As confidentially submitted to the Securities and Exchange Commission on December 11, 2013

(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

Christopher J. Paucek
Chief Executive Officer
2U, Inc.
8201 Corporate Drive, Suite 900
Landover, MD 20785
(301) 892-4350

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 under the Securities Exchange Act of 1934. (Check one):

The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

This is an initial public offering of shares of common stock of 2U, Inc. All of the shares of common stock are being sold by us.

Prior to this offering, there has been no public market for our common stock. It is currently estimated that the initial public offering price per share will be between $ and $ . We intend to apply to list our common stock on the NASDAQ Global Market under the symbol "TWOU".

We are an "emerging growth company" as that term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, have elected to comply with certain reduced public company reporting requirements.

See "Risk Factors" beginning on page 14 to read about factors you should consider before buying shares of our common stock.

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

To the extent that the underwriters sell more than shares of common stock, the underwriters have the option to purchase up to an additional shares from us at the initial public offering price less the underwriting discount.

The underwriters expect to deliver the shares against payment in New York, New York on , 2014.

We have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have prepared. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

For investors outside the United States: We have not and the underwriters have not done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons who come into possession of this prospectus and any applicable free writing prospectus in jurisdictions outside the United States are required to inform themselves about and to observe any restrictions as to this offering and the distribution of this prospectus and any such free writing prospectus applicable to that jurisdiction.

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, especially our consolidated financial statements and the related notes thereto and the information set forth under the sections "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in each case included in this prospectus. Unless the context otherwise requires, we use the terms "2U", "company", "we", "us" and "our" in this prospectus to refer to 2U, Inc. and, where appropriate, our consolidated subsidiary.

Our Mission

2U exists to transform the way great colleges and universities deliver higher education. We believe that our cloud-based software-as-a-service platform allows our clients to reach students globally, enabling the education they provide to reach its highest potential so students can reach theirs.

Company Overview

We are a leading provider of cloud-based software-as-a-service solutions that enable leading nonprofit colleges and universities to deliver their high quality education to qualified students anywhere. Our innovative online learning platform and bundled technology-enabled services provide the comprehensive operating infrastructure colleges and universities need to attract, enroll, educate, support and graduate their students. By leveraging our solutions, we believe our clients are able to expand their addressable markets while providing educational engagement, experiences and outcomes to their online students that match or exceed those of their on-campus offerings.

Our clients deploy our platform to offer high quality educational content, instructor-led classes averaging ten students per session in a live, intimate and engaging setting, and a rich social networking experience, all accessible through proprietary web-based and mobile applications. This technology challenges every student to learn from the front row and every faculty member to engage students in new and innovative ways. We believe that our platform is flexible, easy to use, highly scalable and characterized by a high level of availability and security. The total number of course enrollments in our clients' programs grew from 12,831 during the twelve months ended December 31, 2011 to during the twelve months ended December 31, 2013, representing a compound annual growth rate of %. We measure total course enrollments in our clients' programs by determining, for each of the courses offered during a particular period, the number of students enrolled in that course. From our inception through September 30, 2013, a total of 8,383 unique students had enrolled in our clients' programs.

Our clients are leading nonprofit colleges and universities, and seven of our eight clients offering 2U-enabled graduate programs were ranked by U.S. News and World Report among the top 75 undergraduate institutions in its 2012 National University Rankings. Our clients use our platform to offer full graduate degree programs online. Currently, eight well-recognized nonprofit colleges and universities offer graduate degrees through our platform, including the University of Southern California, Georgetown University, the University of North Carolina at Chapel Hill and the University of California, Berkeley. Additionally, we have opportunities to extend our reach into the international, undergraduate and doctoral higher education markets.

pay equivalent tuition, the option of pursuing their educations without potentially incurring the burden of moving, leaving existing employment or giving up family and community support networks. This can substantially reduce the total cost of obtaining a degree and lower a student's total debt burden. It can also allow students for whom relocating is not an option to obtain a higher quality education than they might be able to access in their local communities.

We provide a suite of technology-enabled services, bundled with our platform, that are designed to promote adoption and usage of our software-as-a-service, or SaaS, solutions by clients and improve enrollment and retention of their students. We have primary responsibility for identifying qualified students for our clients' programs, generating potential student interest in the programs and driving applications to the programs. We have developed sophisticated digital program marketing and student acquisition capabilities, and we work closely with our clients to help them create highly engaging multimedia instructional content. We also include other services that support the complete lifecycle of a higher education program or course, including facilitating in-program field placements and providing technical support. In addition, our platform provides clients with real-time data and deep analytical insight related to student performance and engagement, student and faculty satisfaction, and enrollment.

Our compensation from our clients consists primarily of a specified share of the tuition and fees paid to our clients by students in the programs we enable, which we believe aligns our interests with those of our clients. This revenue model, combined with long contractual terms, enables us to make the investment in technology, integration, content production, program marketing, student and faculty support and other services necessary to create large, successful programs. Our client contracts generally have initial terms between 10 and 15 years in length, and, since our inception, all of the clients that have engaged us remain active.

For the years ended December 31, 2011 and 2012 and the nine months ended September 30, 2013, our revenue was $29.7 million, $55.9 million and $58.3 million, respectively. For the years ended December 31, 2011 and 2012 and the nine months ended September 30, 2013, our net losses were $24.9 million, $23.1 million and $22.8 million, respectively, and our Adjusted EBITDA loss, a non-GAAP measure, was $22.5 million, $18.8 million and $18.0 million, respectively. For a reconciliation of Adjusted EBITDA loss to net loss, see "Selected Consolidated Financial Data —Adjusted EBITDA."

Market Opportunity

The global higher education industry is undergoing a significant transition. Due primarily to macroeconomic conditions, public higher education institutions in the United States and other countries in recent years have faced decreased governmental financial support and increased volatility in graduate enrollment rates. At the same time, we believe the long-term growth prospects of the global higher education industry are strong, as governments, corporations and individuals around the world are increasingly recognizing the importance of education in a knowledge-based economy.

In addition, technology, and online learning in particular, is reshaping how institutions deliver and individuals access education. Rising rates of internet penetration, the rapid proliferation of mobile devices and the growth in cloud-based services are broadening the accessibility of educational content and services as well as the potential reach of educational institutions. As a result, colleges and universities are rethinking their operational and business models, determining how to incorporate technology-enabled offerings into their long-term growth strategies and seeking cost-effective ways to expand their academic reach.

Rising Global Demand for Postsecondary Education

Higher education is a large and well-established market, both in the United States and worldwide. In the United States alone, total revenue for all degree-granting postsecondary institutions was over $550 billion for the 2010-2011 academic year, according to a May 2013 report by the U.S. National Center for Education Statistics. The decade between 2000 and 2010 saw a 37% increase in enrollment in postsecondary degree granting institutions in the United States, from 15.3 million to 21.0 million, according to the U.S. Department of Education, and that number is expected to rise to 23.9 million by 2020, a further increase of 15%.

Rapid Growth in Online Education

The market for online postsecondary education has grown more rapidly than the overall postsecondary market, driven by the increased acceptance of online programs among students, academic institutions and employers, and the greater flexibility and convenience of many online programs. To date, the primary users of online education have been students enrolled in for-profit institutions, which we do not view as our competitors or part of the same industry given our focus on enabling leading nonprofit colleges and universities to deliver their high quality degree programs and courses online.

We believe that in the past many nonprofit institutions lacked confidence that online programs could offer sufficient quality to align with their brands, market reputations and academic standards. However, recent academic research, as well as our own experience, has shown that academic outcomes in online environments are generally equivalent to or better than those in traditional face-to-face environments. We also believe nonprofit institutions have been hesitant to adopt new initiatives given that they lacked the capital, technological expertise and marketing capabilities necessary to build significant online operations. However, as technology has improved and online education initiatives have become more prominent, nonprofit colleges and universities are considering online education as a means to increase enrollments cost-effectively.

Challenges Faced by Providers of Postsecondary Education

During this period of transition, providers of higher education are facing three fundamental challenges:

•: The internet is allowing new forms of instructional content and courses to proliferate, and education service providers who are unable to navigate the online environment and offer a compelling value proposition to students may cede market share to their competitors.
•: Many institutions recognize that they do not possess the human or technological resources necessary to implement a successful online learning strategy.
•: Many institutions face increasing financial challenges that prevent them from investing more heavily in developing technology-based solutions. Given this environment, institutions of higher education are actively looking for ways to increase revenue, such as by raising tuition or increasing enrollment.

Our Opportunity

based SaaS solutions provide nonprofit colleges and universities with the ability to capitalize on the disruptive forces of online education while extending the academic reach of their programs. By doing so, our clients are able not only to fulfill their missions but also to develop significant new sources of revenue through meaningful additional enrollments.

Our Approach

Using our solutions, our clients can:

•: Extend Institutional Mission and Reach. Our solutions enable clients to extend their brands and fulfill their missions by delivering high quality education programs online to students anywhere in the world while maintaining their academic rigor and admissions standards.
•: Increase Revenue. Our solutions enable clients to increase their overall enrollments significantly, thereby growing their tuition revenue.
•: Increase Scalability. Our solutions allow clients to extend beyond their physical boundaries and capacity constraints to scale programs without the investment typically required to acquire, educate and service incremental on-campus students.
•: Deliver a Differentiated, Engaging Learning Environment. Our platform leverages advanced software technology to enable highly interactive learning experiences, accessible using proprietary web-based and mobile applications.
•: Utilize Ongoing Data and Analytical Insight. Our solutions enable clients to track the engagement and learning outcomes of students on our platform to a significantly greater degree than for their on-campus students.
•: Increase Speed to Market. We bring technology and other capabilities that enable institutions to implement and scale an online degree program faster than they could on their own.

Our Strengths

We believe the following to be our key strengths:

•: Robust, Differentiated Software and Services Platform. Our platform offers extensive features, high configurability, an intuitive user interface and the ability to support synchronous and asynchronous learning at scale, combined with a suite of technology-enabled services that together provide a broad set of capabilities that would otherwise require the purchase of multiple, disparate point solutions.

•: Proven Track Record Delivering SaaS Solutions for Leading Higher Education Institutions. We believe our track record of successful implementations for leading nonprofit colleges and universities, together with the trust we have built with clients, create a significant competitive advantage.
•: Proprietary, Data-Driven Approach to Growth. Through our experience launching and operating programs with leading nonprofit colleges and universities, we have developed a proprietary program-selection algorithm to drive the process for identifying new programs and clients, which enables us to systematically identify degrees at colleges and universities that we believe have the highest probability of success.
•: Dedicated Focus on Quality. We prioritize quality by employing a "white glove" service model to enable academic programs that align with our clients' brands and produce student outcomes that we believe are generally equal to or better than their on-campus programs in terms of student satisfaction, graduation rates and other key measures of success.
•: Attractive Financial Model with Significant Predictability and Visibility. Given the long-term nature of our contracts, with initial terms generally ranging from 10 to 15 years in duration, we are able to benefit from increasing enrollments in clients' programs as those programs mature, leading to both revenue growth and expanding operating margins. In addition, we believe the significant portion of our revenue that is typically attributable to returning students contributes to the predictability and recurring nature of our business.

Our Growth Strategy

We intend to continue our industry leadership as a provider of cloud-based SaaS solutions that enable leading nonprofit colleges and universities to deliver education online. Our approach to growth is disciplined and focused on long-term success. The principal elements of our strategy are to:

•

Grow Our Client Base. We intend to expand beyond our existing client base through two focused approaches:

•: Add Programs in New Academic Disciplines. We believe there is a substantial opportunity for us to increase the size of our client base by adding graduate programs in new academic disciplines within our core market of selective nonprofit colleges and universities. According to the U.S. Department of Education, during the 2011-2012 academic year, U.S. institutions of higher education offered graduate degrees in 1,000 separate disciplines. Of these disciplines, 140 had more than 1,000 graduates in that year.
•: Expand Within Existing Academic Disciplines. We are also actively targeting new graduate-level clients in academic disciplines where we have existing programs. We believe this approach will enable us to leverage our program marketing investments across multiple client programs within specific academic disciplines and significantly decrease student acquisition costs within those disciplines.

•

Increase Enrollment and Add Programs with Existing Clients. We intend to continue to increase student enrollments within the existing programs we enable for our clients. We also have been able to expand our relationships with clients by adding degree programs at the same university, as we have at the University of Southern California, the University of North Carolina at Chapel Hill and The George Washington University.

•

Grow International, Undergraduate and Doctoral Presence. We believe that there is significant market demand for our solutions as colleges and universities worldwide seek to

extend their brands by accessing the growing global market for higher education. Our existing client programs serve students in over 50 countries. In addition, we believe there is a meaningful opportunity to provide high quality online education experiences to undergraduate students and to expand our graduate offerings into doctoral programs.

•: Continue to Innovate and Extend our Technological Leadership. Our ability to deliver innovative technology for our clients has been central to our growth and success. We intend to increase the functionality of our platform and continue our investment in the development of new applications that extend our technological leadership.

Our Solutions

Our solutions consist of our cloud-based SaaS platform and bundled technology-enabled services.

Proprietary, Cloud-Based SaaS Platform

•

Online Campus. Our innovative online learning platform, Online Campus, enables our clients to offer high quality educational content together with instructor-led classes in a live, intimate and engaging setting, averaging ten students per session, all accessible through proprietary web-based and mobile applications. Online Campus powers the following services:

•: Virtual, Live Classes and Groups. Online Campus enables a variety of live, small-group class sessions that are accessed online. Our technology solutions enable instructors to simultaneously lead group discussions, customize the virtual classroom to their individual styles and display a variety of documents, images, charts, notes and videos. Online Campus also enhances collaboration by allowing students to interact during class sessions using face-to-face online interaction, establish breakout groups for student discussion and group work and share projects onscreen for group feedback. Additionally, our platform is available for students to collaborate in planned or ad hoc study or work groups, regardless of day or time.
•: Delivery of High Quality, Engaging Content. Through Online Campus, we and our clients create, publish and deliver video and other asynchronous content, interactive course lectures, individual and group assignments and assessments. We have developed technology solutions to enhance interaction between a faculty member and students, both individually and as a group, by blending asynchronous content and real-time student responses in the online environment.
•: Dynamic Social Networking. Online Campus provides an intuitive social interface that connects students to an extended network of faculty, other students, researchers and administrators who are a part of their university community. We provide users with fully customizable social profiles, multimedia postings and dynamic communication and notification tools designed to supplement the live classroom experience and promote meaningful relationships.

•

Content Management System. Our content management system enables us and our clients to author, review and deploy asynchronous content into their online programs. The content management system includes a set of project management and collaboration tools that allow clients to seamlessly integrate the work of faculty with that of our course production and content development staff.

•

Application Processing Portal. Our proprietary application system, known as the Online Application and Recommendation System, or OARS, automates the online application process for prospective students of our clients' programs. OARS is integrated with the

primary marketing site for each program, directly funneling prospective students into each client's existing application process and providing automated workflow for that process.

•: Customer Relationship Management. We have developed customer relationship management deployments configured for each client's specific program characteristics. Each deployment serves as the data hub for scheduling, student acquisition, student application, faculty admissions review, enrollment and student support for each program.

Technology-Enabled Services Supporting Client Program Lifecycle

We offer a comprehensive suite of technology-enabled services that support the complete lifecycle of a higher education program or course. These services include the following:

•

Content Development. Our content development staff works closely with our clients' faculty in a collaborative process to produce high quality, engaging online coursework and content. We produce scripted and casual videos in studio and on location, transform static content into interactive materials and ultimately assemble customized online course materials for delivery through our Online Campus.

•

Student Acquisition. We provide dedicated technology-enabled program marketing services to drive applications for each client program. Our program-specific marketing teams develop creative assets, such as websites related to the fields of study of our clients' programs, and execute campaigns aimed at acquiring students cost-effectively.

•

Dedicated "White Glove" Service. High quality student and faculty support is a central pillar of our bundled service offering. Some of the key services we provide include:

•: Application Advising. Our program-dedicated teams work with prospective students as they consider and apply to a client program.
•: Student and Faculty Support. We augment each student's academic experience by assigning a dedicated advisor to provide ongoing individualized non-academic support and provide a dedicated support team that supports and trains university administration and faculty.
•: In-Program Student Field Placements. Our field placement team is dedicated to securing in-program field placements for students enrolled in our client programs. We work closely with faculty to identify and approve sites that meet curriculum requirements.

•

State Authorization Services. Each online program a client offers using our platform must comply with state authorization requirements in each state where the students enrolled in the program reside. We work with most of our clients to identify and satisfy state authorization requirements.

Risks Related to our Business

Our business is subject to a number of risks of which you should be aware before making an investment decision. These risks are discussed more fully in the "Risk Factors" section of this prospectus immediately following this prospectus summary. These risks include, among others:

•: We have a limited operating history, which makes it difficult to predict our future financial and operating results, and we may not achieve our expected financial and operating results in the future.
•: We have incurred significant net losses since inception and we may never become profitable.

•: Our business depends heavily on the adoption by colleges and universities of online delivery of their programs and courses.
•: Our financial performance depends on our ability to acquire qualified potential students for our clients' programs, and on our and our clients' ability to retain students enrolled in their programs.
•: Disruptions to, or failures of, our platform or unauthorized disclosure of student data could reduce client and student satisfaction with our clients' programs and harm our reputation.
•: We incur significant expense in connection with the launch of new client programs and scale-up of new and existing client programs, and it may be several years, if ever, before we generate revenue from a new program sufficient to recover our costs.
•: We currently have, and for the forseeable future expect to continue to have, a small number of clients, and the loss, or material underperformance, of any one client could hurt our future financial performance.
•: We may not be able to manage growth effectively.
•: Our quarterly operating results have fluctuated in the past and may do so in the future.

Corporate Information

We were incorporated in Delaware in April 2008 as 2Tor Inc. and changed our name to 2U, Inc. in October 2012. Our principal executive offices are located at 8201 Corporate Drive, Suite 900, Landover, Maryland. Our telephone number is (301) 892-4350. Our website address is www.2u.com. The information contained on, or that can be accessed through, our website is not incorporated by reference into this prospectus, and you should not consider any information contained on, or that can be accessed through, our website as part of this prospectus or in deciding whether to purchase our common stock.

"2U", the 2U logo, and other trademarks or service marks of 2U, Inc. appearing in this prospectus are the property of 2U, Inc. This prospectus contains additional trade names, trademarks and service marks of others, which are the property of their respective owners. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the ® or ^TM symbols.

Implications of Being an Emerging Growth Company

We are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from specified disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include:

•: being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced "Management's Discussion and Analysis of Financial Condition and Results of Operations" disclosure;
•: not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting;
•: not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a

supplement to the auditor's report providing additional information about the audit and the financial statements;

•: reduced disclosure obligations regarding executive compensation; and
•: exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

We may take advantage of these provisions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1 billion in annual revenue, have more than $700 million in market value of our capital stock held by non-affiliates or issue more than $1 billion of non-convertible debt over a three-year period. We may choose to take advantage of some, but not all, of the available exemptions. We have taken advantage of some reduced reporting burdens in this prospectus. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock.

In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

The Offering


Common stock offered by 2U, Inc.		shares
Total common stock to be outstanding after this offering		shares
Option to purchase additional shares of common stock		The underwriters have an option to purchase a maximum of additional shares from us. The underwriters can exercise this option at any time within 30 days from the date of this prospectus.
Use of proceeds		We expect the net proceeds to us from this offering, after expenses, to be approximately $ million based on an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable to us. The principal purposes of this offering are to create a public market for our common stock and to facilitate our future access to the public equity markets, as well as to obtain additional capital. We intend to use the net proceeds from this offering for working capital and other general corporate purposes.
		See the "Use of Proceeds" section of this prospectus for additional information.
Risk factors		See the section titled "Risk Factors" beginning on page 14 and the other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in our common stock.
Proposed NASDAQ Global Market symbol		TWOU

The number of shares of our common stock that will be outstanding after this offering is based on 30,950,360 shares of common stock outstanding as of September 30, 2013, including shares issuable upon the conversion of outstanding redeemable convertible preferred stock, and excludes:

•: 5,483,948 shares of our common stock issuable upon the exercise of stock options outstanding under our 2008 stock incentive plan as of September 30, 2013, at a weighted average exercise price of $2.92 per share;
•: 12,797 shares of our common stock issuable upon the exercise of a Series D preferred stock warrant outstanding as of September 30, 2013, at an exercise price of $7.81 per share; and
•: shares of our common stock reserved for future issuance under our equity incentive plans following this offering.

Summary Consolidated Financial Data

In the tables below, we provide you with summary consolidated financial data of 2U, Inc. for the periods indicated. We have derived the following summary consolidated statement of operations data for the years ended December 31, 2011 and 2012 from our audited consolidated financial statements appearing elsewhere in this prospectus, which have been audited by KPMG LLP, independent registered public accounting firm. We have derived the following summary consolidated statement of operations data for the nine months ended September 30, 2012 and 2013 and summary consolidated balance sheet data as of September 30, 2013 from our unaudited consolidated interim financial statements appearing elsewhere in this prospectus.

The summary consolidated financial data for the nine months ended September 30, 2012 and 2013 and as of September 30, 2013 includes, in the opinion of our management, all adjustments, consisting only of normal recurring adjustments, that are necessary for a fair presentation of our financial position and results of operations for these periods. Our historical results are not necessarily indicative of the results to be expected in the future, and our operating results for the nine months ended September 30, 2013 are not necessarily indicative of the results that may be expected for the entire year ending December 31, 2013.

You should read this summary consolidated financial data together with the historical financial statements and related notes to those statements, as well as "Management's Discussion and Analysis of Financial Condition and Results of Operations," which are included elsewhere in this prospectus.

	Year Ended December 31,						Nine Months Ended September 30,

	2011			2012			2012			2013
	(in thousands)
Consolidated Statement of Operations Data:
Revenue	$	29,733		$	55,879		$	39,459		$	58,324
Costs and expenses:
Servicing and support		12,300			14,926			10,516			16,516
Technology and content development		5,117			8,299			5,725			12,944
Program marketing and sales		32,116			45,390			34,491			40,877
General and administrative		5,104			10,342			6,882			10,794

Total costs and expenses		54,637			78,957			57,614			81,131

Loss from operations		(24,904	)		(23,078	)		(18,155	)		(22,807	)
Other income (expense):
Interest expense		(19	)		(73	)		(55	)		12
Interest income		45			38			27			21

Total other income (expense)		26			(35	)		(28	)		33

Loss before income taxes		(24,878	)		(23,113	)		(18,183	)		(22,774	)
Income tax expense		—			—			—			—

Net loss		(24,878	)		(23,113	)		(18,183	)		(22,774	)
Preferred stock accretion		(314	)		(339	)		(254	)		(261	)

Net loss attributable to common stockholders	$	(25,192	)	$	(23,452	)	$	(18,437	)	$	(23,035	)

Net loss per share attributable to common stockholders:
Basic and diluted	$	(3.77	)	$	(3.33	)	$	(2.66	)	$	(3.11	)
Pro forma basic and diluted				$	(0.81	)				$	(0.75	)
Other Financial Data:
Adjusted EBITDA (loss)(1)	$	(22,514	)	$	(18,814	)	$	(15,138	)	$	(18,018	)

(1): Adjusted EBITDA is a financial measure not in accordance with generally accepted accounting principles, or GAAP. For more information about Adjusted EBITDA and a reconciliation of Adjusted EBITDA (loss) to net loss, the most directly comparable financial measure calculated and presented in accordance with GAAP, see the section titled "Selected Consolidated Financial Data — Adjusted EBITDA."

	As of September 30, 2013

	Actual			Pro Forma(1)		Pro Forma As Adjusted(2)
	(in thousands)
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	7,400		$	7,400	$
Accounts receivable		17,205			17,205
Total assets		42,476			42,476
Total liabilities		32,205			32,171
Total redeemable convertible preferred stock		97,961			—
Additional paid-in capital		6,972			104,943
Total stockholders' (deficit) equity		(87,690	)		10,305

(1): The pro forma column reflects: (i) the conversion of the outstanding shares of our redeemable convertible preferred stock into an aggregate of 23,501,208 shares of our common stock, which will occur automatically upon the closing of this offering; (ii) the conversion of the outstanding warrant to purchase Series D redeemable convertible preferred stock into a warrant to purchase 12,797 shares of our common stock, which will occur automatically upon the closing of this offering; and (iii) the reclassification of the Series D warrant liability to additional paid-in capital upon the automatic conversion of our redeemable convertible preferred stock issuable upon exercise of such warrant into common stock.
(2): The pro forma as adjusted column gives effect to the pro forma adjustments set forth above and our sale of shares of common stock in this offering at an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. The pro forma as adjusted information is illustrative only and will change based on the actual initial public offering price and other terms of this offering determined at pricing. Each $1.00 increase or decrease in the assumed initial public offering price of $ per share would increase or decrease each of cash and cash equivalents, total assets, additional paid-in capital and total stockholders' equity on a pro forma as adjusted basis by approximately $ million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same.

Investing in our common stock involves a high degree of risk. Before you invest in our common stock, you should carefully consider the following risks, as well as general economic and business risks, and all of the other information contained in this prospectus. Any of the following risks could have a material adverse effect on our business, operating results and financial condition and cause the trading price of our common stock to decline, which would cause you to lose all or part of your investment. When determining whether to invest, you should also refer to the other information contained in this prospectus, including our consolidated financial statements and the related notes thereto.

We have a limited operating history, which makes it difficult to predict our future financial and operating results, and we may not achieve our expected financial and operating results in the future.

We were incorporated in 2008 and launched our first client program in 2009. We are currently engaged by eight colleges and universities to enable 11 graduate programs. Five of these programs were launched in 2013. An additional program launched in January 2014 and another is scheduled to commence in April 2014. As a result of our limited operating history, our ability to forecast our future operating results, including revenue, cash flows and profitability, is limited and subject to a number of uncertainties. We have encountered and will encounter risks and uncertainties frequently experienced by growing companies in the technology industry, such as the risks and uncertainties described in this prospectus. If our assumptions regarding these risks and uncertainties are incorrect or change due to factors impacting our targeted markets, or if we do not manage these risks successfully, our operating and financial results may differ materially from our expectations and our business may suffer.

We have incurred significant net losses since inception, and we expect our operating expenses to increase significantly in the foreseeable future, which may make it more difficult for us to achieve and maintain profitability.

We incurred net losses of $24.9 million, $23.1 million and $22.8 million in 2011, 2012 and the nine months ended September 30, 2013, respectively, and we had an accumulated deficit of $94.7 million as of September 30, 2013. We will need to generate and sustain increased revenue levels in future periods in order to become profitable, and, even if we do, we may not be able to maintain or increase our level of profitability. We anticipate that our operating expenses will increase substantially in the foreseeable future as we undertake increased technology and production efforts to support a growing number of client programs and increase our program marketing and sales efforts to drive the acquisition of potential students in these programs. In addition, as a public company, we will incur significant accounting, legal and other expenses that we did not incur as a private company. These expenditures will make it harder for us to achieve and maintain profitability.

Our efforts to grow our business may be more costly than we expect, and we may not be able to increase our revenue enough to offset our higher operating expenses. If we are forced to reduce our expenses, our growth strategy could be compromised. We may incur significant losses in the future for a number of reasons, including the other risks described in this prospectus, and unforeseen expenses, difficulties, complications and delays and other unknown events. As a result, we can provide no assurance as to whether or when we will achieve profitability. If we are not able to achieve and maintain profitability, the value of our company and our common stock could decline significantly.

Our business depends heavily on the adoption by colleges and universities of online delivery of their programs and courses. If we fail to attract new colleges and universities as clients, our revenue growth and profitability may suffer.

The success of our business depends in large part on our ability to enter into agreements with additional nonprofit colleges and universities for their offering of graduate programs online. In particular, in order to engage new clients, we need to convince nonprofit colleges and universities, many of which have been educating students in generally the same types of on-campus programs for hundreds of years, to invest significant time and resources to adjust the manner in which they teach students for an online degree program. The delivery of degree-granting programs online at leading nonprofit colleges and universities is nascent, and many administrators and faculty members have expressed concern regarding the perceived loss of control over the education process that might result from offering content online, as well as skepticism regarding the ability of colleges and universities to provide high quality education online that maintains the standards they set for their on-campus programs. It may be difficult to overcome this resistance, and there can be no assurance that online programs of the kind we develop with our clients will ever achieve significant market acceptance.

Our financial performance depends heavily on our ability to acquire qualified potential students for our clients' programs, and our ability to do so may be affected by circumstances beyond our control.

Building awareness of our clients' programs is critical to our ability to acquire prospective students for our clients' programs and generate revenue. A substantial portion of our expenses is attributable to program marketing and sales efforts dedicated to attracting potential students to our clients' programs. Because we generate revenue based on a portion of the tuition that our clients collect from the students enrolled in their programs, it is critical to our success that we identify prospective students who meet our clients' admissions criteria in a cost-effective manner and that enrolled students remain active in our clients' programs.

