Ended

December 31,

Year Ended

December 31,

2023

2022

2023

2022

(unaudited)

(unaudited)

(unaudited)

Revenue

$         255,661

$         236,049

$         945,953

$         963,080

Costs and expenses

Curriculum and teaching

30,219

32,953

129,304

129,886

Servicing and support

27,120

35,002

128,298

147,797

Technology and content development

40,607

49,823

176,218

190,472

Marketing and sales

79,816

80,504

372,129

422,147

General and administrative

23,972

28,272

132,680

159,418

Restructuring charges

13,674

4,067

36,256

33,239

Impairment charges

62,754

—

196,871

138,291

Total costs and expenses

278,162

230,621

1,171,756

1,221,250

(Loss) income from operations

(22,501)

5,428

(225,803)

(258,170)

Interest income

862

398

1,961

1,165

Interest expense

(19,533)

(18,525)

(74,573)

(62,234)

Debt modification expense and loss on debt extinguishment

—

—

(16,735)

—

Other (expense) income, net

(52)

427

(803)

(3,815)

Loss before income taxes

(41,224)

(12,272)

(315,953)

(323,054)

Income tax (expense) benefit

(1,224)

429

(1,654)

903

Net loss

$          (42,448)

$          (11,843)

$       (317,607)

$       (322,151)

Net loss per share, basic and diluted

$              (0.52)

$              (0.15)

$              (3.93)

$              (4.17)

Weighted-average shares of common stock outstanding, basic and diluted

82,140,194

78,261,601

80,891,146

77,327,850

Other comprehensive loss (income)

Foreign currency translation adjustments, net of tax of $0 for all periods presented

1,448

2,448

(5,671)

(3,534)

Comprehensive loss

$          (41,000)

$            (9,395)

$       (323,278)

$       (325,685)

 

2U, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

Year Ended

December 31,

2023

2022

2021

(unaudited)

Cash flows from operating activities

Net loss

$           (317,607)

$           (322,151)

$           (194,766)

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Non-cash interest expense

13,652

19,835

25,403

Depreciation and amortization expense

115,322

128,153

108,448

Stock-based compensation expense

39,688

80,220

97,766

Non-cash lease expense

17,404

21,020

18,933

Restructuring

866

9,555

5,014

Impairment charges

196,871

138,291

—

Provision for credit losses

10,017

8,610

8,036

Loss on debt extinguishment

12,123

—

1,101

Gain on sale of investment

—

—

(27,762)

Other

965

5,443

2,515

Changes in operating assets and liabilities, net of assets and liabilities acquired:

Accounts receivable, net

(58,972)

(3,041)

(31,756)

Other receivables, net

2,980

(517)

(27,001)

Prepaid expenses and other assets

13,504

4,833

(7,636)

Accounts payable and accrued expenses

(436)

(42,735)

21,212

Deferred revenue

(8,657)

5,326

9,388

Other liabilities, net

(41,151)

(41,915)

(26,969)

Net cash (used in) provided by operating activities

(3,431)

10,927

(18,074)

Cash flows from investing activities

Purchase of a business, net of cash acquired

—

5,010

(761,118)

Additions of amortizable intangible assets

(44,010)

(62,445)

(60,546)

Purchases of property and equipment

(6,021)

(11,755)

(9,788)

Purchase of investments

—

—

(1,000)

Proceeds from investments

—

—

38,818

Advances made to university clients

—

(310)

—

Advances repaid by university clients

200

200

200

Other

—

(50)

—

Net cash used in investing activities

(49,831)

(69,350)

(793,434)

Cash flows from financing activities

Proceeds from debt

329,223

696

569,477

Payments on debt

(375,283)

(7,181)

(4,334)

Prepayment premium on extinguishment of senior secured term loan facility

(5,666)

—

—

Payment of debt issuance costs

(4,411)

—

(11,575)

Tax withholding payments associated with settlement of restricted stock units

(1,093)

(2,850)

(18,780)

Proceeds from exercise of stock options

110

1,128

6,489

Proceeds from employee stock purchase plan share purchases

2,102

1,282

3,583

Net cash (used in) provided by financing activities

(55,018)

(6,925)

544,860

Effect of exchange rate changes on cash

(899)

(1,983)

(2,309)

Net decrease in cash, cash equivalents and restricted cash

(109,179)

(67,331)

(268,957)

Cash, cash equivalents and restricted cash, beginning of period

182,578

249,909

518,866

Cash, cash equivalents and restricted cash, end of period

$               73,399

$             182,578

$             249,909

 

2U, Inc.