The following factors, many of which are largely outside of our control, may prevent us from successfully driving and maintaining student enrollment in our clients' programs in a cost-effective manner or at all:

If one or more of these factors reduces student demand for our clients' programs, enrollment could be negatively affected or our costs associated with student acquisition and retention could increase, or both, any of which could materially compromise our ability to grow our revenue or achieve profitability. These developments could also harm our reputation and make it more difficult for us to engage additional clients for new program offerings, which would negatively impact our ability to expand our business.

Disruption to or failures of our platform could reduce client and student satisfaction with our clients' programs and could harm our reputation.

The performance and reliability of our platform is critical to our operations, reputation and ability to attract new clients, as well as our student acquisition and retention efforts. Our clients rely

on our technology solutions to offer their programs online, and students access our platform on a frequent basis as an important part of their educational experience. Accordingly, any errors, defects, disruptions or other performance problems with our platform could damage our or our clients' reputations, decrease student satisfaction and retention and impact our ability to attract new students, clients and programs. If any of these problems occur, our clients may, following notice and our failure to cure, terminate their agreements with us, or make indemnification or other claims against us. In addition, sustained or recurring disruptions in our technology platform could adversely affect our and our clients' compliance with applicable regulations and accrediting body standards.

As a technology company, we face an ever-increasing number of threats to our technology platform, including unauthorized activity and access, malicious perpetrators, system viruses, malicious code and organized cyber-attacks, which could breach our security and disrupt our solutions and our clients' programs. The circumvention of our security measures could result in the misappropriation of proprietary and personally identifiable information about the students enrolled in our clients' programs, or could cause interruptions or malfunctions in the operation of our platform, potentially over an extended period of time. As a result, we may be required to expend significant additional resources to protect against the threat of these disruptions and security breaches or to alleviate problems caused by these disruptions and breaches.

Our market may be limited based on the types of nonprofit colleges and universities we target for online degree programs.

We primarily market degree programs to selective nonprofit colleges and universities, a market that is necessarily limited. The contracts we enter into with our clients generally contain limitations on our ability to contract with other institutions to offer the same degree program, and maintaining good relations with our clients may mean that we may be less likely to approach certain institutions that they regard as their direct competitors to offer similar programs, even if we are allowed to do so under our contracts. Moreover, because of the long-term nature of our client contracts, and because of the relationships of trust we strive to build with our current clients, we will generally not be able or willing to terminate our existing client relationships to pursue a competitive program with another college or university, even if it may prove to be more profitable to us. Instead, we may continue with a program that does not generate expected levels of revenue to us, or one from which we may not be able to fully recover the program marketing and sales expenses we incur in attracting students to enroll in the program, if, for example, the client limits enrollment in the program. As a result, the nature of our contracts and our relationships with our clients could restrict the overall revenue potential of our business.

Attracting new clients for the launch of new programs is complex and time-consuming. If we pursue unsuccessful client opportunities, we may forego more profitable opportunities and our operating results and growth would be harmed.

The process of identifying specific graduate degree programs at the selective nonprofit colleges and universities that we believe will be a good fit for our platform, and then negotiating contracts with potential clients, is complex and time-consuming. Because of the initial reluctance on the part of some nonprofit colleges and universities to embrace a new method of delivering their education services and the complicated approval process within universities, our sales process to attract and engage a new client can be lengthy. Depending on the particular college or university, during the process we may face resistance from university administrators or faculty members.

The sales cycle for a new degree program often spans one year or longer. In addition, our sales cycle can vary substantially from program to program because of a number of factors, including the approval processes of the client or disagreements over the terms of our offerings. We

spend substantial effort and management resources on our new program sales efforts without any assurance that our efforts will result in the launch of a new program. If we invest substantial resources pursuing unsuccessful program opportunities, we may forego other more profitable client relationships, and our operating results and growth would be harmed.

To launch a new program, we must incur significant expense in technology and content development, as well as program marketing and sales, to identify and attract prospective students, and it may be several years, if ever, before we generate revenue from a new program sufficient to recover our costs.

To launch a new program, we must integrate our platform with the various student information and other operating systems our clients use to manage functions within their institutions. In addition, our content development staff must work closely with that client's faculty members to produce engaging online coursework and content, and we must commence student acquisition activities. This process of launching a new program is time-consuming and costly and, under our agreements with our clients, we are primarily responsible for the significant costs of this effort, even before we generate any revenue. Additionally, during the life of our contract with the client, we are responsible for the costs associated with continued program marketing, maintaining our technology platform and providing non-academic and other support for students enrolled in the program. We invest significant resources in these new programs from the beginning of our relationship with the client, and there is no guarantee that we will ever recoup these costs.

Because our client agreements provide that we receive a fixed percentage of the tuition that the clients receive from the students enrolled in their programs, we only begin to recover these costs once students are enrolled and begin paying tuition. The time that it takes for us to recover our investment in a new program depends on a variety of factors, primarily the level of our student acquisition costs and the rate of growth in student enrollment in the program. We estimate that, on average, it takes approximately four to five years after engagement with a client to fully recover our investment in a new program. Because of the lengthy period required to recoup our investment in a program, unexpected developments beyond our control could occur that result in the client ceasing or significantly curtailing a program before we are able to fully recoup our investment. As a result, we may ultimately be unable to recover the full investment that we make in a new program or achieve our expected level of profitability for the program.

If we are not successful in quickly and efficiently scaling up programs with new and existing clients, our reputation and our revenue will suffer.

Our continued growth and profitability depends on our ability to successfully scale up newly launched programs with our clients. As we continue aggressively growing our business, we plan to continue to hire new employees at a rapid pace, particularly in our program marketing and sales team and our technology and content development teams. If we cannot adequately train these new employees, we may not be successful in acquiring potential students for our clients' programs, which would adversely impact our ability to generate revenue, and our clients and the students in their programs could lose confidence in the knowledge and capability of our employees. If we cannot quickly and efficiently scale up our technology to handle growing student enrollment and new client programs, our clients' and their students' experiences with our platform may suffer, which could damage our reputation among colleges and universities and their faculty and students.

Our ability to effectively manage any significant growth of new programs and increasing student enrollment will depend on a number of factors, including our ability to:

Establishing new client programs or expanding existing programs will require us to make investments in management and key staff, increase capital expenditures, incur additional marketing expenses and reallocate other resources. If student enrollment in our clients' programs does not increase, we are unable to launch new programs in a cost-effective manner or we are otherwise unable to manage new client programs effectively, our ability to grow our business and achieve profitability would be impaired, and the quality of our solutions and the satisfaction of our clients and their students could suffer.

Our financial performance depends heavily on student retention within our clients' programs, and factors influencing student retention may be out of our control.

Once a student is enrolled in a client's program, we and our client must retain the student over the life of the degree program in order to generate ongoing revenue. Our strategy involves offering high quality support to students enrolled in our clients' programs in order to support their retention. If we do not help students quickly resolve any educational, technological or logistical issues they encounter, otherwise provide effective ongoing support to students or deliver the type of high quality, engaging educational content that students expect, students may withdraw from the program, which would negatively impact our revenue.

In addition, student retention could be compromised by the following factors, many of which are largely outside of our control:

Any of these factors could significantly reduce the revenue that we generate from a client's program, which would negatively impact our return on investment for the particular program, and could compromise our ability to grow our business and achieve profitability.

We currently have, and for the foreseeable future expect to continue to have, a small number of clients, and therefore we expect the loss, or material underperformance, of any one client could hurt our future financial performance.

We are currently engaged by eight colleges and universities to enable 11 graduate programs. For the foreseeable future, we expect to launch a small number of new graduate degree programs per year. As a result of the small number of programs, the material underperformance of any one program, including the failure to increase student enrollment in a program, or any decline in the ranking of one of our clients' programs or other impairment of their reputation, could have a disproportionate effect on our business. Additionally, because we rely on our own reputation for delivering high quality online programs and recommendations from existing clients in order to attract potential new clients, the loss of any single client program, or the failure of any client to renew its agreement with us upon expiration, could impair our ability to pursue our growth strategy and ultimately to become profitable.

A significant portion of our revenue is currently attributable to programs with the University of Southern California. A decline in enrollment in these programs could significantly reduce our revenue.

Our two longest running programs, launched in 2009 and 2010, are with the University of Southern California, or USC. For the years ended December 31, 2011 and 2012 and the nine months ended September 30, 2013, 94%, 78% and 70%, respectively, of our revenue was derived from these two programs. We expect USC will continue to account for a large portion of our revenue until our other client programs become more mature and achieve significantly higher enrollment levels. Any decline in USC's reputation, any increase in USC's tuition, or any changes in USC's policies could adversely affect the number of students that enroll in these two programs. Further, the faculty or administrators of these two schools could become resistant to offering courses through our platform, making it more difficult for us to attract and retain students. These graduate schools are not required to expand student enrollment in their online programs and, upon the expiration of their contracts, they are not required to continue using us as the provider of their online programs. If either of these programs were to materially underperform for any reason or to terminate their relationships with us, it would significantly reduce our revenue.

If our security measures are breached or fail and result in unauthorized disclosure of data, we could lose clients, fail to attract new clients and be exposed to protracted and costly litigation.

Maintaining platform security is of critical importance for our clients because the platform stores and transmits proprietary and confidential university and student information, which may

include sensitive personally identifiable information that is subject to stringent legal and regulatory obligations. Individuals and groups may develop and deploy viruses, worms and other malicious software programs that attack or attempt to infiltrate our platform. If our security measures are breached or fail as a result of third-party action, employee error, malfeasance or otherwise, we could be subject to liability or our business could be interrupted. Any or all of these issues could harm our reputation, adversely affect our ability to attract new clients and students, cause existing clients to scale back their programs or elect to not renew their agreements, cause prospective students not to enroll or stay enrolled in our clients' programs, or subject us to third-party lawsuits, regulatory fines or other action or liability. Further, any reputational damage resulting from breach of our security measures could create distrust of our company by prospective clients or students. In addition, our insurance coverage may not be adequate to cover losses associated with such events, and in any case, such insurance may not cover all of the types of costs, expenses and losses we could incur to respond to and remediate a security breach.

We have grown rapidly and expect to continue to invest in our growth for the foreseeable future. If we fail to manage this growth effectively, the success of our business model will be compromised.

We have experienced rapid growth in a relatively short period of time. Our revenue grew from $29.7 million in 2011 to $55.9 million in 2012 and $58.3 million for the nine months ended September 30, 2013. The number of our full-time employees increased from 301 as of December 31, 2011 to 426 as of December 31, 2012 and 545 as of September 30, 2013, and we plan to hire a significant number of additional employees in the future.

Our rapid growth has placed, and will continue to place, a significant strain on our administrative and operational infrastructure, facilities and other resources. Our ability to manage our operations and growth will require us to continue to expand our program marketing and sales personnel, technology team, finance and administration teams, as well as our facilities and infrastructure. We will also be required to refine our operational, financial and management controls and reporting systems and procedures. If we fail to efficiently manage this expansion of our business, our costs and expenses may increase more than we plan and we may not successfully expand our client base, enhance our platform and technology-enabled services, develop new programs with new and existing clients, attract a sufficient number of qualified students in a cost-effective manner, satisfy the requirements of our existing clients, respond to competitive challenges or otherwise execute our business plan. Although our business has experienced significant growth in the past, we cannot provide any assurance that our revenue will continue to grow at the same rate in the future.

Our ability to effectively manage any significant growth of our business will depend on a number of factors, including our ability to:

These activities will require significant capital expenditures and allocation of valuable management and employee resources, and our growth will continue to place significant demands on our management and our operational and financial infrastructure.

There are no guarantees that we will be able to effectively manage any future growth in an efficient, cost-effective or timely manner, or at all. In particular, any failure to successfully implement systems enhancements and improvements will likely negatively impact our ability to manage our expected growth, ensure uninterrupted operation of key business systems and comply with the rules and regulations that are applicable to public reporting companies. Moreover, if we do not effectively manage the growth of our business and operations, the quality of our solutions could suffer, which could negatively affect our reputation, results of operations and overall business.

We face competition from established as well as other emerging companies, which could divert clients to our competitors, result in pricing pressure and significantly reduce our revenue.

We expect existing competitors and new entrants to the online learning market to constantly revise and improve their business models in response to challenges from competing businesses, including ours. If these or other market participants introduce new or improved delivery of online education and technology-enabled services that we cannot match or exceed in a timely or cost-effective manner, our ability to grow our revenue and achieve profitability could be compromised.

Our primary competitors include EmbanetCompass and Deltak, which were acquired in 2012 by Pearson and John Wiley & Sons, respectively, both of which are large education and publishing companies. There are also several new and existing vendors providing some or all of the services we provide to other segments of the education market, and these vendors may pursue the institutions we target. In addition, colleges and universities may choose to continue using or develop their own online learning solutions in-house, rather than pay for our solutions.

Some of our competitors and potential competitors have significantly greater resources than we do. Increased competition may result in pricing pressure for us in terms of the percentage of tuition and fees we are able to negotiate to receive from a client. The competitive landscape may also result in longer and more complex sales cycles with a prospective client or a decrease in our market share among selective nonprofit colleges and universities seeking to offer online degree programs, any of which could negatively affect our revenue and future operating results and our ability to grow our business.

A number of competitive factors could cause us to lose potential client opportunities or force us to offer our solutions on less favorable economic terms, including:

We may not be able to compete successfully against current and future competitors. In addition, competition may intensify as our competitors raise additional capital and as established companies in other market segments or geographic markets expand into our market segments or geographic markets. If we cannot compete successfully against our competitors, our ability to grow our business and achieve profitability could be impaired.

If for-profit postsecondary institutions, which offer online education alternatives different from ours, perform poorly, it could tarnish the reputation of online education as a whole, which could impair our ability to grow our business.

For-profit postsecondary institutions, many of which provide course offerings predominantly online, are under intense regulatory and other scrutiny, which has led to media attention that has sometimes portrayed that sector in an unflattering light. Some for-profit online school operators have been subject to governmental investigations alleging the misuse of public funds, financial irregularities, and failure to achieve positive outcomes for students, including the inability to obtain employment in their fields. These allegations have attracted significant adverse media coverage and have prompted legislative hearings and regulatory responses. These investigations have focused on specific companies and individuals, and even entire industries in the case of recruiting practices by for-profit higher education companies. Even though we do not market our solutions to these institutions, this negative media attention may nevertheless add to skepticism about online higher education generally, including our solutions.

The precise impact of these negative public perceptions on our current and future business is difficult to discern. If these few situations, or any additional misconduct, cause all online learning programs to be viewed by the public or policymakers unfavorably, we may find it difficult to enter into or renew contracts with selective colleges and universities or attract additional students for our clients' programs. In addition, this perception could serve as the impetus for more restrictive legislation, which could limit our future business opportunities. Moreover, allegations of abuse of federal financial aid funds and other statutory violations against for-profit higher education companies could negatively impact our opportunity to succeed due to increased regulation and decreased demand. Any of these factors could negatively impact our ability to increase our client base and grow our clients' programs, which would make it difficult to continue to grow our business.

If we do not retain our senior management team and key employees, we may not be able to sustain our growth or achieve our business objectives.

Our future success is substantially dependent on the continued service of our senior management team. Because of our small number of clients and the significant nature of each new client relationship, our senior management team is heavily involved in the client identification and sales process, and their expertise is critical in navigating the complex approval processes of large nonprofit colleges and universities. We do not maintain key-person insurance on any of our employees, including our senior management team. The loss of the services of any individual on our senior management team could make it more difficult to successfully operate our business and pursue our business goals.

Our future success also depends heavily on the retention of our program marketing and sales, technology and content development and support teams to continue to attract and retain qualified students in our clients' programs, thereby generating revenue for us. In particular, our highly-skilled technology and content development employees provide the technical expertise underlying our bundled technology-enabled services that support our clients' programs and the students enrolled in these programs. Competition for these employees is intense. As a result, we may be unable to attract or retain these key personnel that are critical to our success, resulting in harm to our

relationships with clients, loss of expertise or know-how and unanticipated recruitment and training costs.

We may need additional capital in the future to pursue our business objectives. Additional capital may not be available on favorable terms, or at all, which could compromise our ability to grow our business.

We believe that our existing cash balances, in addition to the proceeds we receive from this offering and the available borrowing capacity under our revolving line of credit, will be sufficient to meet our minimum anticipated cash requirements for at least the next twelve months. We may, however, need to raise additional funds to respond to business challenges or opportunities, accelerate our growth, develop new programs or enhance our existing platform. If we seek to raise additional capital, it may not be available on favorable terms or may not be available at all. In addition, if we have borrowings outstanding under our credit facility, we may be restricted from using the net proceeds of financing transactions for our operating objectives. Lack of sufficient capital resources could significantly limit our ability to manage our business and to take advantage of business and strategic opportunities. Any additional capital raised through the sale of equity or debt securities with an equity component would dilute our stock ownership. If adequate additional funds are not available if and when needed, we may be required to delay, reduce the scope of, or eliminate material parts of our business strategy.

Our employees located outside of the United States and the international students enrolled in our clients' programs expose us to international risks.

Operating in international markets requires significant resources and management attention and subjects us to regulatory, economic and political risks that are different from those in the United States. We have an office in Hong Kong for program marketing and student support. Because we have employees in Hong Kong, we are subject to Hong Kong's compensation and benefits regulations, which differ from compensation and benefits regulations in the United States. Further, acquiring and retaining international students for our clients requires us to comply with international data privacy regulations. Failure to comply with international regulations or to adequately adapt to international markets could harm our ability to successfully operate our business and pursue our business goals.

Future programs with colleges and universities outside the United States could expose us to risks inherent in international operations.

One element of our growth strategy is to expand our international operations and establish a worldwide client base. We cannot assure you that our expansion efforts into international markets will be successful. Our experience with attracting clients in the United States may not be relevant to our ability to attract clients in other emerging markets. In addition, we would face risks in doing business internationally that could constrain our operations and compromise our growth prospects, including:

Future agreements with international clients may provide for payments to us to be denominated in local currencies. In such case, fluctuations in the value of the U.S. dollar and foreign currencies could impact our operating results when translated into U.S. dollars, and we may not be able to engage in currency hedging activities to effectively limit the risk of exchange rate fluctuations.

We might not be able to utilize a significant portion of our net operating loss carryforwards, which could adversely affect our profitability.

As of December 31, 2012, we had federal and state net operating loss carryforwards due to prior period losses, which if not utilized will begin to expire in 2029 and 2021 for federal and state purposes, respectively. These net operating loss carryforwards could expire unused and be unavailable to offset future income tax liabilities, which could adversely affect our profitability. In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an "ownership change," which is generally defined as a greater than 50% change, by value, in its equity ownership over a three-year period, the corporation's ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income may be limited. We have not completed an analysis to determine what, if any, impact any prior ownership change has had on our ability to utilize our net operating loss carryforwards. In addition, we may experience ownership changes in the future as a result of subsequent shifts in our stock ownership, including this offering. If we determine that an ownership change has occurred and our ability to use our historical net operating loss carryforwards is materially limited, it would harm our future operating results by increasing our future tax obligations.

We engage some individuals classified as independent contractors, not employees, and if federal or state law mandates that they be classified as employees, our business would be adversely impacted.

We engage independent contractors and are subject to the Internal Revenue Service regulations and applicable state law guidelines regarding independent contractor classification. These regulations and guidelines are subject to judicial and agency interpretation, and it could be determined that the independent contractor classification is inapplicable. Further, if legal standards for classification of independent contractors change, it may be necessary to modify our compensation structure for these personnel, including by paying additional compensation or

reimbursing expenses. In addition, if our independent contractors are determined to have been misclassified as independent contractors, we would incur additional exposure under federal and state law, workers' compensation, unemployment benefits, labor, employment and tort laws, including for prior periods, as well as potential liability for employee benefits and tax withholdings. Any of these outcomes could result in substantial costs to us, could significantly impair our financial condition and our ability to conduct our business as we choose, and could damage our reputation and our ability to attract and retain other personnel.

Our business model relies on client institutions complying with federal and state laws and regulations.

Higher education is heavily regulated. All of our clients participate in Title IV federal student financial assistance programs under the Higher Education Act of 1965, as amended, or HEA, and are subject to extensive regulation by the U.S. Department of Education, or DOE, as well as various state agencies, licensing boards and accrediting commissions. To participate in the Title IV programs, an institution must receive and maintain authorization by the appropriate state education agencies, be accredited by an accrediting commission recognized by the DOE, and be certified by the DOE as an eligible institution. If any of our clients were to be found to be in non-compliance with any of these laws, regulations, standards or policies, the client could lose some or all access to Title IV program funds, lose the ability to offer certain programs or lose their ability to operate in certain states, any of which could cause our revenue from that client's program to decline.

The regulations, standards and policies of our clients' regulators change frequently and are often subject to interpretation. Changes in, or new interpretations of, applicable laws, regulations or standards could compromise our clients' accreditation, authorization to operate in various states, permissible activities or use of federal funds under Title IV programs. We cannot predict with certainty how the requirements applied by our clients' regulators will be interpreted, or whether our clients will be able to comply with these requirements in the future.

Our activities are subject to federal and state laws and regulations and other requirements.

Although we are not an institution of higher education, we are required to comply with certain education laws and regulations as a result of our role as a service provider to higher education institutions, either directly or indirectly through our contractual arrangements with clients. See "Business — Education Laws and Regulations." Failure to comply with these laws and regulations could result in breach of contract and indemnification claims and could cause damage to our reputation and impair our ability to grow our business and achieve profitability.

Activities of the U.S. Congress could result in adverse legislation or regulatory action.

The process of re-authorization of the HEA is due to formally begin in 2014. Congressional hearings were held in 2013 and will continue to be scheduled by the U.S. Senate Committee on Health, Education, Labor and Pensions, the U.S. House of Representatives Committee on Education and the Workforce and other Congressional committees regarding various aspects of the education industry, including accreditation matters, student debt, student recruiting, cost of tuition, distance learning, competency-based learning, student success and outcomes and other matters. In addition, President Obama has proposed a college rating initiative that would publish school ratings based upon measures of access, affordability and outcomes on the College Scorecard and compare peer institutions.

The increased scrutiny and results-based accountability initiatives in the education sector, as well as ongoing policy differences in Congress regarding spending levels, could lead to significant changes in connection with the upcoming reauthorization of the HEA or otherwise. These changes may place additional regulatory burdens on postsecondary schools generally, and specific initiatives may be targeted at companies like us that serve higher education. The adoption of any laws or regulations that limit our ability to provide our bundled services to our clients could compromise our ability to drive revenue through their programs or make our solutions less attractive to them. Congress could also enact laws or regulations that require us to modify our practices in ways that could increase our costs.

In addition, regulatory activities and initiatives of the DOE may have similar consequences for our business even in the absence of Congressional action.

Our business model, which depends on our ability to receive a share of tuition revenue as payment from our clients, has been validated by a DOE "dear colleague" letter, but such validation is not codified by statute or regulation and may be subject to change.

Each institution that participates in Title IV programs agrees it will not "provide any commission, bonus, or other incentive payment based in any part, directly or indirectly, upon success in securing enrollments or the award of financial aid, to any person or entity who is engaged in any student recruitment or admission activity, or in making decisions regarding the award of title IV, HEA program funds." All of our clients participate in Title IV Programs.

Although this rule, referred to as the incentive compensation rule, generally prohibits entities or individuals from receiving incentive-based compensation payments for the successful recruitment, admission or enrollment of students, the DOE provided guidance in 2011 permitting tuition revenue-sharing arrangements known as the "bundled services rule." Our current business model relies heavily on the bundled services rule to enter into tuition revenue-sharing agreements with client colleges and universities. See "Business — Education Laws and Regulations."

Because the bundled services rule was promulgated in the form of agency guidance issued by the DOE in the form of a "dear colleague" letter, or DCL, and is not codified by statute or regulation, there is risk that the rule could be altered or removed without prior notice, public comment period or other administrative procedural requirements that accompany formal agency rulemaking. Although the DCL represents the current policy of the DOE, the bundled services rule could be reviewed, altered or vacated in the future. In addition, the legal weight the DCL would carry in litigation over the propriety of any specific compensation arrangements under the HEA or the incentive compensation rule is uncertain. We can offer no assurances as to how the DCL would be interpreted by a court. The revision, removal or invalidation of the bundled services rule by Congress, the DOE or a court, whether in an action involving our company or our clients, or in action that does not involve us, could require us to change our business model and renegotiate the terms of our client contracts and could compromise our ability to generate revenue.

If we or our subcontractors or agents violate the incentive compensation rule, we could be liable to our clients for substantial fines, sanctions or other liabilities.

Even though the DCL clarifies that tuition revenue-sharing arrangements with our clients are permissible, we are still subject to other provisions of the incentive compensation rule that prohibit us from offering to our employees who are involved with or responsible for recruiting or admissions activities any bonus or incentive-based compensation based on the successful identification, admission or enrollment of students into any institution. If we or our subcontractors or agents violate the incentive compensation rule, we could be liable to our clients for substantial fines, sanctions or other liabilities, including liabilities related to "whistleblower" claims under the federal

False Claims Act. Any such claims, even if without merit, could require us to incur significant costs to defend the claim, distract management's attention and damage our reputation.

If we or our subcontractors or agents violate the misrepresentation rule, or similar federal and state regulatory requirements, we could face fines, sanctions and other liabilities.

We are required to comply with other regulations promulgated by the DOE that affect our student acquisition activities, including the misrepresentation rule. The misrepresentation rule is broad in scope and applies to statements our employees, subcontractors or agents may make about the nature of a client's program, a client's financial charges or the employability of a client's program graduates. A violation of this rule or other federal or state regulations applicable to our marketing activities by an employee, subcontractor or agent performing services for clients could hurt our reputation, result in the termination of client contracts, require us to pay fines or other monetary penalties and require us to pay the fees associated with indemnifying a client from private claims or government investigations.

If our clients fail to maintain their state authorizations, or we or our clients violate other state laws and regulations, students in their programs could be adversely affected and we could lose our ability to operate in that state and provide services to our clients.

Our clients must be authorized in certain states to offer online programs, engage in recruiting and operate externships, internships, clinical training or other forms of field experience, depending on state law. The loss of or failure to obtain state authorization would, among other things, limit a client's ability to enroll students in that state, render the client and its students ineligible to participate in Title IV programs in that state, diminish the attractiveness of the client's program and ultimately compromise our ability to generate revenue and become profitable.

In addition, if we or any of our clients fail to comply with any state agency's rules, regulations or standards beyond authorizations, the state agency could limit the ability of the client to offer programs in that state or limit our ability to perform our contractual obligations to our client in that state.

If our clients fail to maintain institutional or programmatic accreditation for their programs, our revenue could be materially affected.

The loss or suspension of a client's accreditation or other adverse action by the client's institutional or programmatic accreditor would render the institution or its program ineligible to participate in Title IV programs, could prevent the client from offering certain educational programs and could make it impossible for the graduates of the client's program to practice the profession for which they trained. If any of these results occurs, it could hurt our ability to generate revenue from that program.

Our future growth could be impaired if our clients fail to obtain timely approval from applicable regulatory agencies to offer new programs, make substantive changes to existing programs or expand their programs into or within certain states.

Our clients are required to obtain the appropriate approvals from the DOE and applicable state and accrediting regulatory agencies for new programs or locations, which may be conditioned, delayed or denied in a manner that could impair our strategic plans and future growth. Education regulatory agencies are generally experiencing significant increases in the volume of requests for approvals as a result of new distance learning programs and adjustments to the significant volume of new regulations over the last several years. Regulatory capacity constraints

have resulted in delays to various approvals our client institutions are requesting, and such delays could in turn delay the timing of our ability to generate revenue from our clients' programs.

If more state agencies require specialized approval of our clients' programs, our operating costs could rise significantly, approval times could lag or we could be prohibited from operating in certain states.

In addition to state licensing agencies, our clients may be required to obtain approval from professional licensing boards in certain states to offer specialized programs in specific fields of study. Currently, relatively few states require institutions to obtain professional board approval for their professional programs when offered online. However, more states could pass laws requiring professional programs offered by our clients, such as graduate programs in teaching or nursing, to obtain approval from state professional boards. If a significant number of states pass additional laws requiring schools to obtain professional board approval, the cost of obtaining all necessary state approvals could dramatically increase, which could make our solutions less attractive to clients, and our clients could be barred from operating in some states entirely.

If the personally identifiable information we collect from students is unlawfully acquired, accessed or obtained, we could be required to pay substantial fines and bear the cost of investigating the data breach and providing notice to individuals whose personally identifiable information was unlawfully accessed.

In providing services to our clients, we collect personally identifiable information from students and prospective students, such as names, social security numbers and birth dates. In the event that the personally identifiable information is unlawfully accessed or acquired, the majority of states have laws that require institutions to investigate and immediately disclose the data breach to students, usually in writing. Under the terms of our contracts with our clients, we would be responsible for the costs of investigating and disclosing these data breaches to the clients' students. In addition to costs associated with investigating and fully disclosing a data breach in such instances, we could be subject to substantial monetary fines or private claims by affected parties and our reputation would likely be harmed.

We are required to comply with The Family Educational Rights and Privacy Act, or FERPA, and failure to do so could harm our reputation and negatively affect our business.

FERPA generally prohibits an institution of higher education from disclosing personally identifiable information from a student's education records without the student's consent. Our clients and their students disclose to us certain information that originates from or comprises a student education record under FERPA. As an entity that provides services to institutions, we are indirectly subject to FERPA, and we may not transfer or otherwise disclose any personally identifiable information from a student record to another party other than in a manner permitted under the statute. If we violate FERPA, it could result in a material breach of contract with one or more of our clients and could harm our reputation. Further, in the event that we disclose student information in violation of FERPA, the DOE could require a client to suspend our access to their student information for five years.

We operate in an industry with extensive intellectual property litigation. Claims of infringement against us may hurt our business.

Our success depends, in part, upon our ability to avoid infringing intellectual property rights owned by others and being able to resolve claims of intellectual property infringement without

major financial expenditures or adverse consequences. The technology and software fields generally are characterized by extensive intellectual property litigation and many companies that own, or claim to own, intellectual property have aggressively asserted their rights. From time to time, we may be subject to legal proceedings and claims relating to the intellectual property rights of others, and we expect that third parties will assert intellectual property claims against us, particularly as we expand the complexity and scope of our business. In addition, our client agreements require us to indemnify our clients against claims that our solutions infringe the intellectual property rights of third parties.

Future litigation may be necessary to defend ourselves or our clients from intellectual property infringement claims or to establish our proprietary rights. Some of our competitors have substantially greater resources than we do and would be able to sustain the costs of complex intellectual property litigation to a greater degree and for longer periods of time than we could. In addition, patent holding companies that focus solely on extracting royalties and settlements by enforcing patent rights may target us. Regardless of whether claims that we are infringing patents or other intellectual property rights have any merit, these claims are time-consuming and costly to evaluate and defend and could:

In addition to liability for monetary damages against us, which may include attorneys' fees, treble damages in the event of a finding of willful infringement, or, in some circumstances, damages against our clients, we may be prohibited from developing, commercializing or continuing to provide some or all of our bundled technology-enabled solutions unless we obtain licenses from, and pay royalties to, the holders of the patents or other intellectual property rights, which may not be available on commercially favorable terms, or at all.

We may incur liability for the unauthorized duplication, distribution or other use of materials posted online.

In some instances, university personnel or students, or our employees or independent contractors, may post to our platform various articles or other third-party content for use in class discussions or within asynchronous lessons. The laws governing the fair use of these third-party materials are imprecise and adjudicated on a case-by-case basis, which makes it challenging to adopt and implement appropriately balanced institutional policies governing these practices. As a result, we could incur liability to third parties for the unauthorized duplication, distribution or other use of this material. Any such claims could subject us to costly litigation and impose a significant strain on our financial resources and management personnel regardless of whether the claims have merit. Our various liability insurance coverages may not cover potential claims of this type adequately or at all, and we may be required to alter or cease our uses of such material, which may include changing or removing content from courses or altering the functionality of our platform, or to pay monetary damages.

Our failure to protect our intellectual property rights could diminish the value of our solutions, weaken our competitive position and reduce our revenue.

We regard the protection of our intellectual property, which includes trade secrets, copyrights, trademarks, domain names and patent applications, as critical to our success. We protect our proprietary information from unauthorized use and disclosure by entering into confidentiality agreements with any party who may come in contact with such information. We also seek to ensure that we own intellectual property created for us by signing agreements with employees, independent contractors, consultants, companies and any other third party who may create intellectual property for us that assign their copyright and patent rights to us. However, these arrangements and the other steps we have taken to protect our intellectual property may not prevent the misappropriation of our proprietary information or deter independent development of similar technologies by others.

We have also recently begun seeking patent protection for our processes, including one patent application pending in the United States. This pending application is directed to computer-implemented processes that facilitate asynchronous student responses to teacher questions. We cannot predict whether this pending patent application will result in an issued patent that will effectively protect our intellectual property. Even if a patent issues, the patent may be circumvented or its validity may be challenged in proceedings before the U.S. Patent and Trademark Office. In addition, we cannot assure you that every significant feature of our products and services will be protected by any patent or patent application.

We also pursue the registration of our domain names, trademarks and service marks in the United States and in jurisdictions outside the United States. However, third parties may knowingly or unknowingly infringe on our trademark or service mark rights, third parties may challenge our trademark or service mark rights, and pending or future trademark or service mark applications may not be approved. In addition, effective trademark protection may not be available in every country in which we operate or intend to operate. In any or all cases, we may be required to expend significant time and expense to prevent infringement or enforce our rights.

Monitoring unauthorized use of our intellectual property is difficult and costly. Our efforts to protect our proprietary rights may not be adequate to prevent misappropriation of our intellectual property. Further, we may not be able to detect unauthorized use of, or take appropriate steps to enforce, our intellectual property rights. Our competitors may also independently develop similar technology. In addition, the laws of many countries may not protect our proprietary rights to as great an extent as do the laws of the United States. Further, the laws in the United States and elsewhere change rapidly, and any future changes could adversely affect us and our intellectual property rights. Our failure to meaningfully protect our intellectual property could result in competitors offering services that incorporate our most technologically advanced features, which could seriously reduce demand for our solutions. In addition, we may in the future need to initiate litigation such as infringement or adminstrative proceedings, to protect our intellectual property rights. Litigation, whether we are a plaintiff or a defendant, can be expensive, time-consuming and may divert the efforts of our technical staff and managerial personnel, whether or not such litigation results in a determination that is unfavorable to us. In addition, litigation is inherently uncertain, and thus we may not be able to stop our competitors from infringing upon our intellectual property rights.

Our use of "open source" software could negatively affect our ability to offer our solutions and subject us to possible litigation.

A substantial portion of our cloud-based platform and our solutions incorporates so-called "open source" software, and we may incorporate additional open source software in the future.

Open source software is generally freely accessible, usable and modifiable. Certain open source licenses may, in certain circumstances, require us to offer our solutions that incorporate the open source software for no cost, that we make available source code for modifications or derivative works we create based upon, incorporating or using the open source software and that we license such modifications or derivative works under the terms of the particular open source license. If an author or other third party that distributes open source software we use were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal expenses defending against such allegations and could be subject to significant damages, including being enjoined from the offering of our solutions that contained the open source software and being required to comply with the foregoing conditions, which could disrupt our ability to offer the affected solutions. We could also be subject to suits by parties claiming ownership of what we believe to be open source software. Litigation could be costly for us to defend, have a negative effect on our operating results and financial condition and require us to devote additional research and development resources to change our products.

Individuals that appear in content hosted on our platform may claim violation of their rights.

Faculty and students that appear in video segments hosted on our platform may claim that proper assignments, licenses, consents and releases were not obtained for use of their likenesses, images or other contributed content. Our clients are contractually required to ensure that proper assignments, licenses, consents and releases are obtained for their course material, but we cannot know with certainty that they have obtained all necessary rights. Moreover, the laws governing rights of publicity and privacy, and the laws governing faculty ownership of course content, are imprecise and adjudicated on a case-by-case basis, such that the enforcement of agreements to transfer the necessary rights is unclear. As a result, we could incur liability to third parties for the unauthorized duplication, display, distribution or other use of this material. Any such claims could subject us to costly litigation and impose a significant strain on our financial resources and management personnel regardless of whether the claims have merit. Our various liability insurance coverages may not cover potential claims of this type adequately or at all, and we may be required to alter or cease our use of such material, which may include changing or removing content from courses, or to pay monetary damages. Moreover, claims by faculty and students could damage our reputation, regardless of whether such claims have merit.

Risks Related to this Offering, Ownership of Our Common Stock and Our Status as a Public Company

Our quarterly operating results have fluctuated in the past and may do so in the future, which could cause our stock price to decline.

Our quarterly operating results have historically fluctuated due to seasonality and changes in our business, and our future operating results may vary significantly from quarter to quarter due to a variety of factors, many of which are beyond our control. You should not rely on period-to-period comparisons of our operating results as an indication of our future performance. Factors that may cause fluctuations in our quarterly operating results include, but are not limited to, the following:

Our operating results may fall below the expectations of market analysts and investors in some future periods, which could cause the market price of our common stock to decline substantially.

An active trading market for our common stock may not develop and you may not be able to resell your shares of our common stock at or above the initial offering price, if at all.

Prior to this offering, there has been no public market for our common stock. The initial public offering price for our common stock will be determined through negotiations with the underwriters and may not be indicative of the price at which our common stock will trade upon completion of this offering. Although we intend to apply to list our common stock on the NASDAQ Global Market, an active trading market for our shares may never develop or be sustained following this offering. If an active market for our common stock does not develop or is not sustained, it may be difficult for you to sell shares you purchased in this offering at an attractive price or at all.

The trading price of the shares of our common stock may be volatile, and purchasers of our common stock could incur substantial losses.

Our stock price may be volatile. The stock market in general and the market for technology companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, investors may not be able to sell their common stock at or above the price paid for the shares. The market price for our common stock may be influenced by many factors, including:

In addition, in the past, stockholders have initiated class action lawsuits against technology companies following periods of volatility in the market prices of these companies' stock. Such litigation, if instituted against us, could cause us to incur substantial costs and divert management's attention and resources from our business.

If equity research analysts do not publish research or reports, or publish unfavorable research or reports, about us, our business or our market, our stock price and trading volume could decline.

The trading market for our common stock will be influenced by the research and reports that equity research analysts publish about us and our business. We do not currently have and may never obtain research coverage by equity research analysts. Equity research analysts may elect not to provide research coverage of our common stock after the completion of this offering, and such lack of research coverage may adversely affect the market price of our common stock. In the event we do have equity research analyst coverage, we will not have any control over the analysts or the content and opinions included in their reports. The price of our stock could decline if one or more equity research analysts downgrade our stock or issue other unfavorable commentary or research. If one or more equity research analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which in turn could cause our stock price or trading volume to decline.

If you purchase shares of our common stock in this offering, you will suffer immediate dilution of your investment.

We expect the initial public offering price of our common stock to be substantially higher than the net tangible book value per share of our common stock. Therefore, if you purchase shares of our common stock in this offering, you will pay a price per share that substantially exceeds our pro forma net tangible book value per share after this offering. Based on an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, you will experience immediate dilution of $ per share, representing the difference between our pro forma as adjusted net tangible book value per share after giving effect to this offering and the assumed initial public offering price.

In addition, as of September 30, 2013, we had outstanding stock options to purchase an aggregate of 5,483,948 shares of common stock at a weighted-average exercise price of $2.92 per share and an outstanding warrant to purchase 12,797 shares of our common stock, assuming the conversion of redeemable convertible preferred stock issuable upon the exercise of the warrant to common stock upon completion of this offering, at an exercise price of $7.81 per share. To the extent these outstanding options and this warrant are exercised, there will be further dilution to investors in this offering.

A significant portion of our total outstanding shares are restricted from immediate resale but may be sold into the market in the near future. This could cause the market price of our common stock to drop significantly, even if our business is doing well.

Sales of a substantial number of shares of our common stock in the public market could occur at any time. If our stockholders sell, or the market perceives that our stockholders intend to sell, substantial amounts of our common stock in the public market following this offering, the market price of our common stock could decline significantly.

Upon completion of this offering, we will have outstanding shares of common stock, assuming no exercise of outstanding options or warrants. Of these shares, the shares sold in this offering and additional shares will be freely tradable, additional

shares of common stock will be eligible for sale in the public market beginning 90 days after the date of this prospectus, subject to volume, manner of sale and other limitations of Rule 144 and Rule 701, and additional shares of common stock will be available for sale in the public market beginning 180 days after the date of this prospectus following the expiration of lock-up agreements between some of our stockholders and the underwriters. The representatives of the underwriters may release these stockholders from their lock-up agreements with the underwriters at any time and without notice, which would allow for earlier sales of shares in the public market.

In addition, promptly following the completion of this offering, we intend to file one or more registration statements on Form S-8 registering the issuance of approximately shares of common stock subject to options or other equity awards issued or reserved for future issuance under our equity incentive plans. Shares registered under these registration statements on Form S-8 will be available for sale in the public market subject to vesting arrangements and exercise of options, the lock-up agreements described above and, in the case of our affiliates, the restrictions of Rule 144.

Additionally, after this offering, the holders of an aggregate of shares of our common stock and 12,797 shares of our common stock issuable upon the exercise of an outstanding warrant, or their transferees, will have rights, subject to some conditions, to require us to file one or more registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. If we were to register the resale of these shares, they could be freely sold in the public market. If these additional shares are sold, or if it is perceived that they will be sold, in the public market, the trading price of our common stock could decline.

Provisions in our corporate charter documents and under Delaware law may prevent or frustrate attempts by our stockholders to change our management and hinder efforts to acquire a controlling interest in us, and the market price of our common stock may be lower as a result.

Provisions in our amended and restated certificate of incorporation and amended and restated bylaws, as they will be in effect following this offering, may make it difficult for a third party to acquire, or attempt to acquire, control of our company, even if a change in control is considered favorable by you and other stockholders. For example, our board of directors will have the authority to issue up to shares of preferred stock. The board of directors can fix the price, rights, preferences, privileges, and restrictions of the preferred stock without any further vote or action by our stockholders. An issuance of shares of preferred stock may result in the loss of voting control to other stockholders, which could delay or prevent a change in control transaction. As a result, the market price of our common stock and the voting and other rights of our stockholders may be adversely affected.

Our charter documents will also contain other provisions that could have an anti-takeover effect, including:

In addition, we are subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law, which regulates corporate acquisitions by prohibiting Delaware corporations from engaging in specified business combinations with particular stockholders of those companies. These provisions could discourage potential acquisition proposals and could delay or prevent a change in control transaction. They could also have the effect of discouraging others from making tender offers for our common stock, including transactions that may be in your best interests. These provisions may also prevent changes in our management or limit the price that investors are willing to pay for our stock.

Concentration of ownership of our common stock among our existing executive officers, directors and principal stockholders may prevent new investors from influencing significant corporate decisions.

Upon completion of this offering, our executive officers, directors and current beneficial owners of 5% or more of our common stock and their respective affiliates will, in the aggregate, beneficially own over % of our outstanding common stock. As a result, these persons, if they were to act together, would be able to significantly influence all matters requiring stockholder approval, including the election and removal of directors, any merger, consolidation, sale of all or substantially all of our assets, or other significant corporate transactions.

Some of these persons or entities may have interests different than yours. For example, because many of these stockholders purchased their shares at prices substantially below the price at which shares are being sold in this offering and have held their shares for a longer period, they may be more interested in selling our company to an acquirer than other investors, or they may want us to pursue strategies that deviate from the interests of other stockholders.

We are an "emerging growth company" and as a result of the reduced disclosure and governance requirements applicable to emerging growth companies, our common stock may be less attractive to investors.

We are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act, and we intend to take advantage of some of the exemptions from reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. We may take advantage of these reporting exemptions until we are no longer an emerging growth company. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.0 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

Under Section 107(b) of the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting

standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements on a timely basis could be impaired.

After the completion of this offering, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, the Sarbanes-Oxley Act and the rules and regulations of the NASDAQ Global Market. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. Commencing with our fiscal year ending December 31, 2015, we must perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on the effectiveness of our internal control over financial reporting in our Form 10-K filing for that year, as required by Section 404 of the Sarbanes-Oxley Act. This will require that we incur substantial additional professional fees and internal costs to expand our accounting and finance functions and that we expend significant management efforts. Prior to this offering, we have never been required to test our internal controls within a specified period, and, as a result, we may experience difficulty in meeting these reporting requirements in a timely manner.

We may discover weaknesses in our system of internal financial and accounting controls and procedures that could result in a material misstatement of our financial statements. For example, in connection with the audit of our financial statements for the years ended December 31, 2011 and 2012, our independent registered public accounting firm identified a material weakness in the design and operation of our control over financial reporting, which is described in more detail in the next risk factor. In addition, our internal control over financial reporting will not prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.

If we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, or if we are unable to maintain proper and effective internal controls, we may not be able to produce timely and accurate financial statements. If that were to happen, the market price of our stock could decline and we could be subject to sanctions or investigations by the stock exchange on which our common stock is listed, the Securities and Exchange Commission, or SEC, or other regulatory authorities.

If we are unable to successfully remediate the existing material weakness in our internal control over financial reporting, or if other material weaknesses exist in the future, the accuracy and timing of our financial reporting may be compromised.

In conducting its audit of our consolidated financial statements as of and for the years ended December 31, 2011 and 2012, our independent registered public accounting firm identified control deficiencies in the design and operation of our internal control over financial reporting that together constituted a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. The material weakness identified specifically related to the monitoring of the accounting for complex, non-routine transactions and recording of stock based compensation activity. Accordingly, our internal control over financial reporting was not designed or operating effectively, and as a result there were adjustments required in connection with closing our books and records and preparing our December 31, 2011 and 2012 and September 30, 2013

financial statements. We cannot assure you that we have identified all of our existing material weaknesses.

In response to the identified material weakness, we are in the process of implementing procedures and controls designed to mitigate the material weakness and underlying significant deficiencies. For example, we have expanded our in-house accounting and finance resources, including hiring ten experienced employees in this function since April 2012, including our Chief Financial Officer. We have also implemented enhanced review procedures, begun a comprehensive documentation of our internal controls and procedures and implemented more formal procedures for the evaluation of non-routine judgments and estimates. In addition, we expect to implement an internal audit process function during 2014 and to complete the documentation of our internal controls and procedures.

Despite our efforts, we have not yet remediated our material weakness, and there is no assurance that we will be able to remediate the material weakness in a timely manner, or at all. Additionally, we cannot guarantee that, in the future, additional material weaknesses will not exist or otherwise be discovered. If our efforts to remediate the material weakness identified are not successful, or if other material weaknesses or other deficiencies occur, our ability to accurately and timely report our financial position could be impaired, which could result in late filings of our annual and quarterly reports under the Exchange Act, restatements of our consolidated financial statements, a decline in our stock price, suspension or delisting of our common stock from the NASDAQ Global Market, and could adversely affect our reputation, results of operations and financial condition.

We will have broad discretion in the use of proceeds from this offering and may invest or spend the proceeds in ways with which you do not agree and in ways that may not increase the value of your investment.

We will have broad discretion over the use of proceeds from this offering. You may not agree with our decisions, and our use of the proceeds may not yield any return on your investment. As described elsewhere in this prospectus, we expect to use the net proceeds to us from this offering for working capital and general corporate purposes. Our failure to apply the net proceeds of this offering effectively could compromise our ability to pursue our growth strategy and we might not be able to yield a significant return, if any, on our investment of these net proceeds. You will not have the opportunity to influence our decisions on how to use our net proceeds from this offering.

Because we do not anticipate paying any cash dividends on our common stock in the foreseeable future, capital appreciation, if any, will be your sole source of gains and you may never receive a return on your investment.

You should not rely on an investment in our common stock to provide dividend income. We have not declared or paid cash dividends on our common stock to date. We currently intend to retain our future earnings, if any, to fund the development and growth of our business. In addition, the terms of our existing credit facility preclude, and the terms of any future debt agreements is likely to similarly preclude, us from paying dividends. As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future. Investors seeking cash dividends should not purchase our common stock.

We will incur increased costs and demands upon management as a result of being a public company.

As a public company listed in the United States, we will incur significant additional legal, accounting and other costs. These additional costs could negatively affect our financial results. In

addition, changing laws, regulations and standards relating to corporate governance and public disclosure, including regulations implemented by the SEC and the NASDAQ Global Market, may increase legal and financial compliance costs and make some activities more time-consuming. These laws, regulations and standards are subject to varying interpretations and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management's time and attention from revenue-generating activities to compliance activities. If, notwithstanding our efforts to comply with new laws, regulations and standards, we fail to comply, regulatory authorities may initiate legal proceedings against us and our business may be harmed.

Failure to comply with these rules might also make it more difficult for us to obtain some types of insurance, including director and officer liability insurance, and we might be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, on committees of our board of directors or as members of senior management.

This prospectus contains forward-looking statements that involve substantial risks and uncertainties. The forward-looking statements are contained principally in the sections entitled "Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business," but are also contained elsewhere in this prospectus. In some cases, you can identify forward-looking statements by the words "may", "might", "will", "could", "would", "should", "expect", "intend", "plan", "objective", "anticipate", "believe", "estimate", "predict", "project", "potential", "continue" and "ongoing", or the negative of these terms, or other comparable terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although we believe that we have a reasonable basis for each forward-looking statement contained in this prospectus, we caution you that these statements are based on a combination of facts and factors currently known by us and our expectations of the future, about which we cannot be certain. Forward-looking statements include statements about:

You should refer to the "Risk Factors" section of this prospectus for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this prospectus will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified timeframe, or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

This prospectus also contains estimates and other information concerning higher education, including market size and growth rates, which are based on publications, surveys and forecasts, including those made available by the U.S. Department of Education. These publications, surveys and forecasts generally indicate that their information has been obtained from sources believed to be reliable. Higher education is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in "Risk Factors."

We estimate that the net proceeds from our issuance and sale of shares of our common stock in this offering will be approximately $ million, or approximately $ million if the underwriters' option to purchase additional shares from us is exercised in full, based upon an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

Each $1.00 increase or decrease in the assumed initial public offering price of $ per share would increase or decrease the net proceeds to us from this offering by approximately $ million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same.

The principal purposes of this offering are to create a public market for our common stock and to facilitate our future access to the public equity markets, as well as to obtain additional capital. We intend to use the net proceeds from this offering for working capital and other general corporate purposes. We may also use a portion of the net proceeds from this offering for the future acquisition of, or investment in, complementary businesses, products or technologies. However we do not have any current agreements or commitments for any specific acquisitions or investments, and we have not allocated specific amounts of net proceeds for any of these purposes.

Our management will have broad discretion in the application of the net proceeds, and investors will be relying on the judgment of our management regarding the application of the net proceeds of this offering. The timing and amount of our actual expenditures will be based on many factors, including cash flows from operations and the anticipated growth of our business. Pending use of the proceeds as described above, we intend to invest these net proceeds in short-term, interest bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the United States.

We have never declared or paid any dividends on our common stock. We anticipate that we will retain all of our future earnings, if any, for use in the operation and expansion of our business and do not anticipate paying cash dividends in the foreseeable future. Additionally, our ability to pay dividends on our common stock is limited by restrictions under the terms of the agreements governing our credit facility, and the terms of any future loan agreement into which we may enter or any additional debt securities we may issue are likely to contain similar restrictions on the payment of dividends.

The following table sets forth our cash and cash equivalents and our capitalization as of September 30, 2013:

The following information is illustrative only of our cash and cash equivalents and capitalization following the completion of this offering and will change based on the actual initial public offering price and other terms of this offering determined at pricing. You should read this table together with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes appearing elsewhere in this prospectus.

	As of September 30, 2013

	Actual			Pro Forma			Pro Forma As Adjusted
	(in thousands)
Cash and cash equivalents	$	7,400		$	7,400		$

Redeemable convertible preferred stock:
Convertible Series A preferred stock, $0.001 par value; 10,033,976 shares authorized, issued and outstanding, actual; no shares designated, issued or outstanding, pro forma and pro forma as adjusted	$	12,349		$	—		$
Convertible Series B preferred stock, $0.001 par value; 5,057,901 shares authorized, issued and outstanding, actual; no shares designated, issued or outstanding, pro forma and pro forma as adjusted		22,175			—
Convertible Series C preferred stock, $0.001 par value; 4,429,601 shares authorized, issued and outstanding, actual; no shares designated, issued or outstanding, pro forma and pro forma as adjusted		32,394			—
Convertible Series D preferred stock, $0.001 par value; 3,992,527 shares authorized, 3,979,730 shares issued and outstanding, actual; no shares designated, issued or outstanding, pro forma and pro forma as adjusted		31,043			—

Total redeemable convertible preferred stock		97,961			—
Stockholders' (deficit) equity:
Preferred stock, $0.001 par value; no shares authorized, issued or outstanding, actual, pro forma or pro forma as adjusted		—
Common stock, $0.001 par value; 35,984,090 shares authorized; 7,449,152 shares issued and outstanding, actual; 30,950,360 shares issued and outstanding, pro forma; issued and outstanding, pro forma as adjusted		7			31
Additional paid-in-capital		6,972			104,943
Accumulated deficit		(94,669	)		(94,669	)

Total stockholders' (deficit) equity		(87,690	)		10,305

Total capitalization	$	10,271		$	10,305		$

Each $1.00 increase or decrease in the assumed initial public offering price of $ per share would increase or decrease the pro forma as adjusted amount of each of cash and cash equivalents, additional paid-in capital, total stockholders' equity and total capitalization by approximately $ million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same.

The number of shares of common stock outstanding in the table above does not include:

If you invest in our common stock in this offering, your interest will be diluted to the extent of the difference between the initial public offering price per share and the pro forma as adjusted net tangible book value per share of our common stock immediately after this offering. Net tangible book value per share is determined by dividing our total tangible assets less total liabilities and redeemable convertible preferred stock by the number of outstanding shares of our common stock.

As of September 30, 2013, we had a deficit in net tangible book value of $(99.6) million, or approximately $(13.37) per share of common stock. On a pro forma basis, after giving effect to the conversion of the outstanding shares of our redeemable convertible preferred stock into shares of our common stock upon the closing of this offering and the related reclassification of our warrant liability, our deficit in net tangible book value would have been approximately $(1.6) million, or approximately $(0.05) per share of common stock.

Investors participating in this offering will incur immediate and substantial dilution. After giving effect to the issuance and sale of shares of our common stock in this offering at an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of September 30, 2013 would have been approximately $ million, or approximately $ per share of common stock. This represents an immediate increase in the pro forma net tangible book value of $ per share to existing stockholders, and an immediate dilution in the pro forma net tangible book value of $ per share to investors purchasing shares of our common stock in this offering. The following table illustrates this per share dilution:


Assumed initial public offering price per share				$
Actual net tangible book value deficit per share as of September 30, 2013	$	(13.37	)
Increase in net tangible book value per share attributable to the conversion of our redeemable convertible preferred stock and related reclassification of our warrant liability		13.32

Pro forma net tangible book value deficit per share before this offering		(0.05	)
Increase in pro forma net tangible book value per share attributable to new investors participating in this offering

Pro forma as adjusted net tangible book value per share after this offering

Dilution per share to investors participating in this offering				$

The dilution information discussed above is illustrative only and will change based on the actual initial public offering price and other terms of this offering determined at pricing. Each $1.00 increase or decrease in the assumed initial public offering price of $ per share would increase or decrease our pro forma as adjusted net tangible book value by approximately $ million, or approximately $ per share, and the dilution per share to investors participating in this offering by approximately $ per share, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same.

If the underwriters exercise their option in full to purchase additional shares of common stock in this offering, the pro forma as adjusted net tangible book value per share after the offering would be $ per share, the increase in the pro forma net tangible book value per share to existing stockholders would be $ per share and the dilution to new investors purchasing common stock in this offering would be $ per share, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same.

The following table sets forth as of September 30, 2013, on the pro forma basis described above, the differences between the number of shares of common stock purchased from us, the total consideration paid and the weighted average price per share paid by existing stockholders and by investors purchasing shares of our common stock in this offering at an assumed initial public offering price of $ per share, which is the midpoint of the range set forth on the cover page on this prospectus, before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us:

Each $1.00 increase or decrease in the assumed initial public offering price of $ per share would increase or decrease the total consideration paid by new investors by $ million, and increase or decrease the percent of total consideration paid by new investors by percentage points, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same.

The shares of our common stock reserved for future issuance under our equity incentive plans may be subject to automatic annual increases in accordance with the terms of the plans. To the extent that options or warrants are exercised, new options are issued under our equity incentive plans, or we issue additional shares of common stock in the future, there will be further dilution to investors participating in this offering. In addition, we may choose to raise additional capital because of market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans. If we raise additional capital through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.

The following selected consolidated statement of operations data for the years ended December 31, 2011 and 2012 and the selected consolidated balance sheet data as of December 31, 2011 and 2012 are derived from our audited consolidated financial statements, which have been audited by KPMG LLP, an independent registered public accounting firm, appearing elsewhere in this prospectus. The data should be read together with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and in conjunction with the consolidated financial statements, related notes and other financial information included elsewhere in this prospectus. The selected consolidated statement of operations data for the nine-month periods ended September 30, 2012 and 2013 and the selected consolidated balance sheet data as of September 30, 2013 are derived from unaudited consolidated financial statements included in this prospectus.