Reconciliation of Non-GAAP Measures – Adjusted EBITDA

(unaudited)

The following table presents a reconciliation of adjusted EBITDA to net loss for each of the periods indicated.

Three Months Ended

December 31,

Year Ended

December 31,

2023

2022

2023

2022

(in thousands, except share and per share amounts)

Revenue

$      255,661

$      236,049

$      945,953

$      963,080

Net loss

$      (42,448)

$      (11,843)

$    (317,607)

$    (322,151)

Stock-based compensation expense

3,702

17,480

39,688

80,220

Other expense (income), net

52

(427)

803

3,815

Amortization of acquired intangible assets

7,688

10,901

34,225

53,417

Income tax benefit on amortization of acquired intangible assets

(19)

(1)

(76)

(1,202)

Impairment charges

62,754

—

196,871

138,291

Debt modification expense and loss on debt extinguishment

—

—

16,735

—

Restructuring charges

13,674

4,067

36,256

33,239

Other*

4,079

(1,677)

8,462

3,348

  Adjusted net income (loss)

49,482

18,500

15,357

(11,023)

Net interest expense

18,671

18,127

72,612

61,069

Income tax expense (benefit)

1,243

(428)

1,730

299

Depreciation and amortization expense

20,788

22,182

81,097

74,736

  Adjusted EBITDA

$        90,184

$        58,381

$      170,796

$      125,081

Adjusted EBITDA margin

35 %

25 %

18 %

13 %

Net loss per share, basic and diluted

$          (0.52)

$          (0.15)

$          (3.93)

$          (4.17)

Adjusted net income (loss) per share, basic

$            0.60

$            0.24

$            0.19

$          (0.14)

Adjusted net income (loss) per share, diluted**

$            0.48

$            0.23

$            0.19

$          (0.14)

Weighted-average shares of common stock outstanding, basic

82,140,194

78,261,601

80,891,146

77,327,850

Weighted-average shares of common stock outstanding, diluted

112,909,097

78,921,457

82,331,052

77,327,850

*

Includes (i) transaction and integration expense of $3.3 million and $0.2 million for the three months ended December 31, 2023 and 2022, respectively, and $3.6 million and $3.6 million for the years ended December 31, 2023 and 2022, respectively and (ii) litigation-related expense (recoveries) of $0.8 million and $(1.9) million for the three months ended December 31, 2023 and 2022, respectively, and $4.9 million and $(0.3) million for the years ended December 31, 2023 and 2022, respectively.

**

For the purposes of calculating adjusted net income per share on a diluted basis, interest expense associated with the company’s convertible notes of $5.0 million has been added back to adjusted net income for the three months ended December 31, 2023.  For all other periods presented, no such adjustment was made as the result would be anti-dilutive.

 

2U, Inc.

Reconciliation of Non-GAAP Measures – Adjusted EBITDA by Segment

(unaudited)

The following table presents a reconciliation of adjusted EBITDA (loss) to net income (loss) by segment for each of the periods indicated.

Degree Program Segment

Alternative Credential Segment

Consolidated

Three Months Ended

December 31,

Three Months Ended

December 31,

Three Months Ended

December 31,

2023

2022

2023

2022

2023

2022

(in thousands)

Revenue

$   163,466

$   137,109

$     92,195

$     98,940

$   255,661

$   236,049

Net income (loss)

$     38,120

$     15,093

$    (80,568)

$    (26,936)

$    (42,448)

$    (11,843)

Adjustments:

Stock-based compensation expense

2,180

9,754

1,522

7,726

3,702

17,480

Other expense (income), net

2

(806)

50

379

52

(427)

Net interest expense (income)

18,778

18,197

(107)

(70)

18,671

18,127

Income tax expense (benefit)

100

132

1,124

(561)

1,224

(429)

Depreciation and amortization expense

14,777

16,506

13,699

16,577

28,476

33,083

Impairment charges

—

—

62,754

—

62,754

—

Restructuring charges

12,701

3,292

973

775

13,674

4,067

Other

4,079

(1,705)

—

28

4,079

(1,677)

Total adjustments

52,617

45,370

80,015

24,854

132,632

70,224

Total adjusted EBITDA (loss)

$     90,737

$     60,463

$         (553)

$      (2,082)

$     90,184

$     58,381

Adjusted EBITDA margin

56 %

44 %

(1) %

(2) %

35 %

25 %

 

2U, Inc.