The selected consolidated financial data for the nine months ended September 30, 2012 and 2013 and as of September 30, 2013 includes, in the opinion of our management, all adjustments, consisting only of normal recurring adjustments, that are necessary for a fair presentation of our financial position and results of operations for these periods. Our historical results are not necessarily indicative of the results to be expected in the future, and our operating results for the nine months ended September 30, 2013 are not necessarily indicative of the results that may be expected for the entire year ending December 31, 2013.

	Year Ended December 31,						Nine Months Ended September 30,

	2011			2012			2012			2013
	(in thousands)
Consolidated Statement of Operations Data:
Revenue	$	29,733		$	55,879		$	39,459		$	58,324
Costs and expenses:
Servicing and support		12,300			14,926			10,516			16,516
Technology and content development		5,117			8,299			5,725			12,944
Program marketing and sales		32,116			45,390			34,491			40,877
General and administrative		5,104			10,342			6,882			10,794

Total costs and expenses		54,637			78,957			57,614			81,131

Loss from operations		(24,904	)		(23,078	)		(18,155	)		(22,807	)
Other income (expense):
Interest expense		(19	)		(73	)		(55	)		12
Interest income		45			38			27			21

Total other income (expense)		26			(35	)		(28	)		33

Loss before income taxes		(24,878	)		(23,113	)		(18,183	)		(22,774	)
Income tax expense		—			—			—			—

Net loss		(24,878	)		(23,113	)		(18,183	)		(22,774	)
Preferred stock accretion		(314	)		(339	)		(254	)		(261	)

Net loss attributable to common stockholders	$	(25,192	)	$	(23,452	)	$	(18,437	)	$	(23,035	)

Net loss per share attributable to common stockholders:
Basic and diluted	$	(3.77	)	$	(3.33	)	$	(2.66	)	$	(3.11	)
Pro forma basic and diluted				$	(0.81	)				$	(0.75	)
Other Financial Data:
Adjusted EBITDA (loss)(1)	$	(22,514	)	$	(18,814	)	$	(15,138	)	$	(18,018	)

To provide investors with additional information regarding our financial results, we have provided within this prospectus Adjusted EBITDA, a non-GAAP financial measure. We have provided a reconciliation below of Adjusted EBITDA to net loss, the most directly comparable GAAP financial measure.

We have included Adjusted EBITDA in this prospectus because it is a key measure used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.

Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

Because of these and other limitations, you should consider Adjusted EBITDA alongside other GAAP-based financial performance measures, including various cash flow metrics, net income (loss)

and our other GAAP results. The following table presents a reconciliation of Adjusted EBITDA (loss) to net loss for each of the periods indicated:

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes and other financial information included elsewhere in this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the "Risk Factors" section of this prospectus for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

We are a leading provider of cloud-based SaaS solutions that enable leading nonprofit colleges and universities to deliver their high quality education to qualified students anywhere. Our innovative online learning platform and bundled technology-enabled services provide the comprehensive operating infrastructure colleges and universities need to attract, enroll, educate, support and graduate their students. By leveraging our solutions, we believe our clients are able to expand their addressable markets while providing educational engagement, experiences and outcomes to their online students that match or exceed those of their on-campus offerings.

Our clients are leading nonprofit colleges and universities. They use our platform to offer full graduate degree programs online. The students in these programs receive the same degree or credit as their on-campus counterparts and generally pay equivalent tuition. Currently, eight well-recognized nonprofit colleges and universities offer graduate degrees through our platform. We provide a suite of technology-enabled services designed to promote adoption and usage of our SaaS solutions by clients and enrollment and retention of their students. These services include program marketing, student acquisition, content development for courses, and faculty and student support services, including technical training and support, non-academic student advising, academic progress monitoring and career services. We also facilitate in-program field placements, student immersions and other student enrichment experiences.

We are currently engaged by eight colleges and universities to enable 11 graduate programs. The first of our clients' programs was launched in 2009. One additional program launched in 2010 with two more commencing in 2011. In 2013, our clients launched five new programs. An additional program launched in January 2014 and another is scheduled to commence in April 2014. Our client contracts generally have initial terms between 10 and 15 years in length, and, since our inception, all of the clients that have engaged us remain active.

A significant percentage of our annual revenue is related to students returning to our clients' programs after their first semester. In the first nine months of 2013, 78% of our revenue was related to students who had enrolled and completed their first semester prior to the start of the year. Of revenue recognized after March 31, 2013, 87% was related to students who had enrolled and completed their first semester before that date. We believe this high percentage of revenue attributable to returning students contributes to the predictability and recurring nature of our business.

We have achieved significant growth in a relatively short period of time. The total number of course enrollments in our clients' programs grew from 12,831 during the twelve months ended December 31, 2011 to during the twelve months ended December 31, 2013, representing a compound annual growth rate of %. From our inception through September 30, 2013, a total of 8,383 unique students had enrolled in our clients' programs. For the years ended December 31,

2011 and 2012 and the nine months ended September 30, 2013, our revenue was $29.7 million, $55.9 million and $58.3 million, respectively.

Substantially all of our revenue is derived from revenue-share arrangements with our clients under which we receive a contractually specified percentage of the amounts students pay them to enroll in their programs. Accordingly, the primary driver of our revenue growth is the number of students enrolled in our clients' programs. This in turn is influenced primarily by three factors:

In the near term, we expect the primary drivers of our financial results to continue to be our two programs with the University of Southern California, which are our longest running programs, launched in 2009 and 2010. For the years ended December 31, 2011 and 2012 and the nine months ended September 30, 2013, 94%, 78% and 70%, respectively, of our revenue was derived from these two programs. We expect the University of Southern California will continue to account for a large portion of our revenue until our other client programs become more mature and achieve significantly higher enrollment levels.

Our most significant expense in each fiscal period has been program marketing and sales expense, which relates primarily to student acquisition activities. We do not spend significant amounts on new client or program acquisition and we do not maintain a sales force targeted at potential new clients or programs since our model is not dependent on launching a large number of new programs per year, either with new or existing clients. Instead, our new clients and programs are largely generated through a direct approach by our senior management to selected colleges and universities.

We have primary responsibility for identifying qualified students for our clients' programs, generating potential student interest in the programs and driving applications to the programs. While our clients make all admissions decisions, the number of students who enroll in our clients' programs in any given period is significantly dependent on the amount we have spent on these student acquisition activities in prior periods. Accordingly, although most of our clients' programs span multiple semesters and, therefore, generate continued revenue beyond the term in which initial enrollments occurs, we expect that we will need to continue to incur significant program marketing and sales expense for existing programs going forward to generate a continuous pipeline of new enrollments. For new programs, we begin incurring program marketing and sales costs as soon as we enter into an engagement with a new client, which can be as much as nine months before the start of a new client program.

We typically identify prospective students for our clients programs between three months and two or more years before they ultimately enroll. For the students currently enrolled in our clients' programs and those who have graduated, the average time from our initial lead acquisition to initial enrollment was seven months. For the students who have graduated from these programs, the

average time from initial enrollment to graduation was 16 months. However, because our clients' programs are relatively new, they have only graduated a limited number of students to date, with many early enrollees still enrolled. Based on the student retention rates and patterns we have observed in our clients' programs, we estimate that, for our current programs, the average time from a student's initial enrollment to graduation will be approximately two years.

Accordingly, our program marketing and sales expense in any period is an investment we make to generate revenue in future periods. Likewise, revenue generated in any period is largely attributable to student acquisition activities in earlier periods. Because program marketing and sales expense in any period are almost entirely unrelated to revenue generated in that period, we do not believe it is meaningful to directly compare the two. We believe that the total revenue we will receive in the future from students who enroll in our clients' programs as a result of current period program marketing and sales expense will be significantly greater as a multiple of that expense than is implied by the multiple of current period revenue to current period program marketing and sales expense. Further, we believe that our program marketing and sales expense in future periods will generally decline as a percentage of the revenue reported in those same periods as our revenue base from returning students in existing programs becomes larger.

Our revenue, cash position, accounts receivable and deferred revenue can fluctuate significantly from quarter to quarter due to variations driven by the academic schedules of our clients' programs. These programs generally start classes for new and returning students an average of four times per year. Class starts are not necessarily evenly spaced throughout the year, do not necessarily correspond to the traditional academic calendar and may vary from year to year. As a result, the number of classes our client programs have in session, and therefore the number of students enrolled, will vary from month to month and quarter to quarter, leading to variability in our revenue.

The semesters of our clients' programs often straddle two fiscal quarters. Our clients generally pay us when they have billed tuition and specified fees to their students, which is typically early in the semester, and once the drop/add period has passed. We recognize the related revenue ratably over the course of the semester. Because we generally receive payments from our clients prior to our ability to recognize the majority of those amounts as revenue, we record deferred revenue at each balance sheet date equal to the excess of the amounts we have billed or received from our clients over the amounts we have recognized as revenue as of that date. For these reasons, our cash flows typically vary considerably from quarter to quarter and our cash position, accounts receivable and deferred revenue typically fluctuate between quarterly balance sheet dates.

Our expense levels also fluctuate from quarter to quarter, driven primarily by our program marketing and sales activity. We typically reduce our paid search and other program marketing and sales efforts during late November and December because these efforts are less productive during the holiday season. This generally results in lower total program marketing and sales expense during the fourth quarter. In addition, because we begin spending on technology and content development, program marketing and sales, and, to a lesser extent, services and support as much as nine months prior to the start of classes for a new client program, these costs as a percentage of revenue fluctuate, sometimes significantly, depending on the timing of new client programs and anticipated program launch dates.

We use a number of key metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. In

addition to Adjusted EBITDA, which we discuss below, we discuss revenue and the components of operating loss in the section below entitled "— Components of Operating Results." Additionally, we utilize other key metrics to evaluate the success of our growth strategy, including measures we refer to as platform revenue retention rate and total course enrollments in our clients' programs.

We measure our platform revenue retention rate for a particular period by first identifying the group of client programs that launched before the beginning of the prior comparative period. We then calculate our platform revenue retention rate by comparing the revenue we recognized for this group of client programs in the reporting period to the revenue we recognized for the same group in the prior comparative period, expressed as a percentage of the revenue we recognized for the group in the prior comparative period.

Our platform revenue retention rate was 206.5% for the nine months ended September 30, 2012 and 145.4% for the nine months ended September 30, 2013. We currently have four client programs that have been in operation since prior to January 1, 2012 and therefore are included in this metric.

We measure total course enrollments in our clients' programs by determining, for each of the courses offered during a particular period, the number of students enrolled in that course. Any individual student may be enrolled in more than one course during a period. For example, if an individual student was enrolled in four courses during a period, it would count as four course enrollments for the period. We use a rolling twelve-month period to measure total course enrollments so that the impact of changes in our clients' academic schedules do not impair our ability to evaluate trends in this metric.

The total course enrollments in our clients' programs was for the twelve months ended December 31, 2013, a % increase compared to 21,463 total course enrollments in our clients' programs for the twelve months ended December 31, 2012.

Adjusted EBITDA represents our earnings before net interest (income) expense, income taxes, depreciation and amortization, adjusted to eliminate stock-based compensation expense, which is a non-cash item. Adjusted EBITDA is not a measure calculated in accordance with GAAP. Please refer to "Selected Consolidated Financial Data — Adjusted EBITDA" in this prospectus for a discussion of the limitations of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net loss, the most comparable GAAP measurement, for the years ended December 31, 2011 and 2012 and the nine months ended September 30, 2012 and 2013. Adjusted EBITDA should not be considered as an alternative to any measure of financial performance calculated and presented in accordance with GAAP. In addition, Adjusted EBITDA may not be comparable to similarly titled measures of other companies because other companies may not calculate Adjusted EBITDA in the same manner that we do. We prepare Adjusted EBITDA to eliminate the impact of stock-based compensation expense, which we do not consider indicative of our core operating performance. We encourage you to evaluate these adjustments, the reasons we consider them appropriate and the material limitations of using non-GAAP measures as described in "Selected Consolidated Financial Data — Adjusted EBITDA."

Adjusted EBITDA loss was $22.5 million, $18.8 million, $15.1 million and $18.0 million for the years ended December 31, 2011 and 2012 and the nine months ended September 30, 2012 and 2013, respectively.

Substantially all of our revenue consists of a contractually specified percentage of the amounts our clients bill to their students for tuition and fees, less credit card fees, shared program expenses and other specified charges we have agreed to exclude in our contract with a client, which we refer to as net program proceeds. Our contracts generally have 10 to 15 year initial terms. We recognize revenue ratably over the service period, which we define as the first through the last day of classes for each semester in a client's program.

We establish a refund allowance for our share of tuition and fees ultimately uncollected by our clients.

We also offered rebates to a limited group of students who enrolled in a specific client program between 2009 and 2011, which we will be required to pay to such students if they complete their degrees and pre-specified, post-graduation work requirements within a defined period of time after graduation. For students in this group who are still enrolled in the program, we accrue the rebate liability as they continue through the program towards graduation. In addition, all students in this group are required to certify to us each September as to their continuing eligibility for these rebates. For those students who do not make such certification and are therefore no longer eligible for the rebate, because, for example, they have failed to meet their post-graduation work requirements, we reduce the allowance accordingly at that time. As of December 31, 2011 and 2012 and September 30, 2013, 406, 398 and 327 students, respectively, remained eligible to receive these rebates.

These rebates and refunds offset the net program proceeds that we recognize as revenue.

From time to time, we also recognize other revenue related to additional services requested by our clients beyond our bundled technology-enabled services, such as services in connection with state compliance efforts. To date, this other revenue has been immaterial.

The following table details the components of our revenue for the periods indicated.

In addition to providing access to our cloud-based technology platform, we provide bundled technology-enabled services, including program marketing services for student acquisition, content development services, faculty and student support services, including technical training and support, non-academic student advising, academic progress monitoring and career services. We also facilitate in-program field placements, student immersions and other student enrichment experiences. We have determined that no individual deliverable has standalone value upon delivery and, therefore, the multiple deliverables within our arrangements do not qualify for treatment as separate units of accounting. Accordingly, we consider all deliverables to be a single unit of

accounting and we recognize revenue from the entire arrangement over the term of the service period.

We generally receive payments from our clients early in each semester, prior to completion of the service period. We record these advance payments as deferred revenue until the services are delivered or until our obligations are otherwise met, at which time we recognize the revenue. As of each balance sheet date, deferred revenue is a current liability and represents the excess amounts we have billed or received over the amounts we have recognized as revenue in the consolidated statements of operations as of that date.

Costs and expenses consist of servicing and support costs, technology and content development costs, program marketing and sales expenses and general and administrative expenses. To support our anticipated growth, we expect to continue to hire new employees, increase our program promotion and student acquisition efforts, expand our technology infrastructure and increase our other program support capabilities. As a result, we expect our costs and expenses to increase in absolute dollars, but to decrease as a percentage of revenue over time as we achieve economies of scale through the expansion of our business.

Servicing and support. Servicing and support costs consist primarily of compensation costs related to program management and operations, as well as costs for platform technical support and faculty and student support. We also facilitate in-program field placements, student immersions and other student enrichment experiences, and we assist our clients with their state compliance requirements. It also includes software licensing, telecommunications and other costs to maintain platform access for our clients and their students.

Technology and content development. Technology and content development costs consist primarily of compensation and outsourced services costs related to the ongoing improvement and maintenance of our technology platform and content developed for our client programs, as well as costs to support our internal infrastructure, including our cloud-based server usage. It also includes the associated depreciation and amortization expense related to internally developed software and content, as well as hosting and other costs associated with maintaining our platform in a cloud environment.

Program marketing and sales. Program marketing and sales expense consists primarily of costs related to student acquisition. This includes the cost of online advertising and lead generation, as well as compensation costs for our program marketing, search engine optimization, marketing analytics and application counseling personnel. We expense all costs related to program marketing and sales as they are incurred.

General and administrative. General and administrative expense consists primarily of compensation costs for employees in our executive, administrative, finance and accounting, information systems, legal, strategy and human resources functions. Additional expenses include external legal, accounting and other professional fees, telecommunications charges and other corporate costs such as insurance and travel that are not related to another function.

Other income (expense) consists of interest income and interest expense. Interest income is derived from interest received on our cash and cash equivalents. Interest expense consists primarily of the amortization of deferred financing costs associated with our line of credit and convertible notes prior to their conversion and changes in our preferred stock warrant liability as a result of changes in the fair value of such warrant.

The fair value of our preferred stock warrant liability is reassessed at the end of each reporting period and any increase in fair value is recognized in other expense, while any decrease in fair value is recognized in other income. In accordance with its terms, upon completion of this offering, the preferred stock warrant will automatically become a warrant to purchase common stock. At that time, we will reclassify the preferred stock warrant liability to additional paid-in capital and will not recognize further changes in fair value in other income or expense.

The following table sets forth selected consolidated statement of operations data for each of the periods indicated.

	Year Ended December 31,						Nine Months Ended September 30,

	2011			2012			2012			2013
	(in thousands)
Revenue	$	29,733		$	55,879		$	39,459		$	58,324
Costs and expenses:
Servicing and support		12,300			14,926			10,516			16,516
Technology and content development		5,117			8,299			5,725			12,944
Program marketing and sales		32,116			45,390			34,491			40,877
General and administrative		5,104			10,342			6,882			10,794

Total costs and expenses		54,637			78,957			57,614			81,131

Loss from operations		(24,904	)		(23,078	)		(18,155	)		(22,807	)
Other income (expense):
Interest expense		(19	)		(73	)		(55	)		12
Interest income		45			38			27			21

Total other income (expense)		26			(35	)		(28	)		33

Net loss	$	(24,878	)	$	(23,113	)	$	(18,183	)	$	(22,774	)

The following table sets forth our consolidated statement of operations data as a percentage of revenue for each of the periods indicated.

	Year Ended December 31,						Nine Months Ended September 30,

	2011			2012			2012			2013
	(as a percentage of revenue)
Revenue		100.0	%		100.0	%		100.0	%		100.0	%
Costs and expenses:
Servicing and support		41.4			26.7			26.7			28.3
Technology and content development		17.2			14.9			14.5			22.2
Program marketing and sales		108.0			81.2			87.4			70.1
General and administrative		17.3			18.5			17.4			18.5

Total costs and expenses		183.9			141.3			146.0			139.1

Loss from operations		(83.9	)		(41.3	)		(46.0	)		(39.1	)
Other income (expense):
Interest expense		(0.1	)		(0.2	)		(0.2	)		0.0
Interest income		0.2			0.1			0.1			0.0

Total other income (expense)		0.1			(0.1	)		(0.1	)		0.0

Net loss		(83.8	)%		(41.4	)%		(46.1	)%		(39.1	)%

	Nine Months Ended September 30,

	2012						2013						Period-to-Period Change
				Percentage of Revenue						Percentage of Revenue			Period-to-Period Change
	Amount			Percentage of Revenue			Amount			Percentage of Revenue			Amount			Percentage
	(dollars in thousands)
Revenue	$	39,459			100.0	%	$	58,324			100.0	%	$	18,865			47.8	%
Costs and expenses:
Servicing and support		10,516			26.7			16,516			28.3			6,000			57.1
Technology and content development		5,725			14.5			12,944			22.2			7,219			126.1
Program marketing and sales		34,491			87.4			40,877			70.1			6,386			18.5
General and administrative		6,882			17.4			10,794			18.5			3,912			56.8

Total costs and expenses		57,614			146.0			81,131			139.1			23,517			40.8

Loss from operations		(18,155	)		(46.0	)		(22,807	)		(39.1	)		(4,652	)		25.6
Other income (expense):
Interest expense		(55	)		(0.2	)		12			0.0			67			(121.8	)
Interest income		27			0.1			21			0.0			(6	)		(22.2	)

Total other income (expense)		(28	)		(0.1	)		33			0.0			61			(217.9	)

Net loss	$	(18,183	)		(46.1	)%	$	(22,774	)		(39.1	)%	$	(4,591	)		25.2

Revenue. Revenue increased by $18.9 million, or 47.8%, from $39.5 million for the nine months ended September 30, 2012 to $58.3 million for the same nine-month period of 2013. Of the increase, $18.4 million was driven by an increase in total course enrollments in our clients' programs. This resulted primarily from growth in the number of students in our clients' existing programs, as well as the addition of students in new client programs launched during the first nine months of 2013. In addition, our rebate liability decreased by $0.5 million, which resulted in a corresponding increase in our revenue. The decrease in the rebate liability was the result of some students not certifying their continuing eligibility for the rebate program and fewer of the original cohort of students still being enrolled in the applicable client program and, therefore, a reduction in the rate of rebate liability accrual during the period.

Servicing and support. Servicing and support costs increased by $6.0 million, or 57.1%, from $10.5 million for the nine months ended September 30, 2012 to $16.5 million for the same nine-month period of 2013. This increase was due primarily to a $4.5 million increase in compensation costs as we increased headcount to serve a growing number of students and faculty in existing and new client programs. The remaining increase of $1.5 million was attributable to increased costs for software licensing and facilitating in-program field placements, student immersions and student enrichment experiences. As a percentage of revenue, servicing and support costs increased from 26.7% for the nine months ended September 30, 2012 to 28.3% for the same nine-month period of 2013, as five additional client programs launched and we began to incur expenses in anticipation of the revenue we expect to generate through these new programs.

Technology and content development. Technology and content development costs increased by $7.2 million, or 126.1%, from $5.7 million for the nine months ended September 30, 2012 to $12.9 million for the same nine-month period of 2013. This was due primarily to a $2.7 million increase in compensation costs, as we hired personnel to support additional client program launches and scaling of existing client programs. Additionally, costs related to our cloud-based server usage increased by $0.7 million and external technology consulting increased by $1.9 million. Further, depreciation expense associated with our capitalized internal use software and content development costs increased by $0.9 million, primarily as a result of an increase in the

number of courses that have been developed for our client programs. The remaining increase of $1.0 million was attributable to increased costs for telecommunication, travel, computer hardware and other expenses. As a percentage of revenue, technology and content development costs increased from 14.5% for the nine months ended September 30, 2012 to 22.2% for the same nine-month period of 2013, as additional client programs launched and we began to incur expenses in anticipation of the revenue we expect to generate through these new programs.

Program marketing and sales. Program marketing and sales expense increased by $6.4 million, or 18.5%, from $34.5 million for the nine months ended September 30, 2012 to $40.9 million for the same nine-month period of 2013. This increase was due primarily to a $3.2 million increase in compensation costs, as we hired additional personnel to acquire students and drive revenue growth in new client programs. Additionally, lead generation costs increased by a total of $2.1 million, and other general program marketing and sales expenses, including advertising design, printing, public relations and advertisement hosting fees, increased by a total of $1.1 million, as we continued our program marketing efforts to acquire students for our clients' programs. As a percentage of revenue, program marketing and sales expense decreased from 87.4% for the nine months ended September 30, 2012 to 70.1% for the same nine-month period of 2013, reflecting increased revenue, which was primarily attributable to program marketing and sales expense incurred in prior periods.

General and administrative. General and administrative expense increased by $3.9 million, or 56.8%, from $6.9 million for the nine months ended September 30, 2012 to $10.8 million for the same nine-month period of 2013. This increase was due primarily to a $2.4 million increase in compensation costs, as we hired additional personnel to support our growing business and prepared to operate as a public company. Additionally, travel costs increased by $0.4 million driven by the increase in personnel, and our legal, accounting and other professional fees increased by $0.8 million in preparation for this offering. As a percentage of revenue, general and administrative expense increased from 17.4% for the nine months ended September 30, 2012 to 18.5% for the same nine-month period of 2013 as we began to build an infrastructure to meet the demands of new program launches.

	Year Ended December 31,

	2011						2012						Period-to-Period Change
				Percentage of Revenue						Percentage of Revenue			Period-to-Period Change
	Amount			Percentage of Revenue			Amount			Percentage of Revenue			Amount			Percentage
	(dollars in thousands)
Revenue	$	29,733			100.0	%	$	55,879			100.0	%	$	26,146			87.9	%
Costs and expenses:
Servicing and support		12,300			41.4			14,926			26.7			2,626			21.3
Technology and content development		5,117			17.2			8,299			14.9			3,182			62.2
Program marketing and sales		32,116			108.0			45,390			81.2			13,274			41.3
General and administrative		5,104			17.3			10,342			18.5			5,238			102.6

Total costs and expenses		54,637			183.9			78,957			141.3			24,320			44.5

Loss from operations		(24,904	)		(83.9	)		(23,078	)		(41.3	)		1,826			(7.3	)
Other income (expense):
Interest expense		(19	)		(0.1	)		(73	)		(0.2	)		(54	)		284.2
Interest income		45			0.2			38			0.1			(7	)		(15.6	)

Total other income (expense)		26			0.1			(35	)		(0.1	)		(61	)		(234.6	)

Net loss	$	(24,878	)		(83.8	)%	$	(23,113	)		(41.4	)%	$	1,765			(7.1	)

Revenue. Revenue increased by $26.1 million, or 87.9%, from $29.7 million for the year ended December 31, 2011 to $55.9 million for the year ended December 31, 2012. Of the increase, $25.8 million was driven by an increase in total course enrollments in our clients' programs. This resulted from growth in the number of students in our clients' existing programs, as well as two programs that launched during 2011 having a full year of enrollment and resulting revenue during 2012. In addition, our rebates liability decreased by $0.4 million, which resulted in a corresponding increase in our revenue.

Servicing and support. Servicing and support costs increased by $2.6 million, or 21.3%, from $12.3 million for the year ended December 31, 2011 to $14.9 million for the year ended December 31, 2012. This increase was due primarily to a $1.8 million increase in compensation costs as we increased headcount to serve a growing number of students and faculty in client programs. The remaining increase of $0.8 million was attributable to increased costs for software licensing and facilitating in-program field placements, student immersions and student enrichment experiences. As a percentage of revenue, servicing and support costs decreased from 41.4% for the year ended December 31, 2011 to 26.7% for the year ended December 31, 2012, due primarily to our increased revenue.

Technology and content development. Technology and content development costs increased by $3.2 million, or 62.2%, from $5.1 million for the year ended December 31, 2011 to $8.3 million for the year ended December 31, 2012. This was due primarily to a $1.1 million increase in compensation costs, as we hired personnel to support additional client program launches and operations. Additionally, costs related to our cloud-based server usage increased by $0.5 million and costs for external technology consulting increased by $0.4 million, also in support of our business expansion. Further, depreciation expense associated with our capitalized internal use software and content development costs increased by $1.1 million, primarily the result of an increase in the number of courses that have been developed for our client programs. As a percentage of revenue, technology and content development decreased from 17.2% for the year ended December 31, 2011 to 14.9% for the year ended December 31, 2012, due primarily to our increased revenue.

Program marketing and sales. Program marketing and sales expense increased by $13.3 million, or 41.3%, from $32.1 million for the year ended December 31, 2011 to $45.4 million for the year ended December 31, 2012. This increase was due primarily to a $7.9 million increase in lead-generation costs and a $3.7 million increase in compensation costs, as we continued our program marketing efforts to identify additional qualified students for our clients' programs. Additionally, there was a $1.7 million increase in other program marketing expenses, largely consisting of increased costs related to software we use to manage an increasing number of leads for our client programs. As a percentage of revenue, program marketing and sales expense decreased from 108.0% for the year ended December 31, 2011 to 81.2% for the year ended December 31, 2012, reflecting increased revenue, which was primarily attributable to program marketing and sales expense incurred in prior periods.

General and administrative. General and administrative expense increased by $5.2 million, or 102.6%, from $5.1 million for the year ended December 31, 2011 to $10.3 million for the year ended December 31, 2012. This increase was due primarily to a $4.7 million increase in compensation costs, as we hired additional personnel to support our growing business. The remaining increase of $0.5 million was attributable to increased costs for facilities, travel, and legal, accounting and other professional fees. As a percentage of revenue, general and administrative costs increased from 17.3% of revenue in 2011 to 18.5% in 2012.

The following tables show consolidated quarterly statement of operations data for each of our seven most recently completed quarters, as well as the percentage of revenue for each line item. This information has been derived from our unaudited quarterly financial statements, which, in the opinion of management, have been prepared on the same basis as our audited financial statements and include all adjustments, consisting of normal recurring adjustments and accruals, necessary for the fair presentation of financial information. Historical results are not necessarily indicative of results that may be achieved in future periods, and operating results for quarterly periods are not necessarily indicative of operating results for a full year. This information should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this prospectus.

	Three Months Ended

	March 31, 2012			June 30, 2012			Sept. 30, 2012			Dec. 31, 2012			March 31, 2013			June 30, 2013			Sept. 30, 2013
	(in thousands)
Revenue	$	13,106		$	13,369		$	12,984		$	16,420		$	19,134		$	18,691		$	20,499
Costs and expenses:
Servicing and support		3,119			3,779			3,618			4,410			5,018			5,656			5,842
Technology and content development		1,834			1,812			2,079			2,574			3,235			4,596			5,113
Program marketing and sales		10,298			11,370			12,823			10,899			11,770			13,695			15,412
General and administrative		2,359			2,318			2,205			3,460			2,871			3,654			4,269

Total costs and expenses		17,610			19,279			20,725			21,343			22,894			27,601			30,636

Loss from operations		(4,504	)		(5,910	)		(7,741	)		(4,923	)		(3,760	)		(8,910	)		(10,137	)
Other income (expense):
Interest expense		(1	)		(19	)		(35	)		(18	)		8			5			(1	)
Interest income		3			13			11			11			6			10			5

Total other income (expense)		2			(6	)		(24	)		(7	)		14			15			4

Net loss	$	(4,502	)	$	(5,916	)	$	(7,765	)	$	(4,930	)	$	(3,746	)	$	(8,895	)	$	(10,133	)

	Three Months Ended

	March 31, 2012			June 30, 2012			Sept. 30, 2012			Dec. 31, 2012			March 31, 2013			June 30, 2013			Sept. 30, 2013
	(as a percentage of revenue)
Revenue		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Costs and expenses:
Servicing and support		23.8			28.3			27.9			26.9			26.2			30.3			28.5
Technology and content development		14.0			13.6			16.0			15.7			16.9			24.6			24.9
Program marketing and sales		78.6			85.0			98.8			66.4			61.5			73.3			75.2
General and administrative		18.0			17.3			17.0			21.1			15.0			19.5			20.8

Total costs and expenses		134.4			144.2			159.7			130.1			119.6			147.7			149.4

Loss from operations		(34.4	)		(44.2	)		(59.7	)		(30.1	)		(19.6	)		(47.7	)		(49.4	)
Other income (expense):
Interest expense		(0.0	)		(0.2	)		(0.3	)		(0.1	)		0.0			0.0			(0.0	)
Interest income		0.0			0.1			0.1			0.1			0.0			0.1			0.0

Total other income (expense)		0.0			(0.1	)		(0.2	)		(0.0	)		0.0			0.1			0.0

Net loss		(34.4	)%		(44.3	)%		(59.9	)%		(30.1	)%		(19.6	)%		(47.6	)%		(49.4	)%

This management's discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reported period. In accordance with GAAP, we base our estimates on historical experience and on various other assumptions we believe to be reasonable under the circumstances. Actual results may differ from these estimates if conditions differ from our assumptions.

While our significant accounting policies are more fully described in Note 2 to our consolidated financial statements appearing elsewhere in this prospectus, we believe the following accounting policies are critical to the process of making significant judgments and estimates in the preparation of our consolidated financial statements.

We derive revenue under long term contracts, which have initial terms that typically range from 10 to 15 years in length. Under these contracts, we allow access to our cloud-based technology platform and provide bundled, technology-enabled services to our clients and their faculty and students. We are entitled to a contractually specified percentage of net program proceeds from our clients. These net program proceeds represent gross proceeds billed by our clients to students, less credit card fees, shared program expenses and other specified charges we have agreed to exclude in our contract with a client. Net program proceeds are further offset by accruals for expected refunds for our share of tuition and fees ultimately uncollected by our clients, as well as a provision for rebates of tuition to a limited group of students who enrolled in a specific client program between 2009 and 2011, which we will be required to pay to such students if they complete their degrees and meet pre-specified, post-graduation work requirements within a defined period of time after graduation. We recognize revenue ratably over the service period, which we define as the period from the first day of classes for each semester in a client's program through the last day of that semester.

We generate revenue from multiple-deliverable contractual arrangements with our clients. Under each of these arrangements, we provide:

In order to treat deliverables in a multiple-deliverable contractual arrangement as separate units of accounting, deliverables must have standalone value upon delivery. We have determined that no individual deliverable has standalone value upon delivery, and therefore, deliverables within our multiple-deliverable arrangements do not qualify for treatment as separate units of accounting. Accordingly, we consider all deliverables to be a single unit of accounting and recognize revenue from the entire arrangement over the term of the service period.

We generally receive payments from our clients early in each semester, which is prior to the completion of the service period. We record these advance payments as deferred revenue until our services are delivered or our obligations are otherwise met, at which time we recognize the revenue. As of each balance sheet date, deferred revenue is a current liability and represents the excess of amounts we have billed or received over the amounts we have recognized as revenue in the consolidated statements of operations as of that date.

Our accounts receivable are stated at estimated realizable value. We utilize the allowance method to provide for doubtful accounts based on management's evaluation of the collectability of the amounts due. Our estimate is based on historical collection experience and a review of the current status of accounts receivable. Historically, we have experienced write-offs for uncollectible accounts that have been immaterial and have not significantly differed from our estimates. For all periods presented, we determined that no allowance for doubtful accounts for accounts receivable was considered necessary.

We have made, and may in the future make, advances to our clients before a new program launches to cover costs they incur for instructional content creation, staffing and other start-up activities. Advances to clients are stated at estimated realizable value until repaid. We recognize imputed interest expense on these advance payments when there is a significant amount of imputed interest.

We capitalize some of the costs associated with internally developed software, primarily consisting of the direct labor associated with creating the software. Software development projects generally include three stages: the preliminary project stage, in which all costs are expensed as incurred; the application development stage, in which some costs are capitalized and some costs are expensed as incurred; and the post-implementation or operation stage, in which all costs are expensed as incurred.

The costs capitalized in the application development stage include the costs of designing, developing, coding our platform and integrating it with the client's legacy systems, as well as the testing of various elements of the platform. The capitalization of costs requires judgment in determining when a project has reached the application development stage and the period over which we expect to benefit from the use of that software. Once the software is placed in service, these costs are depreciated on a straight-line method over the estimated useful life of the software, which is generally three to five years.

We collaborate with our clients' faculty members to develop and maintain educational content that is delivered to their students through our cloud-based technology platform. The online content developed jointly by us and our clients consists of subjects chosen and taught by the client's faculty members and incorporates references and examples designed to remain relevant over extended periods of time. Online delivery of the content, combined with live, face-to-face instruction, provides us with rapid user feedback, which we then use to make ongoing corrections, modifications and improvements to the course content. Much of our new content development uses proven delivery platforms and is therefore primarily subject-specific in nature. As a result, a significant portion of content development costs qualify for capitalization on our consolidated balance sheets due to the focus of our development efforts on the unique subject matter of the content.

Content development costs that qualify for capitalization are external direct costs, payroll and payroll-related costs. Costs related to our general and administrative functions are not capitalizable and are expensed as incurred. We no longer capitalize content development costs once the content has been fully developed by both us and our client, at which time we begin to amortize the capitalized content development costs. We amortize these costs using the straight-line method over the estimated useful life of the respective capitalized content program, which is generally five years.

Stock options awarded to employees, directors and non-employee third parties are measured at fair value at each grant date. We consider what we believe to be comparable publicly traded companies, discounted free cash flows, and an analysis of our enterprise value in estimating the fair value of our common stock. For awards subject to service-based vesting conditions, we recognize compensation expense on a straight-line basis over the requisite service period of the option award, adjusted for estimated forfeitures. Options subject to service-based vesting generally vest at various times from the date of the grant, with most options vesting in tranches, generally over a period of four years.

Some of the stock options granted during the year ended December 31, 2012 were subject to both performance and service-based vesting conditions. We recognize compensation expense using an accelerated recognition method for awards subject to performance-based vesting conditions when it is probable that the performance condition will be achieved.

The determination of the fair value of stock-based compensation arrangements is affected by a number of variables, including estimates of the fair value of our common stock, expected stock price volatility, risk-free interest rate and the expected life of the award. We value stock options using the Black-Scholes-Merton option-pricing model, which was developed for use in estimating the fair value of traded options that are fully transferable and have no vesting restrictions. Black-Scholes-Merton and other option valuation models require the input of subjective assumptions. The

following summarizes the assumptions used for estimating the fair value of stock options granted to employees for the periods indicated:

We have assumed no dividend yield because we do not expect to pay dividends for the foreseeable future, if at all, which is consistent with our history. The risk-free interest rate assumption is based on observed interest rates for constant maturity U.S. Treasury securities consistent with the expected life of our employee stock options. The expected life represents the period of time the stock options are expected to be outstanding and is based on the simplified method. Under the simplified method, the expected life of an option is presumed to be the midpoint between the vesting date and the end of the contractual term. We used the simplified method due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the stock options. Expected volatility is based on historical volatilities for publicly traded stock of comparable companies over the estimated expected life of the stock options.

Our estimate of pre-vesting forfeitures, or the forfeiture rate, is based on historical behavior by stock option holders. The estimated forfeiture rate is applied to the total estimated fair value of the awards, as derived from the Black-Scholes-Merton model, to compute the stock-based compensation expense, net of pre-vesting forfeitures, to be recognized in our consolidated statements of operations.

Based upon an assumed initial public offering price of $ per share, the midpoint of the range set forth on the cover of this prospectus, the aggregate intrinsic value of outstanding options to purchase shares of our common stock as of September 30, 2013 was $ million, of which $ million related to vested options and $ million related to unvested options.

We are a private company with no active public market for our common stock. Therefore, in response to Section 409A of the Internal Revenue Code of 1986, as amended, related regulations issued by the Internal Revenue Service and accounting standards related to stock-based compensation, we have periodically determined for financial reporting purposes the estimated per share fair value of our common stock at various grant dates using contemporaneous valuations performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants Practice Aid, "Valuation of Privately-Held Company Equity Securities Issued as Compensation," also known as the Practice Aid. We performed these contemporaneous valuations as of April 1, 2011, April 4, 2012, July 31, 2012, May 31, 2013 and September 30, 2013. In conducting the contemporaneous valuations, we used relevant information available to us and considered all objective and subjective factors that we believed to be relevant for each valuation conducted, including management's best estimate of our business condition, prospects and operating performance at each valuation date. The relevant information leveraged and significant factors, assumptions and methodologies used included:

The dates of our contemporaneous valuations have not always coincided with the dates of our stock-based compensation grants. In such instances, management's estimates have been based on the most recent contemporaneous valuation of our shares of common stock and our assessment of additional objective and subjective factors we believed were relevant as of the grant date. The additional factors considered when determining any changes in fair value between the most recent contemporaneous valuation and the grant dates included our stage of development, our operating and financial performance, current business conditions, recent transactions of our securities and the market performance of comparable publicly traded companies.

There are significant judgments and estimates inherent in these contemporaneous valuations. These judgments and estimates include assumptions regarding our future operating performance, the time to completing an IPO or other liquidity event, and the determinations of the appropriate valuation methods. If we had made different assumptions, our stock-based compensation expense, net loss and net loss per share could have been significantly different.

Up to and including the independent valuation performed as of April 4, 2012, we prepared our common stock valuations utilizing the Option Pricing Method, or OPM. In the OPM, the value of our common stock and our redeemable convertible preferred stock are estimated as call options on the enterprise value, with exercise prices based on the respective liquidation preferences of each series of the redeemable convertible preferred stock. Under the OPM, our common stock has value only if the funds available for distribution to common stockholders exceed the value of the liquidation preference of our redeemable convertible preferred stock at the time of the liquidity event. The characteristics of each class of stock, including the conversion ratio and any liquidation preferences of the redeemable convertible preferred stock, determine the class of stock's claim on the enterprise value. Essentially, the rights of the common stockholders are equivalent to a call option on any value above the redeemable convertible preferred stockholders' liquidation preferences. Thus, our common stock can be valued by estimating the value of its portion of each of these call option rights. The OPM, as applied under the Black-Scholes-Merton model, is appropriate to use when the range of possible future outcomes is so difficult to predict that forecasts would be highly speculative.

Beginning with the independent valuation performed as of July 31, 2012, as greater certainty developed regarding a possible liquidity event, we changed the methodology for allocating our enterprise value from the OPM to the Hybrid Method, which incorporates the probability-weighted expected return method, or PWERM, and the OPM. The Hybrid Method includes estimating the probability-weighted enterprise value under multiple scenarios, while using an OPM to then allocate the enterprise value to the various classes of securities within the non-IPO scenarios to reflect the full distribution of possible non-IPO outcomes. We considered the Hybrid Method to be a more appropriate model of non-IPO scenarios due to uncertainty regarding the timing or likelihood of specific alternative exit events if we do not complete an IPO. Under the Hybrid Method, once the portion of the enterprise value allocated to the common shares has been determined, the per share value is then discounted to its present value based on the expected timing of the liquidity event. The common share value is also multiplied by an estimated probability for each scenario evaluated in the Hybrid Method. We determined the probability and timing of two future exit scenarios, an IPO and a strategic merger or sale, based on discussions between our board of directors and our management team.

Market Approach for Estimating Enterprise Value. Under the Practice Aid, the market approach uses similar guideline companies in the marketplace or guideline companies effecting recent sales of securities to determine an implied valuation of the company based upon the price of the securities. When using the guideline company method of the market approach in determining the fair value of our common stock, we identified companies similar to our business and used these guideline companies to develop relevant market multiples and ratios. We then applied these market multiples and ratios to our financial forecasts to create an indication of total equity value. In selecting the guideline companies used in our analysis, we applied several criteria, including companies in similar industries, companies we believed investors would perceive as similar to us based on economic and financial measures, and businesses that we believed entail a similar degree of investment risk. When using the similar transaction methodology of the market approach in determining the fair value of our common stock, we used publicly disclosed data from arm's-length transactions involving similar companies to develop relationships or value measures between the prices paid for the target companies and the underlying financial performance of those companies. These value measures were then applied to our applicable operating data to create an indication of total equity value. When using the recent securities transaction method of the market approach in determining the fair value of our common stock, we identified recent transactions of our securities to determine an implied valuation of our total equity value based on the price of the securities.

For our independent valuations as of April 1, 2011 and April 4, 2012, we used recent sales of our redeemable convertible preferred stock as the primary driver in determining the fair value of our common stock. We used the guideline company method of the market approach as part of determining the fair value of our common stock under the IPO and sale scenarios in the July 31, 2012 independent valuation and all subsequent independent valuations. As an input for each of the independent valuations completed at these dates, we performed a discrete assessment of publicly traded comparable companies, including companies that had recently completed initial public offerings, to ensure that we had a representative sample of guideline companies upon which to base the valuations. The guideline companies we used in the market approach for each of these valuations were the same companies we used to estimate our expected volatility for purposes of determining our stock-based compensation expense related to stock options granted during this period. In addition, we performed a discrete assessment of recent security transactions upon which to base the valuations.

Income Approach for Estimating Enterprise Value. For the income approach, as described by the Practice Aid, we used the discounted free cash flow method, which is based on the premise

that equity value as of the respective valuation date is equal to the projected future free cash flows and expected terminal value of the business, discounted by a required rate of return that investors would demand given the risks of ownership and the risks associated with achieving the stream of projected future free cash flows.

We used the income approach as part of determining the fair value of our common stock under the IPO scenario beginning with our July 31, 2012 independent valuation and all subsequent independent valuations.

The following table summarizes by grant date the number of shares of common stock subject to stock options granted from January 1, 2012 through the date of this prospectus, as well as the associated per share exercise price and the estimated fair value per share of our common stock on the grant date.

Grant Date		Exercise Price per Share		Estimated Grant Date Fair Value per Share

January 25, 2012	472,500	$	3.08	$	3.08
February 15, 2012	425,000		3.08		3.08
February 28, 2012	316,601		3.08		3.08
March 6, 2012	180,000		3.08		3.08
April 30, 2012	200,000		3.08		3.08
May 15, 2012	155,150		3.14		3.14
July 13, 2012	95,000		3.14		3.14
October 3, 2012	407,500		5.75		5.75
November 7, 2012	7,500		5.75		5.75
January 17, 2013	247,500		5.75		6.73
January 31, 2013	120,000		5.75		6.81
May 8, 2013	638,500		5.75		7.37
October 1, 2013	248,500		8.45		8.45
October 4, 2013	175,000		8.45		8.45

The grant dates in the table above represent accounting grant dates at which all of the accounting prerequisites had been met in order to issue the stock options and all terms had been communicated to stock option recipients. Significant factors contributing to the determination of common stock fair value at the date of each grant beginning in fiscal year 2012 were as follows:

January, February, March and April 2012 Stock Option Grants. Our board of directors granted options to purchase an aggregate of 1,594,101 shares of common stock between January 25, 2012 and April 30, 2012, in each case with an exercise price per share of $3.08. In estimating the fair value of our common stock to set the exercise price of the options as of these grant dates, the board of directors reviewed and considered an independent valuation report for our common stock as of April 1, 2011. The independent valuation report estimated a fair value of $3.08 for our common stock as of April 1, 2011. Our board of directors determined that there were no significant factors affecting the value of our common stock that had occurred between April 1, 2011 and each of these grant dates.

May and July 2012 Stock Option Grants. Our board of directors granted options to purchase 250,150 shares of common stock between May 15, 2012 and July 13, 2012, in each case with an exercise price per share of $3.14. In estimating the fair value of our common stock to set the exercise price of the options as of these grant dates, the board of directors reviewed and considered an independent valuation report for our common stock as of April 4, 2012. The independent valuation report estimated a fair value of $3.14 for our common stock as of April 4, 2012. Our board of directors determined that there were no significant factors affecting the value of our common stock that had occurred between April 4, 2012 and each of these grant dates.

The increase in the estimated fair value of our common stock from $3.08 per share as of April 30, 2012 to $3.14 per share as of May 15, 2012 was primarily due to the following:

October and November 2012 Stock Option Grants. Our board of directors granted options to purchase an aggregate of 415,000 shares of common stock between October 3, 2012 and November 7, 2012, in each case with an exercise price per share of $5.75. In estimating the fair value of our common stock to set the exercise price of the options as of these grant dates, the board of directors reviewed and considered an independent valuation report for our common stock as of July 31, 2012. The independent valuation report estimated a fair value of $5.75 for our common stock as of July 31, 2012. Our board of directors determined that there were no significant factors affecting the value of our common stock that had occurred between July 31, 2012 and these grant dates.

The increase in the estimated fair value of our common stock from $3.14 per share as of July 13, 2012 to $5.75 per share as of October 3, 2012 was primarily due to the following:

January and May 2013 Stock Option Grants. Our board of directors granted options to purchase 1,006,000 shares of common stock between January 17, 2013 and May 8, 2013 with an exercise price per share of $5.75. At the time of this grant, we believed overall market conditions had not changed significantly since July 31, 2012. Therefore, the board of directors considered the prior independent valuation report for our common stock as of July 31, 2012, which estimated a fair value for our common stock of $5.75 as of July 31, 2012. Subsequently, we obtained an updated independent valuation report for our common stock as of May 31, 2013. The independent valuation report estimated a fair value for our common stock of $7.50 as of May 31, 2013. In light of the updated valuation, we used a linear interpolation approach for financial accounting purposes to arrive at a per share fair value for accounting purposes. Based on the linear interpolation, we established a per share fair value of $6.73, $6.81 and $7.37 as of January 17, 2013, January 31, 2013 and May 8, 2013, respectively.

The increase in the estimated fair value of our common stock from $5.75 per share as of July 31, 2012 to $7.50 per share as of May 31, 2013 was primarily due to the following:

October 2013 Stock Option Grants. Our board of directors granted options to purchase 423,500 shares of common stock on October 1, 2013 with an exercise price per share of $8.45. In estimating the fair value of our common stock to set the exercise price of the options as of this grant date, the board of directors reviewed and considered an independent valuation report for our common stock as of September 30, 2013. The independent valuation report estimated a fair value of $8.45 for our common stock as of September 30, 2013.

The increase in the estimated fair value of our common stock from $7.37 per share as of May 8, 2013 to $8.45 per share as of September 30, 2013 was primarily due to the following:

In , we determined the estimated initial public offering price per share of this offering, as set forth on the cover page of this prospectus, to be between $ and $ per share. We note that, as is typical in IPOs, the preliminary range was not derived using a formal determination of fair value, but was determined based upon discussions between us and the underwriters. Among the factors considered in setting the preliminary range were prevailing market conditions and estimates of our business potential.

Income taxes are accounted for under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that are included in the financial statements. Under this method, the deferred tax assets and liabilities are determined based on the differences between the financial statement and tax bases of the assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on the deferred tax assets and liabilities is recognized in earnings in the period when the new rate is enacted. Deferred tax assets are subject to periodic recoverability assessments. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that more likely than not will be realized. We consider all positive and negative evidence relating to the realization of the deferred tax assets in assessing the need for a valuation allowance. We currently maintain a full valuation allowance against our deferred tax assets.

We record a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. We account for uncertainty in income taxes using a two-step approach for evaluating tax positions. Step one, recognition, occurs when we conclude that a tax position, based solely on its technical merits, is more likely than not to be sustained upon examination. Step two, measurement, determines the amount of benefit that is more likely than not to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. De-recognition of a tax position that was previously recognized would occur if we subsequently determine that a tax position no longer meets the more likely than not threshold of being sustained. We recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in our consolidated statements of operations.

To date, we have funded our operations primarily through private placements of redeemable convertible preferred stock. We raised $31.5 million and $26.0 million from the sale of redeemable convertible preferred stock in 2011 and 2012, respectively.

In 2012, we obtained a line of credit from Comerica Bank under which we may borrow up to $10.0 million. Through September 30, 2013, we have not borrowed any amounts under this facility. The revolving line of credit has a current term through April 2014 and requires interest-only payments to be made monthly on any outstanding borrowings at an annual interest rate equal to the greater of (a) the lender's prime rate plus 1.5% or (b) one-month LIBOR plus 4.0%. We may borrow and repay any amounts borrowed under the line of credit at any time, without penalty or premium prior to April 2014, although we may not borrow more than $2.0 million in two non-consecutive 30-day periods during any 12-month period. Borrowings under the line of credit are collateralized by all of our assets, excluding our intellectual property. The availability of borrowings under this credit line is subject to our compliance with specified reporting and financial covenants. We are currently in compliance with all such covenants.

The following table summarizes our cash and cash equivalents, accounts receivable, working capital and cash flows for the periods indicated:

Our cash at September 30, 2013 was held for working capital purposes. We do not enter into investments for trading or speculative purposes. Our policy is to invest any cash in excess of our immediate requirements in investments designed to preserve the principal balance and provide liquidity. Accordingly, our cash is invested primarily in demand deposit accounts that are currently providing only a minimal return.

Cash used in operations for the years ended December 31, 2011 and 2012 and the nine months ended September 30, 2012 and 2013 resulted primarily from our net losses, which were largely a function of our program marketing and sales efforts, as well as technology and content development to launch new client programs, service and support personnel to support our growing program base, and the amount and timing of client payments.

Because we recognize revenue and collect payments around the academic schedules of our clients' programs, and because these do not generally correlate with monthly or quarterly financial reporting calendars, we have experienced, and may continue to experience, large period-to-period changes in cash, accounts receivable and deferred revenue.

For the year ended December 31, 2011, net cash used in operating activities of $18.6 million consisted of a net loss of $24.9 million, reduced by $2.4 million in non-cash expenses and a $3.9 million net cash inflow from changes in working capital. Non-cash items consisted primarily of depreciation and amortization expense of $1.6 million and non-cash stock compensation charges of $0.8 million. The increase in cash resulting from changes in working capital consisted primarily of an increase in accrued expenses and other current liabilities of $3.4 million, an increase in deferred revenue of $2.1 million, an increase in the rebate reserve of $0.6 million and an increase in the accrual for expected refunds of $0.5 million. These amounts were partially offset by a $1.3 million increase in accounts receivable, a $1.0 million increase in advances to clients and a $0.6 million increase in prepaid expenses.

For the year ended December 31, 2012, net cash used in operating activities of $20.2 million consisted of a net loss of $23.1 million, reduced by $4.3 million in non-cash expenses and increased by a $1.4 million net cash outflow from changes in working capital. Non-cash expenses consisted primarily of depreciation and amortization expense of $2.9 million and non-cash stock

compensation charges of $1.4 million. The decrease in cash resulting from changes in working capital consisted primarily of a $5.0 million decrease in deferred revenue and a $0.3 million increase in prepaid expenses and related party receivables. These amounts were partially offset by a decrease in accounts receivable of $1.1 million, an increase in accounts payable of $1.3 million, an increase in the accrual for expected refunds of $0.2 million and an increase in accrued expenses and other current liabilities of $1.0 million.

For the nine months ended September 30, 2012, net cash used in operating activities of $19.9 million consisted of a net loss of $18.2 million, reduced by $3.1 million in non-cash expenses and increased by a $4.7 million net cash outflow from changes in working capital. Non-cash expenses consisted primarily of depreciation and amortization expense of $2.0 million and non-cash stock compensation charges of $1.0 million. The decrease in cash resulting from changes in working capital consisted primarily of an increase in accounts receivable of $9.7 million and an increase in prepaid expenses of $0.4 million. These amounts were partially offset by a $3.2 million increase in deferred revenue, a $1.2 million increase in accounts payable, a $0.7 million increase in accrued expenses and other current liabilities and a $0.2 million increase in our rebate reserve.

For the nine months ended September 30, 2013, net cash used in operating activities of $17.0 million consisted of a net loss of $22.8 million, reduced by $4.8 million in non-cash items and a $1.0 million net cash inflow from changes in working capital. Non-cash items consisted primarily of depreciation and amortization expense of $3.1 million and non-cash stock compensation charges of $1.7 million. The increase in cash resulting from changes in working capital consisted primarily of an increase in deferred revenue of $12.8 million, an increase in accrued expenses and other current liabilities of $5.1 million, an increase in the accrual for expected refunds of $0.2 million, an increase in accounts payable of $0.2 million and a decrease in advances to clients of $0.2 million. These amounts were partially offset by an increase in accounts receivable of $17.0 million, an increase in prepaid expenses of $0.3 million and a decrease in the rebate reserve of $0.3 million.

For the years ended December 31, 2011 and 2012, net cash used in investing activities was $6.3 million and $5.2 million, respectively. For the nine months ended September 30, 2012 and 2013, net cash used in investing activities was $4.1 million and $5.7 million, respectively. In each period, these expenditures were for equipment, internally developed software and content development and primarily supported the enhanced platform functionality associated with new client program launches.

For the year ended December 31, 2011, net cash provided by financing activities was $32.3 million, of which $31.5 million came from the issuance of our Series C redeemable convertible preferred stock and $0.8 million came from the issuance of convertible debt.

For the nine months ended September 30, 2012 and the year ended December 31, 2012, net cash provided by financing activities was $26.6 million, of which $26.0 million came from the issuance of our Series D redeemable convertible preferred stock and $0.6 million came from the exercise of stock options.

For the nine months ended September 30, 2013, net cash provided by financing activities was $4.9 million, of which $5.0 million came from the issuance of redeemable convertible preferred stock and $0.1 million came from the exercise of stock options. These proceeds were partially offset by $0.2 million used to repurchase shares of common stock from a former employee.

We believe that the net proceeds of this offering, together with our existing cash balances and available borrowing capacity under our revolving line of credit, will be sufficient to meet our minimum anticipated cash requirements through at least the next twelve months. If our available cash balances and net proceeds from this offering are insufficient to satisfy our liquidity requirements, we may seek to sell equity or convertible debt securities or enter into an additional credit facility. The sale of equity and convertible debt securities may result in dilution to our stockholders and those securities may have rights senior to those of our common shares. If we raise additional funds through the issuance of convertible debt securities, these securities could contain covenants that would restrict our operations. We may require additional capital beyond our currently anticipated amounts. Additional capital may not be available on reasonable terms, or at all.

When we enter into new program agreements with our clients, we sometimes commit to certain minimum staffing and spending amounts related to program marketing and sales activities. We believe we are currently in compliance with all such commitments.

We also have non-cancelable operating leases for our office space and furniture and equipment.

We have a $10.0 million line of credit from Comerica Bank but have not yet borrowed any amounts under this facility.

The following table summarizes our obligations under non-cancelable operating leases at December 31, 2012. Future events could cause actual payments to differ from these estimates.

We do not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K, such as the use of unconsolidated subsidiaries, structured finance, special purpose entities or variable interest entities.

In July 2013, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2013-11, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists." This guidance provides financial statement presentation guidance on whether an unrecognized tax benefit must be presented as either a reduction to a deferred tax asset or separately as a liability. ASU No. 2013-11 will be effective for interim or annual periods beginning after December 15, 2013, which we will adopt as of January 1, 2014. The adoption of this guidance is not expected to have a material impact on our financial condition, results of operations or disclosures.

In May 2011, the FASB issued ASU 2011-04, "Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS." ASU 2011-04 represents the converged guidance of the FASB and the International Accounting Standards Board on fair value measurement and has resulted in common requirements for measuring fair value and for disclosing information about fair value measurements, including a consistent meaning of the term "fair value." We adopted ASU 2011-04 effective January 1, 2012 and have retrospectively applied the provisions of ASU 2011-04 for all periods presented.