Reconciliation of Non-GAAP Measures – Adjusted EBITDA by Segment

(unaudited)

The following table presents a reconciliation of adjusted EBITDA (loss) to net loss by segment for each of the periods indicated.

Degree Program Segment

Alternative Credential Segment

Consolidated

Year Ended

December 31,

Year Ended

December 31,

Year Ended

December 31,

2023

2022

2023

2022

2023

2022

(in thousands)

Revenue

$   561,044

$   571,608

$   384,909

$   391,472

$   945,953

$   963,080

Net income (loss)

$        3,934

$    (10,797)

$ (321,541)

$ (311,354)

$ (317,607)

$ (322,151)

Adjustments:

Stock-based compensation expense

23,382

44,378

16,306

35,842

39,688

80,220

Other (income) expense, net

(1,398)

882

2,201

2,933

803

3,815

Net interest expense (income)

73,041

61,341

(429)

(272)

72,612

61,069

Income tax expense (benefit)

415

5

1,239

(908)

1,654

(903)

Depreciation and amortization expense

57,029

57,779

58,293

70,374

115,322

128,153

Impairment charges

—

—

196,871

138,291

196,871

138,291

Debt modification expense and loss on debt extinguishment

16,735

—

—

—

16,735

—

Restructuring charges

33,127

24,528

3,129

8,711

36,256

33,239

Other

8,434

2,611

28

737

8,462

3,348

Total adjustments

210,765

191,524

277,638

255,708

488,403

447,232

Total adjusted EBITDA (loss)

$   214,699

$   180,727

$    (43,903)

$    (55,646)

$   170,796

$   125,081

Adjusted EBITDA margin

38 %

32 %

(11) %

(14) %

18 %

13 %

 

2U, Inc.

Reconciliation of Non-GAAP Measures – Adjusted Free Cash Flow and Adjusted Unlevered Free Cash Flow

(unaudited)

The following table presents a reconciliation of adjusted unlevered free cash flow to net cash (used in) provided by operating activities for each of the twelve-month

periods indicated.

Trailing Twelve Months Ended

December 31,

2023

September 30,

2023

June 30,

2023

March 31,

2023

(in thousands)

Net cash (used in) provided by operating activities

$            (3,431)

$            (5,149)

$          (16,536)

$           38,472

Additions of amortizable intangible assets

(44,010)

(44,733)

(50,619)

(55,544)

Purchases of property and equipment

(6,021)

(7,313)

(8,640)

(11,210)

Payments to university clients

1,050

1,050

3,550

6,425

Non-ordinary cash payments*

36,653

34,618

36,101

32,282

Adjusted free cash flow

(15,759)

(21,527)

(36,144)

10,425

Cash interest payments on debt

61,194

53,473

47,802

48,118

Adjusted unlevered free cash flow

$           45,435

$           31,946

$           11,658

$           58,543

*

Includes transaction, integration, restructuring-related, stockholder activism, and litigation-related expense.

 

2U, Inc.

Reconciliation of Non-GAAP Measures

(unaudited)

The following table presents a reconciliation of adjusted EBITDA guidance to net loss guidance, at the midpoint of the ranges

provided by the company, for the periods indicated.

Three Months Ending

March 31, 2024

Year Ending

December 31, 2024

(in millions)

Net loss

$                 (57.5)

$                 (87.5)

Stock-based compensation expense

12.0

30.0

Amortization of acquired intangible assets

8.0

32.5

Restructuring charges

3.0

12.0

Other

5.5

7.5

  Adjusted net income

(29.0)

(5.5)

Net interest expense

20.0

70.0

Depreciation and amortization expense

20.0

58.0

  Adjusted EBITDA

$                   11.0

$                122.5

 

2U, Inc.

Key Financial Performance Metrics

(unaudited)

Full Course Equivalent Enrollments

Degree Program Segment

The following table presents FCE enrollments and average revenue per FCE enrollment in the company’s Degree Program Segment for the last eight quarters.

Q4 ’23

Q3 ’23

Q2 ’23

Q1 ’23

Q4 ’22

Q3 ’22

Q2 ’22

Q1 ’22

Degree Program Segment FCE enrollments

43,309

45,284

50,490

55,491

53,631

57,092

60,303

62,609

Degree Program Segment average revenue per FCE enrollment*

$  3,774

$  3,039

$  2,367

$  2,532

$  2,557

$  2,404

$  2,373

$  2,462

*

Average revenue per FCE enrollment includes revenue from portfolio management activities.

 

Alternative Credential Segment*

The following table presents FCE enrollments and average revenue per FCE enrollment in the company’s Alternative Credential Segment for the last eight quarters.

Q4 ’23

Q3 ’23

Q2 ’23

Q1 ’23

Q4 ’22

Q3 ’22

Q2 ’22

Q1 ’22

Alternative Credential Segment FCE enrollments

24,499

25,318

25,840

21,990

24,236

23,128

23,443

22,664

Alternative Credential Segment average revenue per FCE enrollment

$  3,500

$  3,428

$  3,591

$  4,193

$  3,840

$  3,850

$  3,891

$  4,012

*

FCE enrollments and average revenue per FCE enrollment exclude the impact of enrollments in edX offerings and the related revenue of $6.4 million and $5.9 million for the three months ended December 31, 2023 and 2022, respectively, and $27.4 million and $27.2 million for the years ended December 31, 2023 and 2022, respectively.

 

 

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Teradata Introduces New Privacy, Security, and Resiliency Capabilities as AI Forces Change in Enterprise Data Protection

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New capabilities protect the sensitive data and intelligence behind enterprise AI while keeping mission-critical operations available and recoverable

SAN DIEGO, Oct. 20, 2026 /PRNewswire/ — Teradata (NYSE: TDC) today announced new privacy, security, and resiliency capabilities designed to address one of the defining challenges of enterprise AI: how sensitive data is protected, who and what can access it, and whether it remains available and recoverable when something goes wrong. Teradata addresses all three through an integrated approach that reduces raw identity exposure, enforces protection closer to the data, and keeps the intelligence powering AI available and recoverable. In practice, that means protecting the intelligence behind AI without diminishing what makes it valuable.

Key Capabilities

Poly-Anonymization®: reduces raw identity exposure while preserving the relationships and utility AI and analytics requireFormat-preserving encryption: protects sensitive values without changing their format or breaking downstream systemsPost-quantum security and readiness: strengthens protection against emerging quantum-era threats through Anonomatic PII Vault® and TLS 1.3 hybrid-key exchange for data in transitImmutable backup protection: prevents recovery points from being modified or deleted, strengthening cyber-recovery readinessDatabase-level high availability: an additional availability layer for mission-critical workloads, distinct from disaster recovery

Why It Matters Now
As AI becomes mission-critical, it expands both the value and the vulnerability of enterprise data. Sensitive information now moves among users, applications, models, and agents, making it harder to secure at the boundary alone. AI is designed to combine disparate information to find patterns and make decisions, which means data that isn’t individually identifiable can become so when AI brings it together.

Executive Quote
“Privacy, security, and resiliency have historically been treated as separate problems with separate solutions. That approach doesn’t hold up when AI is moving sensitive data across users, applications, models, and agents simultaneously. This announcement reflects how we think those capabilities need to work together, and it’s the foundation for how we intend to extend that protection as AI environments grow more complex and the actors operating within them multiply.”
          -Sumeet Arora, Chief Product Officer, Teradata

Privacy Protection
Access control determines who can see sensitive data. Identity reduction changes how much identifying information needs to be present in the analytical environment in the first place. Teradata combines both, through an OEM partnership with Anonomatic, whose privacy capabilities are natively available to Teradata customers.

Poly-Anonymization replaces PII fields with a stable identifier while holding underlying identity separately within Anonomatic PII Vault, a post-quantum-secure environment built with multiple layers of overlapping security controls designed to protect sensitive identity information. Authorized users can restore identity when a legitimate use case requires it, but everyone else works with data that retains its analytical structure, its relationships, and its utility. The result is an analytical environment where sensitive data can be used for AI, analytics, testing, and approved collaboration without broadly exposing who the data is about.

Unlike approaches that rely solely on mathematically reversible encryption, PII Vault combines identity separation, Poly-Anonymization, access controls, and additional layered protections to reduce identity exposure while retaining the utility required for AI and analytics. Format-preserving encryption extends that protection to situations where a value’s structure matters to downstream systems, protecting sensitive data without breaking the applications and workflows built around it.

Testing at large scale demonstrated that Teradata’s Anonomatic-powered privacy-preserving controls can support enterprise analytical workloads without the performance tradeoffs organizations typically associate with data privacy. Multi-table join queries on protected data used fewer Teradata resources than equivalent queries on unprotected data, though results will vary by workload and configuration.