Market risk is the risk of loss to future earnings, values or future cash flows that may result from changes in the price of a financial instrument. The value of a financial instrument may change as a result of changes in interest rates, exchange rates, commodity prices, equity prices and other market changes. Our exposure to market risk related to changes in foreign currency exchange rates is deemed low as further described below. In addition, we do not use derivative financial instruments for speculative, hedging or trading purposes, although in the future we may enter into exchange rate hedging arrangements to manage the risks described in the succeeding paragraphs.

We are subject to interest rate risk in connection with potential borrowings available under our $10 million bank line of credit procured in April 2012. Borrowings under the revolving line of credit bear interest at variable rates. Increases in the LIBOR or our lender's prime rate would increase the amount of interest payable on any borrowings outstanding under this line of credit. Through September 30, 2013, we have not borrowed any amounts under this line of credit.

All of our current client contracts are denominated in U.S. dollars. Therefore, we have minimal, if any, foreign currency exchange risk with respect to our revenue.

We have an office in Hong Kong for program marketing and student support and incur expenses related to its operations. The functional currency of this office is Hong Kong Dollars, which exposes us to changes in foreign currency exchange rates. Hong Kong Dollar currency rates have historically been tied to the U.S. Dollar, however. In addition, because of the small size of our Hong Kong office and the relatively nominal amount of our expenses denominated in Hong Kong Dollars, we do not expect any material effect on our financial position or results of operations from fluctuations in exchange rates. However, our exposure to foreign currency exchange risk may change over time as business practices evolve, and if our exposure increases, adverse movement in foreign currency exchange rates could have a material adverse impact on our financial results.

We do not believe that inflation has had a material effect on our business, financial condition or results of operations. Through our pricing model, we benefit from price increases implemented by our clients, and we continue to monitor inflation-driven cost increases in order to minimize their effects through productivity improvements and cost containment efforts. If our costs were to become subject to significant inflationary pressures, the price increases implemented by our clients, and our own pricing strategies, might not fully offset the higher costs. Our inability or failure to do so could harm our business, financial condition and results of operations.

Our clients deploy our platform to offer high quality educational content, instructor-led classes averaging ten students per session in a live, intimate and engaging setting, and a rich social networking experience, all accessible through proprietary web-based and mobile applications. This technology challenges every student to learn from the front row and every faculty member to engage students in new and innovative ways. We believe that our platform is flexible, easy to use, highly scalable and characterized by a high level of availability and security. The total course enrollments in our clients' programs grew from 12,831 during the twelve months ended December 31, 2011 to during the twelve months ended December 31, 2013, representing a compound annual growth rate of %. We measure total course enrollments in our clients' programs by determining, for each of the courses offered during a particular period, the number of students enrolled in that course. From our inception through September 30, 2013, a total of 8,383 unique students had enrolled in our clients' programs.

Our clients are leading nonprofit colleges and universities, and seven of our eight clients offering 2U-enabled graduate programs were ranked by U.S. News and World Report among the top 75 undergraduate institutions in its 2012 National University Rankings. Through our uncompromising focus on quality and deep understanding of the higher education environment, we believe we have become not only a valued provider of the technology services our clients use to implement and manage their critical online education operations, but also a trusted steward of their brands.

Our clients use our platform to offer full graduate degree programs online. Currently, eight well-recognized nonprofit colleges and universities offer graduate degrees through our platform, including the University of Southern California, Georgetown University, the University of North Carolina at Chapel Hill and the University of California, Berkeley. Additionally, we have opportunities to extend our reach into the international, undergraduate and doctoral higher education markets.

We believe that by delivering high quality degree programs and courses online using our platform, our clients can improve educational outcomes and career opportunities for a larger number of students, and by doing so, broaden the global reach of their brands while maintaining their academic rigor and admissions standards. By deploying our platform, clients give their students, who receive the same degree or credit as their on-campus counterparts and generally pay equivalent tuition, the option of pursuing their educations without potentially incurring the burden of moving, leaving existing employment or giving up family and community support networks. This can substantially reduce the total cost of obtaining a degree and lower a student's

total debt burden. It can also allow students for whom relocating is not an option to obtain a higher quality education than they might be able to access in their local communities.

We provide a suite of technology-enabled services, bundled with our platform, that are designed to promote adoption and usage of our software-as-a-service, or SaaS, solutions by clients and improve enrollment and retention of their students. We have primary responsibility for identifying qualified students for our clients' programs, generating potential student interest in the programs and driving applications to the programs. We have developed sophisticated digital marketing and student acquisition capabilities, and we work closely with our clients to help them create highly engaging multimedia instructional content for delivery on our platform. We also include other services that support the complete lifecycle of a higher education program or course, including facilitating in-program field placements and providing technical support. In addition, our platform provides clients with real-time data and deep analytical insight related to student performance and engagement, student and faculty satisfaction, and enrollment. We provide the significant domain expertise and operating capacity our clients require to scale and operate successfully in the online environment.

Our client relationships are characterized by close, ongoing collaboration with faculty and administration, as well as a deep integration between our clients' academic missions and operations and our technology and services. Our compensation from our clients consists primarily of a specified share of the tuition and fees paid to our clients by students in the programs we enable, which we believe aligns our interests with those of our clients. This revenue model, combined with long contractual terms, enables us to make the investment in technology, integration, content production, program marketing, student and faculty support and other services necessary to create large, successful programs. In addition, our proprietary program-selection algorithm enables us to deploy capital with greater confidence as we can systematically identify programs that we believe have the highest probability of success for our clients.

Our client contracts generally have initial terms between 10 and 15 years in length, and, since our inception, all of the clients that have engaged us remain active. A significant percentage of our annual revenue is related to students returning to our clients' programs after their first semester. In the first nine months of 2013, 78% of our revenue was related to students who had enrolled and completed their first semester prior to the start of the year. Of revenue recognized after March 31, 2013, 87% was related to students who had enrolled and completed their first semester before that date. We believe this high percentage of revenues attributable to returning students contributes to the predictability and recurring nature of our business.

We have achieved significant growth in a relatively short period of time. For the years ended December 31, 2011 and 2012 and the nine months ended September 30, 2013, our revenues were $29.7 million, $55.9 million and $58.3 million, respectively. For the years ended December 31, 2011 and 2012 and the nine months ended September 30, 2013, our net losses were $24.9 million, $23.1 million and $22.8 million, respectively, and our Adjusted EBITDA loss, a non-GAAP measure, was $22.5 million, $18.8 million and $18.0 million, respectively. For a reconciliation of Adjusted EBITDA loss to net loss, see "Selected Consolidated Financial Data—Adjusted EBITDA."

around the world are increasingly recognizing the importance of education in a knowledge-based economy.

During the period of transition, providers of higher education are facing three fundamental challenges. First, institutions recognize that the shift in education towards digital media is altering the competitive landscape. The internet is allowing new forms of instructional content and courses to proliferate, and education service providers who are unable to navigate the online environment and offer a compelling value proposition to students may cede market share to their competitors.

Second, many institutions recognize that they do not possess the human or technological resources necessary to implement a successful online learning strategy. Scaling degree programs

online requires robust technology platforms and support services, significant expertise in digital marketing and recruiting, and the ability to create highly engaging multimedia content. These are not competencies that colleges and universities have traditionally developed among their faculty and staff.

Third, many institutions face increasing financial challenges that prevent them from investing more heavily in developing technology-based solutions. In the United States, funding and endowment returns have declined in recent years. For example, in 2012, total state support for higher education declined by 7.6%, according to an annual report from the State Higher Education Executive Officers Association. At the same time, the National Association of College and University Business Officers reported in 2013 that the average return on higher education endowments in 2012 was negative for the third time in five years. Given this environment, institutions of higher education are actively looking for ways to increase revenue, such as by raising tuition or increasing enrollment.

We believe that an increasing number of institutions of higher education globally will implement online learning strategies to extend their reach and remain relevant to the needs of students. We believe we have a significant opportunity to help leading nonprofit colleges and universities implement and scale high quality online degree programs, as well as protect and deliver on the promise of their brands. We believe that the transition of the higher education market to cloud-based online delivery is just beginning, and that we are uniquely positioned to capture market share by delivering compelling, value-producing services to these institutions. Our cloud-based SaaS solutions provide nonprofit colleges and universities with the ability to capitalize on the disruptive forces of online education while extending the academic reach of their programs. By doing so, our clients are able not only to fulfill their missions but also to develop significant new sources of revenue through meaningful additional enrollments.

We provide a cloud-based SaaS platform and bundled technology-enabled services that enable leading nonprofit colleges and universities to deliver high quality online degree programs and courses. Our platform supports a wide range of university functions, such as enabling high quality educational content, instructor-led classes averaging ten students per session in a live, intimate and engaging setting, and a rich social networking experience, all accessible through proprietary web-based and mobile applications. We assist our clients in developing engaging, premium quality academic content that we host on our platform. Our platform also serves as the hub for all student and faculty interaction, and incorporates a live, or synchronous, learning experience, with pre-produced, or asynchronous, educational content and dynamic social networking. Furthermore, we offer services that support the complete lifecycle of a higher education program or course, including attracting students, facilitating in-program field placements and providing technical support. Our clients retain control of, and responsibility for, admissions, financial aid, faculty, curriculum and the direct delivery of academic services such as teaching, grading and assessment. We integrate our platform with the various student information and other operating systems our clients use to manage functions within their institutions. In addition, our platform provides our clients with real-time data and deep analytical insight related to student performance and engagement, student and faculty satisfaction, and enrollment. We believe that our platform is flexible, easy to use, highly scalable and characterized by a high level of availability and security.

We intend to continue our industry leadership as a provider of cloud-based SaaS solutions that enable leading nonprofit colleges and universities to deliver education online. Our approach to

growth is disciplined and focused on long-term success. The principal elements of our strategy are to:

Our solutions consist of our cloud-based SaaS platform and bundled technology-enabled services.

Our innovative online learning platform, Online Campus, enables our clients to offer high quality educational content together with instructor-led classes in a live, intimate and engaging setting, averaging ten students per session, all accessible through proprietary web-based and mobile applications. This virtual classroom experience is enhanced by extensive social networking capabilities that enable ongoing interaction and collaboration. Online Campus allows our clients to

provide a personalized learning environment for faculty and students as well as a robust online educational community.

Our content management system enables us and our clients to author, review and deploy asynchronous content into their online programs. The content management system includes a set of project management and collaboration tools that allow clients to seamlessly integrate the work of faculty with that of our course production and content development staff.

Our proprietary application system, known as the Online Application and Recommendation System, or OARS, automates the online application process for prospective students of our clients' programs. OARS is integrated with the primary marketing site for each program, directly funneling prospective students into each client's existing application process and providing automated workflow for that process. Additionally, our system automates faculty review and student notification to improve the efficiency of these processes.

We have developed customer relationship management deployments configured for each client's specific program characteristics. Each deployment serves as the data hub for scheduling, student acquisition, student application, faculty admissions review, enrollment and student support for each program. Our clients and our staff, as appropriate, can review, maintain and track this information to ensure that functions driven both by the client and by us are properly coordinated.

We offer a comprehensive suite of technology-enabled services that support the complete lifecycle of a higher education program or course. These services include the following:

Our cloud-based SaaS platform is designed to deliver an exceptional end-user experience in a secure environment. To increase the speed at which we develop and enhance our solutions, we use open-source technology and custom development of our own instructional design tools and learning components.

Our technology stack resides completely in the cloud, with a high level of security and horizontal scalability. We work with Amazon Web Services, our cloud hosting provider, to ensure high levels of redundancy and general preparedness. We have the ability to manage hundreds of server instances in Amazon Web Services and elsewhere through our automated deployment technologies.

Our application programming interface, or API, is at the core of all of our applications, providing a standardized way to provision, manage, engage and deliver content to students, faculty and administrators. The API supports advanced analytics that allow us to search and analyze student usage data to evaluate course content, inform continuous technology development and improve user experiences. The API manages authentication and access for our entire technology stack and is designed to manage and interface with new technologies as they are introduced.

Our development process follows best practices in web security, including formal design reviews by operations security consultants, threat modeling and risk assessments. All deployed software undergoes recurring penetration testing performed by certified industry experts. Our security risk assessment reviews begin during the design phase and continue through ongoing operations.

All of our applications and application components are designed from the ground up to produce significant, readable and interpretable data to centralized systems in the form of monitors and logs that allow us to proactively identify and mitigate potential capacity, performance and security issues. We design our platform to industry security standards as well as requirements set out in current applicable regulations and standards.

We dedicate the bulk of our program marketing and sales efforts to acquiring students for our clients' programs, and have developed highly sophisticated internet-based program marketing and student acquisition capabilities. At September 30, 2013, we had 255 employees in our program marketing and sales function.

Our model is not dependent on launching a large number of new programs per year, either with new or existing clients. Accordingly, we do not maintain a sales force targeted at new client or program acquisition. Rather, our new clients and programs are largely generated through a direct approach by our senior management to selected colleges and universities. We use a proprietary program selection algorithm to develop our pipeline of target clients. This data-centric model uses internally generated, publicly available and purchased data on market size, selectivity, student demographics, competition and other factors to identify combinations of colleges and universities and programs we believe will have the best prospects of long-term success.

The following table sets forth our current client base and graduate degree programs and their respective actual or expected program launch dates:

College/University	Current Degree(s)	Program Launch Date

University of Southern California — Rossier School of Education	Master of Arts in Teaching Master of Arts in Teaching, TESOL Master of Education in Advanced Instruction	April 2009
University of Southern California — School of Social Work	Master of Social Work	October 2010
Georgetown University — School of Nursing and Health Sciences	Master of Science in Nursing	March 2011
University of North Carolina at Chapel Hill — Kenan-Flagler Business School	Master of Business Administration	July 2011
Washington University in St. Louis — School of Law	Master of Laws in U.S. Law	January 2013
University of North Carolina at Chapel Hill — School of Government	Master of Public Administration	January 2013
The George Washington University — School of Public Health and Health Services	Master of Public Health	June 2013
American University — School of International Service	Master of Arts in International Relations	May 2013
Simmons College — School of Nursing and Health Sciences	Master of Science in Nursing	October 2013
University of California, Berkeley — School of Information	Master of Information and Data Science	January 2014
The George Washington University — School of Public Health and Health Services	Executive Master of Health Administration	April 2014

In addition, we are piloting a program supporting a consortium of U.S. and international universities offering online undergraduate courses to their students for credit.

Our client contracts generally have initial terms of 10 to 15 years and do not permit either party to terminate for convenience. Most contracts impose liquidated damages for a client's non-renewal, unless the client otherwise terminates due to our uncured breach. We own most of the leads we generate for each of our client's programs. Each of our clients owns all of the academic content that we help them develop, although we are generally not obligated to develop content that will be functional anywhere but on our platform.

Our contracts also set forth the parties' respective rights to offer competitive programs. For example, some contracts permit us to offer competitive programs with other schools whose potential students are not academically qualified or otherwise interested in the program we offer with our client. Other contracts prohibit us from offering competitive programs with a specific list of schools, whether a certain number as listed on U.S. News & World Report's "best" schools list or a specifically enumerated list of schools negotiated with our client. One contract does not restrict our ability to offer competitive programs. In addition, any limitation on our ability to offer competitive programs becomes inapplicable if a client either refuses to scale the program to accommodate all

students qualifying for admission into the program, or raises the program admissions standards above those at the time of contract execution. In addition, our contracts generally prohibit our clients from offering any online competitive program.

The overall market for technology solutions that enable higher education providers to deliver education online is highly fragmented, rapidly evolving and subject to changing technology, shifting needs of students and educators and frequent introductions of new methods of delivering education online. Several competitors provide solutions that compete with some of the capabilities of our platform. Two such competitors, EmbanetCompass and Deltak, were acquired in 2012 by Pearson and John Wiley & Sons, respectively, both of which are large education and publishing companies. There are also several new and existing vendors providing some or all of the services we provide to other segments of the education market, and these vendors may pursue the institutions we target. In addition, nonprofit colleges and universities may elect to continue using or develop their own online learning solutions in-house.

We expect that the competitive landscape will change as the market for online college programs at nonprofit institutions matures. We believe the principal competitive factors in our market include the following:

We believe we compete favorably on the basis of these factors. Our ability to remain competitive will depend, to a great extent, upon our ability to consistently deliver high quality technology solutions, meet client needs for content development, and acquire, support and retain students.

We protect our intellectual property by relying on a combination of copyrights, trademarks, trade secrets, patent applications, domain names and contractual agreements. For example, we rely on trademark protection in the United States and various foreign jurisdictions to protect our rights to various marks, including 2U, and other distinctive logos associated with our brand. We also have one patent application pending in the United States, which is directed to computer-implemented processes that facilitate asynchronous student responses to teacher questions, which is a process we use in our Bi-Directional Learning Tool, a technology we initially created to facilitate the Socratic method of teaching law.

We ensure that we own intellectual property created for us by signing agreements with employees, independent contractors, consultants, companies, and any other third party that creates intellectual property for us that assign any intellectual property rights to us.

We have also established business procedures designed to maintain the confidentiality of our proprietary information, including the use of confidentiality agreements with employees, independent contractors, consultants and companies with which we conduct business.

We continue to evaluate developing and expanding our intellectual property rights in patents, trademarks and copyrights, as available through registration in the United States and internationally.

For important additional information related to our intellectual property position, please review the information set forth in "Risk Factors — Risks Related to Intellectual Property."

The higher education industry is heavily regulated. Institutions of higher education that award degrees and certificates to signify the successful completion of an academic program are subject to regulation from three primary entities: the U.S. Department of Education, or DOE, accrediting agencies and state licensing authorities. Each of these entities promulgates and enforces its own laws, regulations and standards, which we refer to collectively as education laws.

We contract with postsecondary institutions that are subject to education laws. In addition, we ourselves are required to comply with certain education laws as a result of our role as a service provider to institutions of higher education, either directly or indirectly through our contractual arrangements with clients. Our failure, or that of our clients, to comply with education laws could adversely impact our operations. As a result, we work closely with our clients to maintain compliance with education laws.

Under the Higher Education Act of 1965, as amended, or the HEA, institutions offering postsecondary education must comply with certain laws and related regulations promulgated by the DOE in order to participate in the Title IV federal student financial assistance programs. All of our clients participate in the Title IV programs.

The HEA and the regulations promulgated thereunder are frequently revised, repealed or expanded. Congress historically has reauthorized and amended the HEA in regular intervals, approximately every five to six years, with the next re-authorization process expected to formally begin in 2014.

Although we are not considered an institution of higher education and we do not directly participate in Title IV programs, we are required to comply with certain regulations promulgated by the DOE as a result of our role as a service provider to institutions that do participate in Title IV programs. These include, for example, regulations governing student privacy under Family Educational Rights and Privacy Act, or FERPA. The most material obligations stem from new rules and revisions to existing regulations promulgated by the DOE in 2010 as part of the so-called "program integrity" rules.

While the program integrity rules were targeted at for-profit institutions of higher education, most apply equally to traditional colleges and universities such as our clients, and they apply in particular to institutions contracting with outside vendors to provide services, particularly in connection with distance education. These rules include principally the incentive compensation rule, the misrepresentation rule, the written arrangements rules and state authorization requirements. Many of the program integrity rules were subsequently challenged, but survived, largely intact, in 2012 in a decision issued by the U.S. Court of Appeals for the District of Columbia, Association of

Private Sector Colleges and Universities v. Duncan. The more significant program integrity rules applicable to us or our clients are discussed in further detail below.

The HEA provides that any institution that participates in the Title IV federal student financial assistance programs must agree with the DOE that the institution will not provide any commission, bonus or other incentive payment to any person or entity engaged in any student recruiting or admission activities.

As part of the program integrity rules, the DOE issued revised regulations regarding incentive compensation effective July 1, 2011. Under the revised regulations, each higher education institution agrees that will not "provide any commission, bonus, or other incentive payment based in any part, directly or indirectly, upon success in securing enrollments or the award of financial aid, to any person or entity who is engaged in any student recruitment or admission activity, or in making decisions regarding the award of title IV, HEA program funds." Pursuant to this rule, we are prohibited from offering our covered employees, which are those involved with or responsible for recruiting or admissions activities, any bonus or incentive-based compensation based on the successful recruitment, admission or enrollment of students into a postsecondary institution.

In addition, the revised rule initially raised a question as to whether our company itself, as an entity, is prohibited from entering into tuition revenue-sharing arrangements with clients. On March 17, 2011, the DOE issued official agency guidance, known as a "Dear Colleague Letter," or the DCL, providing guidance on this point. The DCL states that "[t]he Department generally views payment based on the amount of tuition generated as an indirect payment of incentive compensation based on success in recruitment and therefore a prohibited basis upon which to measure the value of the services provided" and that "[t]his is true regardless of the manner in which the entity compensates its employees." But the DCL also provides an important exception to the ban on tuition revenue-sharing arrangements between institutions and third parties. According to the DCL, the DOE does not consider payment based on the amount of tuition generated by an institution to violate the incentive compensation ban if the payment compensates an "unaffiliated third party" that provides a set of "bundled services" that includes recruitment services, such as those we provide. Example 2-B in the DCL is described as a "possible business model" developed "with the statutory mandate in mind." Example 2-B describes the following as a possible business model:

The DCL guidance indicates that that an arrangement that complies with Example 2-B will be deemed to be in compliance with the incentive compensation provisions of the HEA and the DOE's regulations. Our business model and contractual arrangements with client institutions closely follow Example 2-B in the DCL. In addition, we assure that none of our "covered employees" is paid any bonus or other incentive compensation in violation of the rule.

The HEA prohibits an institution that participates in the Title IV programs from engaging in any "substantial misrepresentation" regarding three broad subject areas: (1) the nature of the school's education programs, (2) the school's financial charges and (3) the employability of the school's graduates. In 2010, as part of the program integrity rules, the DOE revised its regulations in order to significantly expand the scope of the misrepresentation rule. Although some of the DOE's most expansive amendments to the misrepresentation rule were overturned by the courts in 2012, most of the 2010 amendments survived and remain in effect.

Under the new rule, "misrepresentation" is defined as any false, erroneous or misleading statement, written, visual or oral. This includes even statements that "have the likelihood or tendency to deceive." Therefore, a statement need not be intentionally deceitful to qualify as a misrepresentation. "Substantial misrepresentation" is defined loosely as a misrepresentation on which the person to whom it was made could reasonably be expected to rely, or has reasonably relied, to that person's detriment.

The new regulation also expand the scope of the rule to cover statements made by any representative of an institution, including agents, employees and subcontractors, and statements made directly or indirectly to any third party, including state agencies, government officials or the public, and not just to students or prospective students.

Violations of the misrepresentation rule are subject to various sanctions by the DOE and violations may be used as a basis for legal action by third parties. As a result, we and our employees and subcontractors, as agents of our clients, must use a high degree of care to comply with the misrepresentation rule and are prohibited by contract from making any false, erroneous or misleading statements about our clients. To avoid an issue under the misrepresentation rule, we assure that all marketing materials are approved in advance by our clients before they are used by our employees and we carefully monitor our subcontractors.

Accrediting agencies primarily examine the academic quality of the instructional programs of an educational institution, and a grant of accreditation is typically viewed as confirmation that an institution or an institution's programs meet generally accepted academic standards. Accrediting agencies also review the administrative and financial operations of the institutions they accredit to ensure that each institution has the resources to perform its educational mission. The DOE also relies on accrediting agencies to determine whether institutions' educational programs qualify the institutions to participate in Title IV programs.

In addition to institutional accreditation, colleges and universities may require specialized programmatic accreditation for particular educational programs. Many states and professional associations require professional programs to be accredited, and require individuals to have graduated from accredited programs in order to sit for professional license exams. Programmatic accreditation, while not a sufficient basis for institutional Title IV Program certification by the DOE, assists graduates to practice or otherwise secure appropriate employment in their chosen field. Common fields of study subject to programmatic accreditation include teaching and nursing.

Although we are not an accredited institution and are not required to maintain accreditation, accrediting agencies are responsible for reviewing an accredited institution's third-party contracts with service providers like us and may require an institution to obtain approval from or to notify the accreditor in connection with such arrangements. One purpose of the notification and approval requirements is to verify that the accredited institution remains responsible for providing academic instruction leading to a credential and provides oversight of other activities undertaken by third

parties like us that are within the scope of its accreditation. We work closely with our clients to assure that the standards of their respective accreditors are met and are not adversely impacted by us.

Accrediting agencies are also responsible for assuring that any "written arrangements" to outsource academic instruction meet accrediting standards and related regulations of the DOE. Our operations are generally not subject to such "written arrangements" rules because academic instruction is provided by our client institutions and not by us.

Each state has at least one licensing agency responsible for the oversight of educational institutions operating within its jurisdiction. Continued approval by such agencies is necessary for an institution to operate and grant degrees, diplomas or certificates in those states. Moreover, under the HEA, approval by such agencies is necessary to maintain eligibility to participate in Title IV programs. The level of regulatory oversight varies substantially from state to state.

We and our clients may be subject to regulation in each state in which we or they own facilities, provide distance education or recruit students. State laws establish standards for, among other things, student instruction, qualifications of faculty, location and nature of facilities and financial policies. The need to comply with applicable state laws and regulations may limit or delay our ability to market programs or offer new degree programs of our clients.

State regulatory requirements for online education are inconsistent between states, change frequently and, in some instances, are outmoded. In addition, the interpretation of state authorization regulations is subject to substantial discretion by the state agency responsible for enforcing the regulations. Some states have enacted legislation or issued regulations that specifically address online educational programs, some of which may affect our operations.

As part of the program integrity rules, the DOE required, among other things, that an institution offering distance learning or online programs secure the approval of those states which require such approval and provide evidence of such approval to the DOE upon request. This regulation dramatically increased the importance of state authorization because failure to obtain it could result in an obligation to return federal funds received by an institution. On July 12, 2011, the U.S. District Court for the District of Columbia struck down those portions of regulations requiring proof of state approval for online education programs on procedural grounds, and that holding was upheld by the United States Court of Appeals for the District of Columbia Circuit. However, on November 19, 2013, the DOE announced that it would consider issuing new regulations regarding state authorization for programs offered through distance education. As a result, the DOE is widely expected to reinstate the 2010 rule, and may create new compliance obligations for institutions that offer educational programs abroad.

We monitor state law developments closely and work closely with our clients to assist them with obtaining any required approvals.

Our activities on behalf of institutions are also subject to other federal and state laws. These regulations include, but are not limited to, consumer marketing and unfair trade practices laws and regulations, including those promulgated and enforced by the Federal Trade Commission, as well as federal and state data protection and privacy requirements.

As of September 30, 2013, we had 545 full-time employees and 17 part-time employees. None of our employees are represented by a labor union or covered by a collective bargaining agreement. We consider our relations with our employees to be good.

We lease approximately 65,700 square feet of space for our corporate headquarters in Landover, Maryland pursuant to a lease that expires in July 2018. We also lease an aggregate of approximately 22,500 square feet of space in New York, Los Angeles, Chapel Hill, St. Louis and Hong Kong. We are currently evaluating options for additional space in Landover and New York as needed to accommodate our growth, and we believe that we will be able to obtain such space on acceptable, commercially reasonable terms.

From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. We are not presently a party to any material legal proceedings, nor are we a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition or cash flows.

The following table sets forth information concerning our executive officers and directors, including their ages as of September 30, 2013:

Name		Position

Executive Officers:
Christopher J. Paucek	42	Chief Executive Officer and Director
Robert L. Cohen	48	President and Chief Operating Officer
Catherine A. Graham	53	Chief Financial Officer
Jeff C. Rinehart	38	Chief Marketing Officer
James Kenigsberg	37	Chief Technology Officer
Non-Management Directors:
Paul A. Maeder	59	Director and Chairman of the Board
Mark J. Chernis.	46	Director
Timothy M. Haley	46	Director
John M. Larson	62	Director
Michael T. Moe	51	Director
Robert M. Stavis	50	Director

Mr. Paucek is a co-founder of our company and has served as our Chief Executive Officer since January 2012 and as a member of our board of directors since March 2012. He previously served as our President and Chief Operating Officer from April 2008 through December 2011. Prior to 2U, Mr. Paucek served as the chief executive officer of Smarterville, Inc., the parent company of Hooked on Phonics, from 2007 until 2008. From 2004 to 2007, Mr. Paucek served as vice president of business development and president of Educate Products for Educate, Inc. In 2004, Mr. Paucek served as deputy campaign manager for the successful re-election campaign of United States Senator Barabra Mikulski. Mr. Paucek began his career in 1993 by co-founding Cerebellum Corporation, the media company behind the award-winning educational Standard Deviants television program and video series, and he led Cerebellum as co-chief executive officer until 2003. Mr. Paucek holds a B.A. from The George Washington University and is currently enrolled in our MBA@UNC program at the UNC Kenan-Flagler Business School of the University of North Carolina at Chapel Hill. Our board of directors believes that Mr. Paucek's knowledge of our company as one of our co-founders, and his broad experience leading education companies, enable him to make valuable contributions to the board.