Partner Quote
“Enterprise AI creates a fundamentally different privacy challenge. Organizations need to use sensitive, individual-level data to build effective AI, but the traditional tools for protecting that data weren’t designed to preserve what AI needs to work. Our partnership with Teradata makes it possible to reduce identity exposure at enterprise scale without forcing organizations to choose between protection and utility.”
          -Matt Fleck, Founder and CEO at Anonomatic, a data security software company focused on making PII data privacy secure, simple and cost effective

Native Data Security
Protection that follows the data requires controls enforced at the data layer, not just at the systems surrounding it. Teradata applies classification, policy enforcement, and access controls closer to the data itself. Together, these capabilities provide a governance-led foundation for protecting data and intelligence across users, applications, and workloads.

For data in transit, Teradata introduces post-quantum protection via TLS 1.3 hybrid-key exchange, which combines classical and post-quantum cryptographic algorithms in a single handshake. As quantum computing advances make current encryption standards increasingly vulnerable, organizations that establish cryptographic readiness now will be better positioned for what’s ahead.

New native capabilities including dynamic data masking, data classification and tagging, column-level encryption, and global identity extend that protection across the data layer. Through a partnership with Immuta, a data authorization platform between identity and enterprise data, dynamic ABAC brings identity-aware, attribute-driven access control that enforces policy consistently across users and AI workloads without duplicating data or rewriting governance rules.

Teradata’s security architecture is designed to extend as AI environments evolve, with ongoing investment in controls that govern how AI agents access and act on enterprise data within policy boundaries.

Enterprise Data Protection
For enterprises running AI at scale, a cyberattack is a threat to the data, context, and operational knowledge that AI depends on to function. Teradata Enterprise Data Protection addresses that reality through a workload-aligned approach that lets organizations match protection levels to business criticality rather than applying the same resiliency architecture to every workload. The objective is not simply to restore data, but to restore the trusted context AI needs to resume mission-critical operations.

Database-level high availability via real-time replication introduces an additional availability layer designed for continuous synchronization and low recovery objectives.

Immutable backup protection strengthens cyber-recovery readiness by ensuring recovery points cannot be modified, encrypted, or deleted, even by privileged administrators. As ransomware increasingly targets backup data specifically, protected recovery points have become as critical as the protection strategies built around them. Teradata’s resiliency architecture is designed to extend as cyber threats and recovery requirements evolve.

Additional capabilities including backup and recovery, scheduled data synchronization, and disaster recovery round out a more consistent Enterprise Data Protection experience.

Availability

Privacy capabilities, powered by Anonomatic and delivered by Teradata, are available now for Teradata Cloud on AWS, Azure, and Google Cloud.Native data security capabilities including dynamic data masking, data classification and tagging, and column-level encryption are available on Teradata Cloud across AWS, Azure, and Google Cloud. Dynamic data masking, data classification and tagging are available for Teradata Factory and on-premises deployment options.Teradata Enterprise Data Protection including immutable backup protection is available now on Teradata Cloud across AWS, Azure, and Google Cloud with availability on Teradata Customer Cloud planned in the coming months. 

About Teradata
Teradata empowers enterprises to turn intelligence into autonomous action, grounding AI agents in deep business context and trusted data. As AI agents multiply, Teradata is the context foundation, governance layer, and performance backbone that companies need now. The Teradata Autonomous Knowledge Platform puts AI into production across cloud, on-premises, and hybrid environments.

Forward-Looking Statements
This press release contains “forward-looking statements” about the expectations, beliefs, plans, and intentions relating to Teradata’s privacy, security, and resiliency capabilities. Such statements include statements regarding future product availability, capabilities, and offerings, and expected benefits to Teradata customers. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, Teradata’s results could differ materially from the results expressed or implied by the forward-looking statements made. Teradata undertakes no obligation, and does not intend to update the forward-looking statements. Factors that may cause actual results to differ materially from those in any forward-looking statements include: (i) delays and unexpected difficulties and expenses in executing the planned product capabilities and offerings, (ii) changes in the regulatory landscape related to AI and (iii) uncertainty as to whether customer adoption will justify the investments in the product capabilities and offerings. Further information on factors that could affect Teradata’s financial and other results is included in the filings Teradata makes with the Securities and Exchange Commission from time to time.

The Teradata logo is a trademark, and Teradata is a registered trademark of Teradata Corporation and/or its affiliates in the U.S. and worldwide.

Poly-Anonymization and PII Vault are registered trademarks of Anonomatic, Inc.

MEDIA CONTACT
Jennifer Donahue
Jennifer.Donahue@Teradata.com

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SOURCE Teradata

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Teradata Expands Sovereign AI Across On-Premises and Air-Gapped Cloud Environments

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New Teradata Factory and Teradata Sovereign Cloud on Google Distributed Cloud capabilities give enterprises greater control over where their most sensitive data and AI operate

SAN DIEGO, Oct. 20, 2026 /PRNewswire/ — Teradata (NYSE: TDC) today announced a portfolio of deployment and platform capabilities designed to give governments and enterprises greater control over the data, AI, and technology that power their most critical operations. This includes expanded capabilities for Teradata Factory with AI Studio and the availability of Teradata Sovereign Cloud on Google Distributed Cloud air-gapped environment.

What’s New
Teradata’s portfolio spans two complementary deployment models designed to address different sovereignty requirements.

The expanded capabilities for Teradata Factory with AI Studio bring a unified AI environment to operate on data, vectors, models, and agents directly into customer-controlled on-premises infrastructure. These capabilities include:

Tera, the agentic coworker for enterprise data work, including Tera Harness and Tera Context EngineAgentStack, the complete AI agent development capabilities to build, manage, observe and operate agents through natural language, pro-code, low-code, and Model Context Protocol (MCP) interfacesModel services, which provide machine learning operations and AI model management with pre-integrated model and bring-your-own-model supportData pipelines for ingesting multimodal unstructured data, vector embeddings, vector storage and hybrid search for RAGAnalytics, native notebooks backed by in-database analytics and Teradata’s Elastic Python Compute, built on Ray and Arrow, bring AI to where data lives

Teradata Sovereign Cloud on Google Distributed Cloud air-gapped brings Teradata’s high-performance enterprise-scale analytics into fully isolated environments. Key benefits of running Teradata Sovereign Cloud on Google Distributed Cloud air-gapped include:

Full isolation: Deploy Teradata in an air-gapped environment with no external connectivity— keeping classified and regulated data fully containedSecurity and compliance: Meet stringent regulatory requirements while maintaining complete audit trails and governanceHigh-performance analytics and AI at scale: Run complex queries across billions of rows and petabytes of data with predictable performance

Why it Matters
Research points to growing urgency. According to a 2026 BARC global study of 320 business and IT decision-makers, 62 percent of organizations cite data and AI in core business processes as a key driver of sovereignty requirements. A separate IBM study found that 91 percent of executives say they do not fully understand their organization’s dependencies across AI vendors, models and infrastructure. And Gartner predicts that by 2030, more than 75 percent of enterprises outside the United States will have a digital sovereignty strategy, supported by a sovereign cloud strategy.

As AI moves into mission-critical operations, sovereignty is no longer only about where data resides. Organizations must also consider where AI runs, which models are used, how enterprise information is accessed, who operates the environment, and which external technologies their AI depends on.

This is particularly relevant for governments, defense organizations, regulated industries and critical infrastructure, where data residency, privacy, jurisdiction, operational continuity or national-security requirements can limit the use of traditional public-cloud AI services.

Teradata frames sovereignty across three dimensions: data sovereignty (where data lives and who can access it), operational sovereignty (who controls the environment and whether it can operate independently), and digital sovereignty (which technologies and AI models the organization depends on). An organization can satisfy data residency requirements and still lack full sovereignty if AI processing occurs externally, external administrators can access the environment, or operations stop when public connectivity is unavailable.

Teradata’s sovereign portfolio is designed to address these requirements, bringing enterprise analytics and AI inside the boundaries that organizations control.

The Deployment Portfolio
Teradata Factory and Teradata Sovereign Cloud on Google Distributed Cloud air-gapped address different sovereignty requirements.

Teradata Factory is an integrated hardware and software rack that brings a private enterprise data and AI environment into customer-controlled on-premises infrastructure. It is designed for organizations that require direct physical control over their infrastructure and AI execution.

Teradata Sovereign Cloud on Google Distributed Cloud air-gapped provides a cloud operating model inside a sovereign boundary. The environment has no connection to the public internet and is operated by the customer. It is designed for organizations that need the operational model of cloud within a fully isolated, sovereign environment. Teradata provides the enterprise analytics layer within the air-gapped boundary, enabling organizations to support use cases such as operational reporting, mission analysis, intelligence fusion, training and simulation analytics, and defense logistics and sustainment inside the sovereign boundary.