Mr. Cohen has served as our President since November 2013 and as our Chief Operating Officer since April 2012 and previously served as our Chief Financial Officer from our inception in 2008 until April 2012. From 2001 to 2008, Mr. Cohen held a number of senior roles at The Princeton Review, including as executive vice president of strategic development and executive vice president and general manager of K12 Services. From 1985 to 2001, Mr. Cohen founded and operated a franchise of The Princeton Review, before selling the franchise back to that company. Mr. Cohen attended Princeton University.

Ms. Graham has served as our Chief Financial Officer since April 2012. Prior to that, she served as chief financial officer for Online Resources Corporation, a financial technology company, from 2002 to April 2012. Prior to that, she served as chief financial officer for VIA NET.WORKS, Inc., an internet services and web hosting provider, from 1998 to 2002. Previously, she served in senior financial positions with Yurie Systems, a telecommunications equipment manufacturer, and other public companies, as well as with several commercial banks. Ms. Graham holds a B.A. from the University of Maryland and an M.B.A. from Loyola College of Maryland.

Mr. Rinehart has served as our Chief Marketing Officer since March 2011. Prior to joining 2U, from 2000 to 2011, Mr. Rinehart worked for Capital One Financial Corporation, a financial services company in a series of progressively more senior leadership roles in its Marketing and Analysis division, including most recently as vice president of marketing strategy for Capital One's consumer credit card division. Mr. Rinehart holds a B.S. and a master's degree in Economics from East Carolina University.

Mr. Kenigsberg has served as our Chief Technology Officer since July 2010 and previously as Chief Information Officer from September 2008 to June 2010. From 2000 to 2008, Mr. Kenigsberg held various leadership positions at The Princeton Review, including from 2004 to 2008 as vice president of application development and product development. Prior to that, he served as technical project manager at Ogilvy & Mathers in 2000 and as project engineer at Thomson Reuters from 1998 to 2000. Mr. Kenigsberg attended Hunter College.

Mr. Maeder has served on our board of directors since February 2010 and as chairman of our board since November 2012. Mr. Maeder is a General Partner of Highland Capital Partners, a venture capital firm he co-founded in 1988. He currently serves of the boards of several private companies. He holds a B.S.E. in Aerospace and Mechanical Sciences from Princeton University, an M.S.E. in Mechanical Engineering from Stanford University and a M.B.A. from the Harvard Business School. Our board of directors believes that Mr. Maeder's broad experience investing in the online higher education and software industries and his experience serving as a board member for numerous companies enable him to make valuable contributions to the board.

Mr. Chernis has served on our board of directors since January 2009. Mr. Chernis has served as Chief Operating Officer of the K12 Technology division of Pearson Education since June 2011 and previously was the president and chief operating officer of SchoolNet, Inc. from March 2008 until its acquisition by Pearson in 2011. Mr. Chernis has held various positions at The Princeton Review beginning in 1984, most recently serving as its President from 1995 to November 2007. Mr. Chernis holds a B.A. from Vassar College. Our board of directors believes that Mr. Chernis's deep knowledge of the education industry and his experience with The Princeton Review enable him to make valuable contributions to the board.

Mr. Haley has served on our board of directors since February 2010. Mr. Haley is a founding partner of Redpoint Ventures, a venture capital firm, and has been a Managing Director of the firm since 1999. Mr. Haley was also the managing director of Institutional Venture Partners, a venture capital firm, from 1998 to 2010. From 1986 to 1998, Mr. Haley was the president of Haley Associates, an executive recruiting firm in the high technology industry. Mr. Haley currently serves on the board of directors of Netflix, Inc. and several private companies. Mr. Haley holds a B.A. from Santa Clara University. Our board of directors believes that Mr. Haley's broad experience investing in software, consumer internet and digital media industries, and his experience serving as a board member for numerous companies, enable him to make valuable contributions to the board.

Mr. Larson has served on our board of directors since June 2009. Mr. Larson has served as the Executive Chairman and Chief Executive Officer of Triumph Higher Education Group, Inc., a company that advises and invests in domestic and international education companies, since 2010. He also serves as executive chairman of its subsidiary Triumph Higher Education Group, a culinary education company. Mr. Larson founded and served as President, Chief Executive Officer and director of Career Education Corporation, or CEC, a publicly held post-secondary education company, from its inception in 1994 through 2006, including as Chairman of the Board from 2000 to 2006. He continues to serve as Chairman Emeritus of CEC. He holds a B.S. in Business Administration from the University of California at Berkeley. Our board of directors believes that Mr. Larson's deep knowledge of the higher education industry and his experience founding and leading a publicly held education company enable him to make valuable contributions to the board.

Mr. Moe has served on our board of directors since February 2013. Mr. Moe is the co-founder of GSV Capital Corp. and has served as its Chief Executive Officer and Chief Investment Officer and on its board of directors since September 2010. Prior to founding GSV, Mr. Moe co-founded and served as chairman and chief executive officer of ThinkEquity Partners, an asset management and investment banking firm focusing on venture capital, entrepreneurial and emerging growth companies, from 2001 to September 2008. Before ThinkEquity, he held positions as head of global growth research at Merrill Lynch and head of growth research and strategy at Montgomery Securities. Mr. Moe holds a B.A. in Political Science and Economics from the University of Minnesota. Our board of directors believes that Mr. Moe's broad experience investing in emerging growth equity markets and his experience serving as a board member for numerous companies enable him to make valuable contributions to the board.

Mr. Stavis has served on our board of directors since April 2011. Mr. Stavis has been a partner at Bessemer Venture Partners, a venture capital firm, since 2000. Prior to joining Bessemer, Mr. Stavis was an independent private equity investor. Prior to that, he served in various positions at Salomon Smith Barney, including as co-head of global arbitrage trading. Mr. Stavis holds a B.A.S. in Engineering from the University of Pennsylvania's School of Engineering and Applied Sciences and a B.S. in Economics from the University of Pennsylvania's Wharton School. Our board of directors believes that Mr. Stavis's broad experience investing in the emerging software technology industry and his experience serving as a board member for numerous companies enable him to make valuable contributions to the board.

Our board of directors currently consists of seven members. Our directors were elected to and currently serve on the board pursuant to a voting agreement among us and several of our largest stockholders. This agreement will terminate upon the completion of this offering, after which there will be no further contractual obligations regarding the election of our directors.

In accordance with our amended and restated certificate of incorporation, which will become effective upon the closing of this offering, our board of directors will be divided into three classes, each of which will consist, as nearly as possible, of one-third of the total number of directors constituting our entire board and which will serve staggered three-year terms. At each annual meeting of stockholders, the successors to directors whose terms then expire will be elected to serve from the time of election and qualification until the third annual meeting following election. Our directors will be divided among the three classes as follows:

Our amended and restated bylaws, which will become effective upon completion of this offering, will provide that the authorized number of directors may be changed only by resolution approved by a majority of our board of directors. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors.

The division of our board of directors into three classes with staggered three-year terms may delay or prevent a change of our management or a change in control.

Our board of directors has undertaken a review of the independence of the directors and considered whether any director has a material relationship with us that could compromise his ability to exercise independent judgment in carrying out his responsibilities. As a result of this review, our board of directors determined that Messrs. Chernis, Haley, Larson, Maeder, Moe and Stavis, representing six of our seven directors, are "independent directors" as defined under applicable NASDAQ rules.

Our board of directors has an independent chairman, Mr. Maeder, who has authority, among other things, to call and preside over board meetings, including meetings of the independent directors, and to set meeting agendas. Accordingly, the board chairman has substantial ability to shape the work of the board. We believe that separation of the positions of board chairman and chief executive officer reinforces the independence of the board in its oversight of the business and affairs of the company. In addition, we believe that having an independent board chairman creates an environment that is more conducive to objective evaluation and oversight of management's performance, increasing management accountability and improving the ability of the board to monitor whether management's actions are in the best interests of the company and its stockholders. As a result, we believe that having an independent board chairman enhances the effectiveness of the board as a whole.

Our board of directors has established an audit committee, a compensation committee and a nominating and corporate governance committee, each of which has the composition and responsibilities described below. From time to time, the board may establish other committees to facilitate the management of our business. A copy of each committee's charter will be posted on our website, www.2u.com, upon the completion of this offering.

Our audit committee reviews our internal accounting procedures and consults with and reviews the services provided by our independent registered public accountants. Our audit committee consists of three directors, Messrs. , and , and our board of directors has determined that each of them is independent within the meaning of the applicable NASDAQ listing requirements and the independence requirements contemplated by Rule 10A-3 under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Mr. is the chairman of the audit committee and our board of directors has determined that Mr. is an "audit committee financial expert" as defined by SEC rules and regulations. Our board of directors has determined that the composition of our audit committee meets the criteria for independence under, and the functioning of our audit committee complies with, the applicable requirements of the Sarbanes-Oxley Act, the NASDAQ Global Market listing requirements and SEC rules and regulations. We intend to continue to evaluate the requirements applicable to us and we intend to comply with the future requirements to the extent that they become applicable to our audit committee. The principal duties and responsibilities of our audit committee include:

Our compensation committee reviews and determines the compensation of all our executive officers. Our compensation committee consists of three directors, Messrs. , and , each of whom is a non-employee member of our board of directors as defined in Rule 16b-3 under the Exchange Act and an "outside director" as defined under Section 162(m) of the Internal Revenue Code of 1986, as amended. Mr. is the chairman of the compensation committee. Our board of directors has determined that the composition of our compensation committee satisfies the applicable independence requirements under, and the functioning of our compensation committee complies with the applicable requirements of, NASDAQ listing rules and

SEC rules and regulations. We intend to continue to evaluate and intend to comply with all future requirements applicable to our compensation committee. The principal duties and responsibilities of our compensation committee include:

The nominating and corporate governance committee consists of three directors, Messrs. , and . Mr. is the chairman of the nominating and corporate governance committee. Our board of directors has determined that the composition of our nominating and corporate governance committee satisfies the applicable independence requirements under, and the functioning of our nominating and corporate governance committee complies with the applicable requirements of, NASDAQ listing standards and SEC rules and regulations. We will continue to evaluate and will comply with all future requirements applicable to our nominating and corporate governance committee. The nominating and corporate governance committee's responsibilities include:

Code of Business Conduct and Ethics for Employees, Executive Officers and Directors

Effective upon the completion of this offering, we will adopt a Code of Business Conduct and Ethics, or the Code of Conduct, applicable to all of our employees, executive officers and directors. Following the completion of this offering, the Code of Conduct will be available on our website at

www.2u.com. The nominating and corporate governance committee of our board of directors will be responsible for overseeing the Code of Conduct and must approve any waivers of the Code of Conduct for employees, executive officers and directors. We expect that any amendments to the Code of Conduct, or any waivers of its requirements, will be disclosed on our website.

None of our directors who currently serve as members of our compensation committee is, or has at any time during the past year been, one of our officers or employees. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any other entity that has one or more executive officers serving on our board of directors or compensation committee.

We have not historically paid cash retainers or other cash compensation with respect to service on our board of directors, except for reimbursement of direct expenses incurred in connection with attending meetings of our board of directors or committees of our board of directors. We have at times granted stock options to some of our non-employee directors under our 2008 stock incentive plan.

None of our non-employee directors received compensation for service on our board of directors during the year ended December 31, 2012 and, accordingly, we have not included a 2012 Director Compensation Table.

Christopher Paucek, our Chief Executive Officer, is also a director, but does not receive any additional compensation for his service as a director. Mr. Paucek's compensation as an executive officer is set forth below under "Executive Compensation — 2012 Summary Compensation Table."

We expect that our board of directors will adopt a director compensation plan for non-employee directors to be effective following the completion of this offering.

The following table provides information about outstanding stock options held by each of our non-employee directors as of December 31, 2012. All of these options were granted under our 2008 stock incentive plan, which is described under the caption "Equity Compensation Plans — 2008 Stock Incentive Plan."

The following table sets forth information regarding compensation earned during the year ended December 31, 2012 by our Chief Executive Officer, President and Chief Operating Officer, Chief Financial Officer, Chief Marketing Officer and Chief Technology Officer, which we refer to as our named executive officers.

Name and Principal Position		Salary		Option Awards (1)(2)		Non-Equity Incentive Plan Compensation (3)		All Other Compensation (4)		Total

Christopher Paucek	2012	$	298,767	$	664,977	$	99,248	$	32,339	$	1,095,331
Chief Executive Officer
Robert Cohen	2012		274,375		338,882		86,245		6,093		705,595
President and Chief Operating Officer
Catherine Graham(5)	2012		157,197		330,920		60,423		2,163		550,703
Chief Financial Officer
Jeff Rinehart	2012		267,708		174,382		83,312		48,693		574,095
Chief Marketing Officer
James Kenigsberg	2012		221,250		90,156		52,661		5,993		370,060
Chief Technology Officer

(1): This column reflects the full grant date fair value for options granted during the year as measured pursuant to ASC Topic 718 as stock-based compensation in our consolidated financial statements. Unlike the calculations contained in our financial statements, this calculation does not give effect to any estimate of forfeitures related to service-based vesting, but assumes that the executive will perform the requisite service for the award to vest in full. The assumptions we used in valuing options are described in note 10 to our consolidated financial statements included in this prospectus.
(2): Amounts in this column include the grant date fair value of stock option awards granted at the election of the officer in lieu of a portion of the cash bonus payable under the terms of the 2012 Matrix Position Bonus Plan, as described under "— Narrative to 2012 Summary Compensation Table — Annual Bonus Plan." The grant date fair value for these options was calculated based on the probable outcome of the performance conditions for the vesting of each award and was $8,017 for Mr. Paucek, $9,882 for Messrs. Cohen and Rinehart and $7,906 for Mr. Kenigsberg. Assuming the highest level of performance achievement, the maximum potential grant date fair value of the performance-based awards would have been $12,514 for Mr. Paucek, $15,426 for Messrs. Cohen and Rinehart and $12,341 for Mr. Kenigsberg.
(3): Amounts shown in this column represent the cash amounts paid in June 2013 under our 2012 Matrix Position Bonus Plan. See "— Narrative to 2012 Summary Compensation Table — Annual Bonus Plan" for a description of the formula used to determine these amounts.
(4): See "— Narrative to 2012 Summary Compensation Table — Other Compensation" for a description of the items in this column.
(5): Ms. Graham joined the company on April 30, 2012. The salary amount represents Ms. Graham's salary for the eight months that she was employed by us during 2012.

We review compensation annually, or more frequently in certain situations, for all of our employees, including our named executive officers. In determining base salaries, bonus targets and equity incentive awards for our named executive officers, we consider their historical compensation levels, compensation for comparable positions in the market, individual performance as compared to our expectations and objectives, and our desire to drive short- and long-term results that are in the best interests of our stockholders. We do not target a specific competitive position or a specific mix of compensation among base salary, bonus or long-term incentives.

Our board of directors, excluding our Chief Executive Officer, determines the compensation of our Chief Executive Officer, after considering the recommendation of the compensation committee of our board of directors. The compensation committee of our board of directors has historically determined the compensation of our named executive officers, other than our Chief Executive Officer, after considering the recommendation of our Chief Executive Officer. In November 2013, our compensation committee engaged a compensation consultant to advise the compensation committee regarding executive compensation.

Mr. Paucek's base salary is reviewed periodically by our board of directors and adjustments may be made upon the recommendations of the compensation committee. In December 2011, our board of directors appointed him as our Chief Executive Officer and set his annual base salary at $300,000. In October 2013, the compensation committee of our board of directors approved an increase in Mr. Paucek's salary to $350,000, effective as of January 1, 2014.

Base salaries for our named executive officers other than our Chief Executive Officer are typically reviewed annually in connection with their performance reviews and are generally effective as of April 1 of each year. Effective as of April 1, 2012, base salaries for Messrs. Cohen, Rinehart and Kenigsberg were $275,000, $275,000 and $230,000, respectively, and as of April 1, 2013, they were increased to $284,350, $284,350 and $270,000, respectively. Ms. Graham's initial base salary of $250,000 was approved at the time of her appointment as our Chief Financial Officer in April 2012 and was increased to $257,792 in April 2013.

We seek to motivate and reward our employees, including our named executive officers, for achievements relative to our corporate goals and expectations for each fiscal year. Historically, our board of directors, upon the recommendation of the compensation committee, has approved an annual bonus plan for certain employees, including our named executive officers. Our plan has separate performance targets for each client program and the company, and participant bonus payouts are calculated on various schedules that weight these goals depending on the participant's role. Our named executive officers participate in the schedule referred to as the Matrix Position Bonus Plan. For the 2012 Matrix Position Bonus Plan, Mr. Kenigsberg had a target bonus opportunity of 40%, and each of our other named executive officers had a target bonus opportunity of 50% of his or her annual salary.

Bonus Targets. Under the 2012 Matrix Position Bonus Plan, the bonus payout for our named executive officers was based upon the achievement of specified corporate goals as follows:

The potential total payout based on the achievement of the corporate goals set forth above could have been further increased by up to 20% if we achieved targets for expected future

revenues from students that enrolled in our client programs during 2012 and if we had budgeted minimum cash balances on hand as of December 31, 2012.

Once management determined the level of corporate goal achievement set forth above, the potential bonus payout amount was multiplied by a percentage, between zero and 100%, depending upon the executive's personal performance rating. For our Chief Executive Officer, the full board of directors, excluding our Chief Executive Officer, determined the personal performance rating component of the bonus, which was based upon our compensation committee's assessment of our Chief Executive Officer's achievement of specified performance goals. For named executive officers other than our Chief Executive Officer, the compensation committee, after consultation with our Chief Executive Officer, determined the personal performance rating component of the bonus.

As part of its approval of the 2012 Matrix Position Bonus Plan in January 2012, the board of directors allowed each executive officer to elect to receive stock options in lieu of a portion of the target bonus. Any executive who so elected would be able to exchange $3.00 of eligible cash bonus opportunity for an option to purchase one share of common stock. Any such options vested in accordance with a performance-based vesting formula that is equivalent to the bonus formula described above.

The total bonus opportunity for our named executive officers under the 2012 Matrix Position Bonus Plan is summarized in the table below:

Determination of Bonuses. In June 2013, the board of directors, upon the recommendation of the compensation committee, determined that we had achieved the corporate goals at an overall weighted level of 76.875%.

The compensation committee of our board of directors, and the full board of directors in the case of our Chief Executive Officer, determined that each of our named executive officers had achieved 100% of their personal performance objectives, and therefore the payouts under the 2012 Matrix Bonus Plan to our named executive officers were as follows:

These bonus payouts were made in June 2013 for the named executive officers' performance during 2012 and are reflected in the "Non-Equity Incentive Plan" column of the 2012 Summary Compensation Table above.

Each stock option granted to our named executive officers that they elected to receive in February 2012 in lieu of a portion of bonus opportunity also vested in June 2013 as to 76.875% of the target number of shares, or approximately 64% of the maximum number of shares, underlying each option.

In 2013, our board of directors, upon the recommendation of the compensation committee, approved a 2013 Matrix Position Bonus Plan that operates similarly to the 2012 Matrix Position Bonus Plan, although the 2013 plan does not provide for the substitution of stock options in lieu of a portion of the target cash bonus. The 2013 plan also increases the weighting of the payout attributable to total company performance from 50% to 75% and increases the number of our clients' programs that comprise the 25% weighting.

In addition to the annual Matrix Position Bonus Plan, our board of directors and compensation committee may make special cash bonus awards in their discretion.

Our 2008 plan authorizes us to make grants to eligible recipients of incentive stock options, non-qualified stock options and restricted stock awards. To date, all of our awards under this plan have been in the form of stock options.

We typically grant stock options at the start of employment to each executive and certain other employees. We do not have a formal policy for granting additional equity at regular intervals, though we generally grant additional equity upon promotion and reevaluate option holdings and potential new grants as vesting progresses.

We typically award stock options on the date the board of directors or the compensation committee approves the grant, but in some cases the board of directors or the compensation committee may approve the grant of a stock option to be awarded on a participant's start date. We typically set the option exercise price at the fair market value of a share of our common stock on the date of grant. Our time-vested stock option grants to our named executive officers typically vest as follows: 25% on the first anniversary of the date of grant or, if earlier, the vesting commencement date, and 1/36^th per month thereafter, until fully vested at the end of four years. These stock option grants generally have a term of 10 years from the grant date.

In December 2011, in connection with the promotion of Mr. Paucek to the position of our Chief Executive Officer, our board of directors awarded him an option to purchase 400,000 shares of our common stock at an exercise price of $3.08 per share.

In January 2012, our board of directors awarded options to Messrs. Cohen, Rinehart and Kenigsberg to purchase 200,000 shares, 100,000 shares and 50,000 shares, respectively. Each of these options has an exercise price of $3.08 per share. In March 2012, our board of directors approved the hiring of Ms. Graham, her appointment as our Chief Financial Officer and the grant of an option to purchase 200,000 shares of our common stock to her. Ms. Graham's employment commenced in April 2012, at which time she was awarded the stock option described above with an exercise price of $3.08 per share.

We offer a tuition reimbursement benefit for all of our employees. Under this program, we pay 100% of the cost of tuition for eligible employees and their spouses and dependents enrolled in

one of our clients' eligible graduate programs. Mr. Paucek is enrolled in our MBA@UNC program, and we paid his tuition costs in the amount of $28,593 under this program during 2012.

Other amounts shown in the "All Other Compensation" column in the 2012 Summary Compensation Table relate to company contributions to the 401(k) plan and premiums we paid for term life insurance policies on behalf of the officer, consistent with those provided to all of our employees.

Please see "— Potential Payments upon Termination of Employment and in Connection with Change of Control Arrangements" for information regarding the severance provisions for Messrs. Paucek and Cohen, who are the only named executive officers who currently have such arrangements.

The following table provides information about outstanding stock options held by each of our named executive officers at December 31, 2012. All of these options were granted under our 2008 stock incentive plan. None of our named executive officers held restricted stock or other stock awards at the end of 2012.



	Number of Securities Underlying Unexercised Options (#)
									Option Exercise Price ($)
											Option Expiration Date
Name	Exercisable			Unexercisable(1)							Option Expiration Date
Christopher Paucek		384,000	(2)		—					0.60		01/23/2019
		53,125			31,875					1.82		06/08/2020
		—			400,000					3.08		02/27/2022
							8,112	(2)		3.08		02/28/2022
Robert Cohen		20,000			—					0.60		01/23/2019
		46,875			28,125					1.82		06/08/2020
		—			200,000					3.08		02/13/2022
							10,000	(2)		3.08		02/28/2022
Catherine Graham		—			200,000					3.08		04/30/2022
Jeff Rinehart		114,583			135,417	(3)				2.86		02/23/2021
		—			100,000	(4)				3.08		02/13/2022
							10,000	(2)		3.08		02/28/2022
James Kenigsberg		120,000			—					0.60		01/23/2019
		12,500			7,500					1.82		06/08/2020
		3,750			6,250					3.08		06/27/2021
		—			50,000					3.08		02/13/2022
							8,000	(2)		3.08		02/28/2022

Our executive officers did not participate in, or otherwise receive any benefits under, any pension plan sponsored by us during the year ended December 31, 2012.

Our executive officers did not earn any nonqualified deferred compensation benefits from us during the year ended December 31, 2012.

Potential Payments upon Termination of Employment and in Connection with Change of Control Arrangements

We have entered into confidential information, invention assignment, work for hire, non-compete and no solicit/no hire agreements with each of Messrs. Paucek and Cohen which provide, among other things, that during the six-month period after the executive officer's termination of employment with the company, he may not engage, in any capacity, in the business of developing or administering degree-granting distance learning higher education services without the advance written consent of our board. In exchange for these agreements not to compete, we have agreed to pay Mr. Paucek or Mr. Cohen, as applicable, an amount during that six-month period at a rate equivalent to the highest salary earned during his employment with us, which amount can be paid in a lump sum at the beginning of the six-month period or over time in accordance with our standard payroll practices.

Our board of directors adopted and our stockholders approved our 2013 Equity Incentive Plan, or our 2013 plan, in December 2013. Our 2013 plan provides for the grant of incentive stock options within the meaning of Section 422 of the Internal Revenue Code, or the Code, to our employees and our parent and subsidiary corporations' employees, and for the grant of nonstatutory stock options, restricted stock awards, restricted stock unit awards, stock appreciation rights, performance stock awards and other forms of stock compensation to our employees, including officers, consultants and directors. Our 2013 plan also provides for the grant of performance cash awards to our employees, consultants and directors.

Authorized Shares. Initially, the maximum number of shares of our common stock reserved for issuance under our 2013 plan is shares. The number of shares of our common stock that may be issued under our 2013 plan will automatically increase on January 1 of each year, for a period of ten years, from January 1, 2015 continuing through January 1, 2023, by % of the total number of shares of our common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares as may be determined by our board of directors.

Shares issued under our 2013 plan may be authorized but unissued or reacquired shares of our common stock. Shares subject to stock awards granted under our 2013 plan that expire or terminate without being exercised in full, or that are paid out in cash rather than in shares, will not

reduce the number of shares available for issuance under our 2013 plan. Additionally, shares issued pursuant to stock awards under our 2013 plan that we repurchase or that are forfeited, as well as shares reacquired by us as consideration for the exercise or purchase price of a stock award or to satisfy tax withholding obligations related to a stock award, will become available for future grant under our 2013 plan.

Administration. Our board of directors, or a duly authorized committee thereof, has the authority to administer our 2013 plan. Our board of directors has delegated its authority to administer our 2013 plan to our compensation committee under the terms of the compensation committee's charter. Our board of directors may also delegate to one or more of our officers the authority to (i) designate employees other than officers to receive specified stock awards and (ii) determine the number of shares of our common stock to be subject to such stock awards. Subject to the terms of our 2013 plan, the administrator has the authority to determine the terms of awards, including recipients, the exercise price or strike price of stock awards, if any, the number of shares subject to each stock award, the fair market value of a share of our common stock, the vesting schedule applicable to the awards, together with any vesting acceleration, the form of consideration, if any, payable upon exercise or settlement of the stock award and the terms and conditions of the award agreements for use under our 2013 plan.

The administrator has the power to modify outstanding awards under our 2013 plan, subject to the terms of the 2013 plan and applicable law. Subject to the terms of our 2013 plan, the administrator has the authority to reprice any outstanding option or stock appreciation right, cancel and re-grant any outstanding option or stock appreciation right in exchange for new stock awards, cash or other consideration, or take any other action that is treated as a repricing under generally accepted accounting principles, with the consent of any adversely affected participant.

Incentive Stock Option Limit. The maximum number of shares of common stock that may be issued upon exercise of incentive stock options under our 2013 plan is shares.

Section 162(m) Limits. No participant may be granted stock awards covering more than shares of our common stock under our 2013 plan during any calendar year pursuant to stock options, stock appreciation rights and other stock awards whose value is determined by reference to an increase over an exercise price or strike price of at least 100% of the fair market value of our common stock on the date of grant. Additionally, no participant may be granted in a calendar year a performance stock award covering more than shares of our common stock or a performance cash award having a maximum value in excess of $ under our 2013 plan. These limitations enable us to grant awards that will be exempt from the $1,000,000 limitation on the income tax deductibility of compensation paid per covered executive officer imposed by Section 162(m) of the Code.

Performance Awards. Our 2013 plan permits the grant of performance-based stock and cash awards that may qualify as performance-based compensation that is not subject to the $1,000,000 limitation on the income tax deductibility of compensation paid per covered executive officer imposed by Section 162(m) of the Code. To enable us to grant performance-based awards that will qualify, our compensation committee can structure such awards so that the stock or cash will be issued or paid pursuant to such award only following the achievement of specified pre-established performance goals during a designated performance period.

Corporate Transactions. Our 2013 plan provides that in the event of a specified corporate transaction, including without limitation a consolidation, merger, or similar transaction involving our company, the sale, lease or other disposition of all or substantially all of the assets of our company or the consolidated assets of our company and our subsidiaries, or a sale or disposition of at least

50% of the outstanding capital stock of our company, the administrator will determine how to treat each outstanding stock award. The administrator may:

The administrator is not obligated to treat all stock awards or portions of stock awards, even those that are of the same type, in the same manner. The administrator may take different actions with respect to the vested and unvested portions of a stock award.

Change in Control. The administrator may provide, in an individual award agreement or in any other written agreement between us and the participant, that the stock award will be subject to additional acceleration of vesting and exercisability in the event of a change in control. In the absence of such a provision, no such acceleration of the stock award will occur.

Plan Amendment or Termination. Our board has the authority to amend, suspend, or terminate our 2013 plan, provided that such action does not materially impair the existing rights of any participant without such participant's written consent. No incentive stock options may be granted after the tenth anniversary of the date our board of directors adopted our 2013 plan.

Our board of directors adopted, and our stockholders approved, the 2008 Stock Incentive Plan, or the 2008 plan, in October 2008. The 2008 plan was most recently amended on May 8, 2013. Our 2008 plan provides for the grant of incentive stock options to our employees and the employees of our subsidiaries, and for the grant of nonstatutory stock options, restricted stock awards and deferred stock awards to our employees, directors and consultants.