Together, Teradata Factory and Teradata Sovereign Cloud on Google Distributed Cloud air-gapped support a hybrid approach to sovereign deployment, giving organizations the flexibility to run enterprise analytics and AI inside whichever boundary their requirements demand.

Executive Perspectives
“As AI becomes embedded in mission-critical decisions, organizations can no longer treat sovereignty as a data-location requirement. They need control over where AI runs, which models are used, who can operate the environment, and whether critical workloads can continue if external connectivity disappears. And increasingly, sovereignty is not a single location. It is an architecture that spans public cloud, sovereign cloud, and on-premises infrastructure. Teradata is uniquely built for that reality. We can run in all of those environments, connect them through Teradata Fabric without requiring data to move, and give organizations the freedom to choose the AI models and infrastructure that work for them.”

— Sumeet Arora, Chief Product Officer, Teradata

“Google Distributed Cloud is purpose-built, air-gapped infrastructure that delivers complete technical, operational and software sovereignty. By combining Google Distributed Cloud’s sovereign infrastructure with Teradata’s AI and knowledge capabilities, we are giving enterprise customers in regulated industries the ability to innovate without sacrificing control over their data.”

— Muninder Singh Sambi, VP of Product Management, Google Distributed Cloud

Availability
The expanded Teradata sovereign capabilities for Teradata Factory with AI Studio will be available in Q1 2027. Teradata Sovereign Cloud on Google Distributed Cloud air-gapped is available in Private Preview.

About Teradata
Teradata empowers enterprises to turn intelligence into autonomous action, grounding AI agents in deep business context and trusted data. As AI agents multiply, Teradata is the context foundation, governance layer, and performance backbone that companies need now. The Teradata Autonomous Knowledge Platform puts AI into production across cloud, on-premises, and hybrid environments.

Teradata Forward-Looking Statements
This press release contains “forward-looking statements” about the expectations, beliefs, plans, and intentions relating to Teradata’s sovereign portfolio. Such statements include statements regarding future product availability, capabilities, and offerings, and expected benefits to Teradata customers. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, Teradata’s results could differ materially from the results expressed or implied by the forward-looking statements made. Teradata undertakes no obligation, and does not intend to update the forward-looking statements. Factors that may cause actual results to differ materially from those in any forward-looking statements include: (i) delays and unexpected difficulties and expenses in executing the planned product capabilities and offerings, (ii) changes in the regulatory landscape related to AI and (iii) uncertainty as to whether customer adoption will justify the investments in the product capabilities and offerings. Further information on factors that could affect Teradata’s financial and other results is included in the filings Teradata makes with the Securities and Exchange Commission from time to time.

The Teradata logo is a trademark, and Teradata is a registered trademark of Teradata Corporation and/or its affiliates in the U.S. and worldwide.

MEDIA CONTACT
January Machold
January.Machold@Teradata.com

 

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State Farm® and MIT AgeLab Collaborate to Study What’s Driving Distraction Behind the Wheel

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Drivefulness™ research explores the human side of a nearly $100 billion roadway risk

BLOOMINGTON, Ill., Oct. 20, 2026 /PRNewswire/ — As vehicles become more connected and technology-enabled, the challenge of distracted driving is becoming more complex across the country. The question is no longer simply what distracts drivers, but understanding why people make certain choices behind the wheel and how technology may influence those decisions.

State Farm® and the MIT AgeLab are exploring those questions through a research initiative examining driver attention, distraction, and the behaviors that influence decision-making behind the wheel. Researchers have coined the term “drivefulness” to describe a state in which a driver is safe, aware, appropriately engaged, and ready to respond to the road, while being supported in having the best possible driving experience for them.

The study brings together State Farm’s decades of experience understanding crash risk, driver behavior, and the real-world consequences of distraction with MIT AWARE initiative’s multidisciplinary research expertise in transportation safety, human factors, behavioral science, and how people interact with technology.

Distracted driving carries significant human and economic consequences. According to U.S. Department of Transportation research, distraction was involved in 29% of motor vehicle crashes studied, contributing to more than 10,000 deaths, 1.3 million injuries, and an estimated $98.2 billion in economic costs.

Understanding the relationship among driver attention, distraction, and behaviors could help inform how automakers, organizations, regulators, and insurers approach roadway safety, risk prevention, and the design of future driving experiences.

“Distracted driving is not simply about whether a driver knows what is safe or unsafe. It reflects a much more complex interaction between the driver’s state, the demands of the driving environment, and the technologies that compete for or support their attention,” said Dr. Pnina Gershon of the MIT AgeLab. “With this research, we are looking beyond individual moments of distraction to understand what drivers need to be prepared, attentive, and appropriately engaged during the driving task. That allows us to think differently about safety and about how technology, information, and interventions can support drivers before, during, and after the drive.”

Dr. Gershon is the director of the MIT AWARE initiative and a co-director of the MIT Advanced Vehicle Technology Consortium. With more than two decades of research experience, she leads work at the intersection of driving safety, human behavior, health, and human-centered AI. Her research uses sensing, real-world data, and behavioral analytics to understand human states and to develop technologies and interventions that support safer, more effective interactions between people and increasingly automated systems.

Understanding the behavior behind the risk

Drivers may know distraction is dangerous, but State Farm research shows that knowledge doesn’t always change what happens behind the wheel. Sixty-eight percent of drivers admit to engaging in distracting behaviors while driving, and 44% say they have crashed or experienced a near-crash while doing so.

Perception may be part of the challenge. Sixty-two percent of drivers believe taking their eyes off the road for two or more seconds is safe, even though a two-second glance away doubles crash risk.

“Technology is changing the driving experience, creating new opportunities to better understand and support drivers,” said Jeff Legner, technology executive at State Farm. “The more we learn about how people interact with technology behind the wheel, the better positioned we are to anticipate evolving risks, improve driver experiences and explore new approaches to accident prevention. This research can help turn those insights into meaningful ways to support drivers before, during and after every drive.”

Combining real-world risk with behavioral science

State Farm has worked to address distracted driving from multiple angles, including advocating for stronger hands-free laws, supporting cross-industry safety research and advancing technology that can help drivers better understand their behavior. That work includes telematics-based tools for customers and collaboration with companies such as Cambridge Mobile Telematics to explore how technology and data can help reduce roadway risk. The MIT AgeLab brings deep expertise in understanding the human side of a rapidly changing driving environment.

The collaboration builds on an established research relationship between State Farm and MIT, including State Farm’s participation in the MIT Advanced Vehicle Technology Consortium, which studies how drivers interact with increasingly automated and technology-enabled vehicles.

First findings expected in October
The first phase of the research is focused on establishing a deeper understanding of how people perceive and manage attention behind the wheel.

Findings from the first phase of the drivefulness study are expected later in October 2026, providing an early look at what the research is uncovering about driver attention, distraction and behavior through consumer survey findings.

The findings will help inform the next phase of drivefulness research, beginning in January 2027, on how people, technology and the driving environment can work together to support safer driving.

About State Farm®
For over 100 years, the mission of State Farm has been to help people manage the risks of everyday life, recover from the unexpected and realize their dreams. State Farm Mutual Automobile Insurance Company and its affiliates are the largest providers of auto and home insurance combined in the United States. Its more than 19,200 agent offices and over 62,000 employees serve over 96 million policies and accounts – including auto, fire, life, health, commercial policies and financial services accounts. Commercial auto insurance, along with coverage for renters, business owners, boats and motorcycles, is also available. State Farm Mutual Automobile Insurance Company is the parent of the State Farm family of companies. State Farm is ranked No. 32 on the 2025 Fortune 500 list of largest companies. For more information, please visit http://www.statefarm.com.

About the AWARE initiative at the MIT AgeLab
AWARE is an MIT research initiative focused on developing intelligent vehicle systems that can better understand drivers and support them in real-world conditions. Based at the MIT AgeLab and Center for Transportation & Logistics, AWARE brings together naturalistic driving research, advanced simulation, behavioral science, and artificial intelligence to study how driver state, behavior, and context interact across the driving journey. Its research examines areas such as distraction, fatigue, impairment, workload, automation use, driver monitoring, and human-machine interaction, with the goal of moving beyond simply detecting driver behavior toward systems that can sense, interpret, respond, and promote safer and more appropriate driver engagement. Through this work, AWARE is building the evidence and methods needed to support the next generation of adaptive, human-centered mobility technologies. For more information about AWARE, visit https://ctl.mit.edu/aware-initiative, and about the AgeLab, visit https://agelab.mit.edu/.

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