Authorized Shares. There are 6,980,000 shares of our common stock reserved for issuance under our 2008 plan. As of September 30, 2013, 856,671 shares of our common stock have been issued upon the exercise of options granted under our 2008 plan, options to purchase 5,483,948 shares of our common stock were outstanding at a weighted average exercise price of $2.92 per share, and 639,381 shares remained available for future grant under our 2008 plan. Effective upon the completion of this offering, no further options or stock awards may be granted under our 2008 plan, but all outstanding stock awards granted under the 2008 plan will continue to be governed by their existing terms.

Administration. Our board of directors, or a committee thereof appointed by our board of directors, administers our 2008 plan and the option and stock awards granted under it. Our board of directors has delegated its authority to administer our 2008 plan to our compensation committee.

Corporate Transactions. Our 2008 plan provides that, in the event of a change in control transaction, all outstanding stock options shall become fully vested and exercisable and the restrictions and deferral limitations applicable to all outstanding restricted stock and deferred stock awards shall be deemed fully vested immediately prior to the change in control transaction, unless the surviving corporation or a parent or subsidiary thereof assumes such awards or substitutes equivalent awards therefor. Any stock options which are neither assumed or substituted in connection with the change in control nor exercised as of the effective date of the change in control shall terminate and cease to be outstanding as of the effective date of the change in control. In addition, if, in connection with or within one year following a change in control in which the successor corporation has assumed or substituted employee options, either an employee's employment is terminated by the successor corporation without cause, as defined in the 2008 plan, or the employee terminates employment after being reassigned, as defined in the 2008 plan, then all awards then held by the employee shall become fully vested and exercisable and the restrictions and deferral limitations applicable to any such awards shall lapse and such awards shall be deemed fully vested.

We maintain a tax-qualified retirement plan that provides eligible U.S. employees with an opportunity to save for retirement on a tax advantaged basis. Eligible employees are able to defer eligible compensation subject to applicable annual Code limits. Currently, we match one-third of each eligible employee's contributions up to 6% of total eligible compensation. Employees' pre-tax contributions are allocated to each participant's individual account and are then invested in selected investment alternatives according to the participants' directions. Employees are immediately and fully vested in their contributions, and our matching contribution is also immediately and fully vested when made. The 401(k) plan is intended to be qualified under Section 401(a) of the Code with the 401(k) plan's related trust intended to be tax exempt under Section 501(a) of the Code. As a tax-qualified retirement plan, contributions to the 401(k) plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) plan.

Upon completion of this offering, our amended and restated certificate of incorporation will contain provisions that limit the liability of our current and former directors for monetary damages to the fullest extent permitted by the Delaware General Corporation Law, which provides that directors of a corporation will not be personally liable to us or to our stockholders for monetary damages for any breach of fiduciary duties as a director. However, these provisions do not eliminate or limit the liability of our directors for:

This limitation of liability does not apply to liabilities arising under federal securities laws and does not affect the availability of equitable remedies such as injunctive relief or rescission.

Our amended and restated certificate of incorporation and our amended and restated bylaws will provide that we are required to indemnify our directors to the fullest extent permitted by the Delaware General Corporation Law. Our amended and restated bylaws will also provide that, upon

satisfaction of certain conditions, we are required to advance expenses incurred by a director in advance of the final disposition of any action or proceeding, and permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in that capacity regardless of whether we would otherwise be permitted to indemnify him or her under the provisions of Delaware law. Our amended and restated bylaws will also provide our board of directors with discretion to indemnify our officers and employees when determined appropriate by the board. We have entered and expect to continue to enter into agreements to indemnify our directors as determined by the board of directors. With certain exceptions, these agreements provide for indemnification for related expenses including, among other things, attorneys' fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding. We believe that these bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as directors. We also maintain customary directors' and officers' liability insurance.

The limitation of liability and indemnification provisions in our amended and restated certificate of incorporation and amended and restated bylaws may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholder's investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions. At present, there is no pending litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought and we are not aware of any threatened litigation that may result in claims for indemnification.

Our directors and executive officers may adopt written plans, known as Rule 10b5-1 plans, in which they will contract with a broker to buy or sell shares of our common stock on a periodic basis. Under a Rule 10b5-1 plan, a broker executes trades pursuant to parameters established by the director or executive officer when entering into the plan, without further direction from them. The director or executive officer may amend a Rule 10b5-1 plan in some circumstances and may terminate a plan at any time. Our directors and executive officers also may buy or sell additional shares outside of a Rule 10b5-1 plan when they are not in possession of material nonpublic information subject to compliance with the terms of our insider trading policy. Prior to 180 days after the date of this offering, subject to early termination, the sale of any shares under Rule 10b5-1 plan would be subject to the lock-up agreement that the director or executive officer has entered into with the underwriters.

The following is a summary of transactions since January 1, 2010 to which we have been a participant in which the amount involved exceeded or will exceed $120,000, and in which any of our directors, executive officers or holders of more than five percent of our capital stock, or any members of their immediate family, had or will have a direct or indirect material interest, other than compensation arrangements which are described under "Executive Compensation" and "Management — Director Compensation." For a description of severance arrangements that we have entered into with some of our executive officers, see the section of this prospectus entitled "Executive Compensation — Potential Payments upon Termination of Employment and in Connection with Change of Control Arrangements."

In February 2010, we sold an aggregate of 5,057,901 shares of our Series B redeemable convertible preferred stock at a price of $4.46 per share for an aggregate price of approximately $22.6 million, 4,848,917 shares of which were sold to Mr. Cohen, one of our executive officers, as well as entities affiliated with members of our board of directors and holders of more than five percent of our voting securities. The table below summarizes these sales.

In March 2011, we sold an aggregate of 4,429,601 shares of our Series C redeemable convertible preferred stock at a price of $7.34 per share for an aggregate price of approximately $32.5 million, 4,124,820 shares of which were sold to entities affiliated with members of our board of directors and holders of more than five percent of our voting securities. The table below summarizes these sales.

(1): Consists of 756,570 shares purchased by Bessemer Venture Partners VII L.P., 330,999 shares purchased by Bessemer Venture Partners VII Institutional L.P. and 1,276,713 shares purchased by BVP VII Special Opportunity Fund L.P. Entities affiliated with Bessemer Venture Partners are holders of more than five percent of our voting securities, and Robert Stavis, a Partner of Bessemer Venture Partners, is a member of our board of directors.
(2): Consists of 655,535 shares purchased by Redpoint Ventures III, L.P. and 25,540 shares purchased by Redpoint Associates III, LLC. Entities affiliated with Redpoint Ventures are holders of more than five percent of our voting securities, and Timothy Haley, a Managing Director of Redpoint Ventures, is a member of our board of directors.
(3): Consists of 292,583 shares purchased by Highland Capital Partners VII Limited Partnership, 70,898 shares purchased by Highland Capital Partners VII-B Limited Partnership, 103,250 shares purchased by Highland Capital Partners VII-C Limited Partnership and 9,168 shares purchased by Highland Entrepreneurs' Fund. Entities affiliated with Highland Capital Partners are holders of more than five percent of our voting securities, and Paul Maeder, a General Partner of Highland Capital Partners, is a member of our board of directors.
(4): John Larson, a member of our board of directors, is President of Triumph Capital, LLC.

In March 2012 and January 2013, we sold an aggregate of 3,979,730 shares of our Series D redeemable convertible preferred stock at a price of $7.81 per share for an aggregate price of approximately $31.1 million, 1,350,036 shares of which were sold to entities affiliated with members

of our board of directors and holders of more than five percent of our voting securities. The table below summarizes these sales.

(1): Consists of 615,835 shares purchased by Redpoint Ventures III, L.P. and 23,993 shares purchased by Redpoint Associates III, LLC. Entities affiliated with Redpoint Ventures are holders of more than five percent of our voting securities, and Timothy Haley, a Managing Director of Redpoint Ventures, is a member of our board of directors.
(2): Consists of 196,683 shares purchased by Highland Capital Partners VII Limited Partnership, 47,660 shares purchased by Highland Capital Partners VII-B Limited Partnership, 69,408 shares purchased by Highland Capital Partners VII-C Limited Partnership and 6,163 shares purchased by Highland Entrepreneurs' Fund. Entities affiliated with Highland Capital Partners are holders of more than five percent of our voting securities, and Paul Maeder, a General Partner of Highland Capital Partners, is a member of our board of directors.
(3): Consists of 73,708 shares purchased by Bessemer Venture Partners VII L.P., 32,247 shares purchased by Bessemer Venture Partners VII Institutional L.P. and 124,383 shares purchased by BVP VII Special Opportunity Fund L.P. Entities affiliated with Bessemer Venture Partners are holders of more than five percent of our voting securities, and Robert Stavis, a Partner of Bessemer Venture Partners, is a member of our board of directors.
(4): John Larson, a member of our board of directors, is President of Triumph Capital, LLC.

In September 2012, we made a loan in the amount of $265,000 to Christopher Paucek, our Chief Executive Officer. The loan bore interest at the rate of 2.18% per annum and was payable in full on the seventh anniversary of the original loan, subject to acceleration in specified circumstances, including the completion of this offering. The loan was secured by a pledge of stock options held by Mr. Paucek to acquire up to 869,000 shares of common stock, as well as a pledge of the underlying shares of common stock. In October 2013, Mr. Paucek repaid the loan in full in the amount of $271,082, including accrued interest in the amount of $6,082.

Pursuant to a sublease agreement dated November 2011, we sublease approximately 5,300 square feet of office space in our headquarters facility to an entity that is partially owned by John Katzman. Mr. Katzman is a beneficial owner of more than five percent of our common stock and was also an executive officer of our company until August 2012 and was a director of our company until December 2012. The sublease requires the subtenant to reimburse us for the allocated cost of the subleased space. For the years ended December 31, 2011 and 2012 and the nine months ended September 30, 2013, we received $16,000, $191,000 and $143,000, respectively, under this sublease.

We have entered into an investor rights agreement, as amended, with our preferred stockholders, including Robert Cohen, our President and Chief Operating Officer, and entities affiliated with Redpoint Ventures, Highland Capital Partners, Novak Biddle Venture Partners, Bessemer Venture Partners and one of our co-founders, John Katzman. The investor rights agreement, among other things:

For more information regarding the registration rights provided in this agreement, please refer to the section titled "Description of Capital Stock — Registration Rights." The provisions of this agreement other than those relating to registration rights will terminate upon completion of this offering. This summary discusses certain material provisions of the investor rights agreement and is qualified by the full text of the agreement filed as an exhibit to the registration statement of which this prospectus is a part.

We have entered into a voting agreement, as amended, with some of our stockholders, including Christopher Paucek, our Chief Executive Officer, Robert Cohen, our President and Chief Operating Officer and entities affiliated with Redpoint Ventures, Highland Capital Partners, Novak Biddle Venture Partners, Bessemer Venture Partners and one of our co-founders, John Katzman. The voting agreement provides for, among other things, the voting of shares with respect to the constituency of our board of directors and the voting of shares in favor of specified transactions approved by our board of directors and the requisite supermajority of holders of our outstanding preferred stock. The voting agreement will terminate upon the completion of this offering.

We have entered into a right of first refusal and co-sale agreement, as amended, with some of our stockholders, including Robert Cohen, our President and Chief Operating Officer, and entities affiliated with Redpoint Ventures, Highland Capital Partners, Novak Biddle Venture Partners, Bessemer Venture Partners and one of our co-founders, John Katzman. The right of first refusal and

co-sale agreement, among other things, grants our investors rights of first refusal and co-sale with respect to proposed transfers of our securities by specified stockholders and grants us rights of first refusal with respect to proposed transfers of our securities by specified stockholders. The right of first refusal and co-sale agreement will terminate upon the completion of this offering.

Our amended and restated certificate of incorporation will contain provisions limiting the liability of directors, and our amended and restated bylaws will provide that we will indemnify each of our directors to the fullest extent permitted under Delaware law. Our amended and restated certificate of incorporation and amended and restated bylaws will also provide our board of directors with discretion to indemnify our officers and employees when determined appropriate by the board.

In addition, we have entered into an indemnification agreement with each of our directors and some of our executive officers. For more information regarding these agreements, see "Executive Compensation — Limitations on Liability and Indemnification."

Prior to this offering, we have not had a formal policy regarding approval of transactions with related parties. Prior to the completion of this offering, we expect to adopt a related person transaction policy that sets forth our procedures for the identification, review, consideration and approval or ratification of related person transactions. The policy will become effective immediately upon the execution of the underwriting agreement for this offering. For purposes of our policy only, a related person transaction is a transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we and any related person are, were or will be participants in which the amount involved exceeds $120,000. Transactions involving compensation for services provided to us as an employee or director are not covered by this policy. A related person is any executive officer, director or beneficial owner of more than 5% of any class of our voting securities, including any of their immediate family members and any entity owned or controlled by such persons.

Under the policy, if a transaction has been identified as a related person transaction, including any transaction that was not a related person transaction when originally consummated or any transaction that was not initially identified as a related person transaction prior to consummation, our management must present information regarding the related person transaction to our audit committee, or, if audit committee approval would be inappropriate, to another independent body of our board of directors, for review, consideration and approval or ratification. The presentation must include a description of, among other things, the material facts, the interests, direct and indirect, of the related persons, the benefits to us of the transaction and whether the transaction is on terms that are comparable to the terms available to or from, as the case may be, an unrelated third party or to or from employees generally. Under the policy, we will collect information that we deem reasonably necessary from each director, executive officer and, to the extent feasible, significant stockholder to enable us to identify any existing or potential related-person transactions and to effectuate the terms of the policy. In addition, under our Code of Business Conduct and Ethics, our employees and directors have an affirmative responsibility to disclose any transaction or relationship that reasonably could be expected to give rise to a conflict of interest. In considering related person transactions, our audit committee, or other independent body of our board of directors, will take into account the relevant available facts and circumstances including, but not limited to:

The policy requires that, in determining whether to approve, ratify or reject a related person transaction, our audit committee, or other independent body of our board of directors, must consider, in light of known circumstances, whether the transaction is in, or is not inconsistent with, our best interests and those of our stockholders, as our audit committee, or other independent body of our board of directors, determines in the good faith exercise of its discretion.

The following table sets forth the beneficial ownership of our common stock as of November 1, 2013, as adjusted to reflect the sale of common stock offered by us in this offering, for:

The percentage ownership information shown in the table is based upon 30,955,307 shares of common stock outstanding as of November 1, 2013, after giving effect to the conversion of all of our redeemable convertible preferred stock into 23,501,208 shares of common stock, which will occur automatically immediately prior to the closing of this offering.

We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. In addition, the rules include shares of common stock issuable pursuant to the exercise of stock options or warrants that are either immediately exercisable or exercisable on or before December 31, 2013, which is 60 days after November 1, 2013. These shares are deemed to be outstanding and beneficially owned by the person holding those options or warrants for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.

Except as otherwise noted below, the address for persons listed in the table is c/o 2U, Inc., 8201 Corporate Drive, Suite 900, Landover MD 20785.

			Percentage of Shares Beneficially Owned

	Number of Shares Beneficially Owned		Percentage of Shares Beneficially Owned
Name of Beneficial Owner	Number of Shares Beneficially Owned		Before Offering			After Offering
Principal Stockholders:
Entities affiliated with Redpoint Ventures(1)		7,234,906		23.4	%
John Katzman and affiliated entities(2)		5,856,181		18.8
Entities affiliated with Highland Capital Partners(3)		3,543,165		11.4
Novak Biddle Venture Partners V, L.P.(4)		3,413,330		11.0
Entities affiliated with Bessemer Venture Partners(5)		2,594,620		8.4
Executive Officers and Directors:
Christopher J. Paucek(6)		655,239		2.1
Robert L. Cohen(7)		823,608		2.6
Catherine A. Graham(6)		83,333		*
Jeff C. Rinehart(6)		231,406		*
James Kenigsberg(6)		173,875		*
Michael T. Moe(8)		1,319,233		4.3
John M. Larson(9)		834,550		2.7
Mark J. Chernis(6)		100,000		*
Paul A. Maeder(3)		3,543,165		11.4
Robert M. Stavis(5)		2,594,620		8.4
Timothy M. Haley(1)		7,234,906		23.4
All current directors and executive officers as a group (11 persons)(10)		17,593,935		54.2

*: Represents beneficial ownership of less than 1%.
(1): Consists of (a) 6,963,598 shares of common stock issuable upon conversion of shares of preferred stock held by Redpoint Ventures III, L.P. ("Redpoint Ventures") and (b) 271,308 shares of common stock issuable upon conversion of shares of preferred stock held by Redpoint Associates III, LLC ("Redpoint Associates"). The shares held by Redpoint Ventures are indirectly held by Redpoint Ventures III, LLC, the general partner of Redpoint Ventures. Timothy Haley, one of our directors, along with Allen Beasley, Jeffrey D. Brody, R. Thomas Dyal, G. Bradford Jones, John L. Walecka and Geoffrey Y. Yang (the "Redpoint Managers") are the managers of Redpoint Ventures III, LLC and hold the voting and dispositive rights with respect to the shares held by Redpoint Ventures. The Redpoint Managers also have voting and dispositive rights with respect to the shares held by Redpoint Associates. The principal business address of Redpoint Ventures and Redpoint Associates is 3000 Sand Hill Road, Building 2, Suite 290, Menlo Park, CA 94025.
(2): Consists of (a) 4,596,499 shares of common stock held by Mr. Katzman directly, (b) 1,064,682 shares of common stock held by Mr. Katzman's family members and family trusts and (c) 195,000 shares of common stock underlying options held by Mr. Katzman directly that are vested and exercisable within 60 days of November 1, 2013.
(3): Consists of (a) 2,178,336 shares of common stock issuable upon conversion of shares of preferred stock held by Highland Capital Partners VII, Limited Partnership ("Highland VII"), (b) 527,852 shares of common stock issuable upon conversion of shares of preferred stock held by Highland Capital Partners VII-B, Limited Partnership ("Highland VII-B"), (c) 768,720 shares of

common stock issuable upon conversion of shares of preferred stock held by Highland Capital Partners VII-C, Limited Partnership ("Highland VII-C") and (d) 68,257 shares of common stock issuable upon conversion of shares of preferred stock held by Highland Entrepreneurs' Fund VII, Limited Partnership ("Highland Entrepreneurs" and together with Highland VII, Highland VII-B and Highland VII-C, the "Highland Entities"). Highland Management Partners VII, Limited Partnership ("HMP LP") is the general partner of each of the Highland Entities. Highland Management Partners VII, LLC ("HMP LLC") is the general partner of HMP LP. Paul A. Maeder, one of our directors, and Peter W. Bell, Sean M. Dalton, Robert J. Davis, Daniel J. Nova and Corey M. Mulloy are the managing members of HMP LLC and share voting and investment power over the shares held by the Highland Entities. The principal business address for the Highland Entities is One Broadway, 16th Floor, Cambridge, MA 02142.

(4): Consists of shares of common stock issuable upon conversion of shares of preferred stock. Novak Biddle Company V, LLC is the general partner of Novak Biddle Venture Partners V, L.P. AGW Biddle III and E. Rogers Novak, Jr. are the managing members of Novak Biddle Company V, LLC and share voting and investment power over the shares held by Novak Biddle Venture Partners V, L.P. The principal business address of Novak Biddle Venture Partners V, L.P. is 7501 Wisconsin Avenue, East Tower, Suite 1380, Bethesda, MD 20814.
(5): Consists of (a) 830,278 shares of common stock issuable upon conversion of shares of preferred stock held by Bessemer Venture Partners VII L.P. ("Bessemer VII"), (b) 363,246 shares of common stock issuable upon conversion of shares of preferred stock held by Bessemer Venture Partners VII Institutional L.P. ("Bessemer Institutional") and (c) 1,401,096 shares of common stock issuable upon conversion of shares of preferred stock held by BVP Special Opportunity Fund L.P. ("Bessemer SOF" and together with Bessemer VII and Bessemer Institutional, the "Bessemer Entities"). Deer VII & Co. L.P. is the general partner of each of the Bessemer Entities, and Deer VII & Co. Ltd. is the general partner of Deer VII & Co. L.P. Robert M. Stavis, one of our directors, J. Edmund Colloton, David J. Cowan, Byron B. Deeter, Robert P. Goodman and Jeremy S. Levine are the directors of Deer VII & Co. Ltd. and share voting and dispositive power over the shares held by the Bessemer Entities. The principal business address for the Bessemer Entities is 1865 Palmer Avenue, Suite 104, Larchmont, NY 10538.
(6): Consists of shares of common stock underlying options that are vested and exercisable within 60 days of November 1, 2013.
(7): Consists of (a) 5,800 shares of common stock held by Mr. Cohen directly, (b) 300,000 shares of common stock held by a family trust of which Mr. Cohen's spouse is one of the trustees, (c) 187,864 shares of common stock underlying options that are vested and exercisable within 60 days of November 1, 2013 and (d) 329,944 shares of common stock issuable upon conversion of shares of preferred stock held by Mr. Cohen directly.
(8): Consists of (a) 1,151,802 shares of common stock held by GSV Capital Corp. ("GSV") and (b) 167,431 shares of common stock issuable upon conversion of shares of preferred stock held by GSV. Mr. Moe is the chief executive officer of GSV and may be deemed to have beneficial ownership of the shares held by GSV.
(9): Consists of (a) 100,000 shares of common stock underlying options held by Mr. Larson directly that are vested and exercisable within 60 days of November 1, 2013 and (b) 734,500 shares of common stock issuable upon conversion of shares of preferred stock held by Triumph Capital, LLC ("Triumph"). Mr. Larson is the sole member of Triumph and may be deemed to have beneficial ownership of the shares held by Triumph.
(10): Consists of (a) 1,457,602 shares of common stock, (b) 14,604,616 shares of common stock issuable upon conversion of shares of preferred stock and (c) 1,531,717 shares of common stock underlying options that are vested and exercisable within 60 days of November 1, 2013.

The following description of our capital stock and provisions of our amended and restated certificate of incorporation and amended and restated bylaws are summaries. You should also refer to the amended and restated certificate of incorporation and the amended and restated bylaws, which are filed as exhibits to the registration statement of which this prospectus is part.

Upon the completion of this offering, our amended and restated certificate of incorporation will authorize us to issue up to shares of common stock, $0.001 par value per share, and shares of preferred stock, $0.001 par value per share, all of which shares of preferred stock will be undesignated. Our board of directors may establish the rights and preferences of the preferred stock from time to time. As of , 2013, after giving effect to the conversion of all outstanding preferred stock into shares of common stock, there would have been shares of common stock issued and outstanding, held of record by stockholders.

Each holder of our common stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders, including the election of directors. Under our amended and restated certificate of incorporation and amended and restated bylaws, our stockholders will not have cumulative voting rights. Because of this, the holders of a majority of the shares of common stock entitled to vote in any election of directors can elect all of the directors standing for election, if they should so choose.

Subject to preferences that may be applicable to any then-outstanding preferred stock, holders of common stock are entitled to receive ratably those dividends, if any, as may be declared from time to time by the board of directors out of legally available funds.

In the event of our liquidation, dissolution or winding up, holders of common stock will be entitled to share ratably in the net assets legally available for distribution to stockholders after the payment of all of our debts and other liabilities and the satisfaction of any liquidation preference granted to the holders of any then-outstanding shares of preferred stock.

Holders of common stock have no preemptive, conversion or subscription rights and there are no redemption or sinking fund provisions applicable to the common stock. The rights, preferences and privileges of the holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that we may designate in the future.

All currently outstanding shares of redeemable convertible preferred stock will be converted automatically to common stock immediately prior to the completion of this offering.

Following the completion of this offering, our board of directors will have the authority, without further action by our stockholders, to issue up to shares of preferred stock in one or more series, to establish from time to time the number of shares to be included in each such series, to fix the rights, preferences and privileges of the shares of each wholly unissued series and any qualifications, limitations or restrictions thereon, and to increase or decrease the number of shares of any such series, but not below the number of shares of such series then outstanding.

Our board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of our common stock. The purpose of authorizing our board of directors to issue preferred stock and determine its rights and preferences is to eliminate delays associated with a stockholder vote on specific issuances. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring or preventing a change in control of us and may adversely affect the market price of our common stock and the voting and other rights of the holders of our common stock. It is not possible to state the actual effect of the issuance of any shares of preferred stock on the rights of holders of common stock until the board of directors determines the specific rights attached to that preferred stock.

As of September 30, 2013, under our 2008 plan, options to purchase an aggregate of 5,483,948 shares of common stock were outstanding. For additional information regarding the terms of this plan, see "Executive Compensation — Equity Incentive Plans."

We have outstanding an immediately exercisable warrant to purchase 12,797 shares of our Series D redeemable convertible preferred stock at an exercise price of $7.81 per share which expires in April 2022. The warrant contains provisions for the adjustment of the exercise price and the number of shares issuable upon the exercise of the warrant in the event of certain stock dividends, stock splits, reorganizations, reclassifications and consolidations. Upon the closing of this offering, this warrant will automatically convert into a warrant to purchase 12,797 shares of our common stock.

We have also granted piggyback registration rights to the warrant holder, as more fully described below under "— Registration Rights."

We and the holders of our existing redeemable convertible preferred stock, the holder of our warrant and certain holders of our common stock have entered into an investor rights agreement. The registration rights provisions of this agreement provide some of those holders with demand and piggyback registration rights with respect to the shares of common stock currently held by them and issuable to them upon conversion of our redeemable convertible preferred stock in connection with our initial public offering.

At any time beginning six months following this offering, the holders of at least a majority of the shares issuable upon conversion of our redeemable convertible preferred stock and some shares of our common stock have the right to demand that we file up to a total of two registration

statements, so long as the anticipated offering price, net of underwriting discounts and commissions, is at least $15,000,000. These registration rights are subject to specified conditions and limitations, including the right of the underwriters, if any, to limit the number of shares included in any such registration under specified circumstances. Upon such a request, we are required to effect the registration as soon as practicable, and in any event within 90 days of the request. An aggregate of shares of common stock will be entitled to these demand registration rights.

At any time after the completion of this offering, if we propose to register any of our securities under the Securities Act either for our own account or for the account of other stockholders, the holders of shares of common stock that are issued upon conversion of our redeemable convertible preferred stock, some holders of shares of our common stock and the holder of our currently outstanding warrant will each be entitled to notice of the registration and will be entitled to include their shares of common stock in the registration statement. These piggyback registration rights are subject to specified conditions and limitations, including the right of the underwriters to limit the number of shares included in any such registration under specified circumstances. An aggregate of shares of common stock will be entitled to these piggyback registration rights.

At any time after we become eligible to file a registration statement on Form S-3, holders of our common stock that are issued upon conversion of our redeemable convertible preferred stock and holders of some shares of our common stock will be entitled, upon the written request of the holders of at least 10% of such shares, up to twice in any 12-month period, to have such shares registered by us on a Form S-3 registration statement at our expense, provided that such requested registration has an anticipated aggregate offering size to the public of at least $2,000,000 and subject to other specified conditions and limitations. An aggregate of shares of common stock will be entitled to these Form S-3 registration rights.

We will pay all expenses relating to any demand, piggyback or Form S-3 registration, other than underwriting discounts and commissions, subject to specified conditions and limitations.

The registration rights granted under the investor rights agreement will terminate upon the second anniversary of the closing of this offering or, if earlier, with respect to a particular holder, at such time as that holder and its affiliates may sell all of their shares of common stock pursuant to Rule 144 under the Securities Act of 1933, as amended, without any restrictions on volume.

Upon completion of this offering, we will be subject to Section 203 of the Delaware General Corporation Law, which prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years after the date that such stockholder became an interested stockholder, with the following exceptions:

In general, Section 203 defines a "business combination" to include the following:

In general, Section 203 defines an "interested stockholder" as an entity or person who, together with the person's affiliates and associates, beneficially owns, or within three years prior to the time of determination of interested stockholder status did own, 15% or more of the outstanding voting stock of the corporation.

Certificate of Incorporation and Bylaws to be in Effect Upon the Completion of this
Offering

Our amended and restated certificate of incorporation to be in effect upon the completion of this offering, or our restated certificate, will provide for our board of directors to be divided into three classes with staggered three-year terms. Only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three-year terms. Because our stockholders do not have cumulative voting rights, stockholders holding a majority of the shares of common stock outstanding will be able to elect all of our directors. Our restated certificate and our amended and restated bylaws to be effective upon the completion of this offering, or our restated bylaws, will also provide that directors may be removed by the stockholders only for cause upon the vote of 66²/3% or more of our outstanding common stock. Furthermore, the authorized number of directors may be changed only by resolution of the board of directors, and vacancies and newly created directorships on the board of directors may, except as otherwise required by law or determined by the board, only be filled by a majority vote of the directors then serving on the board, even though less than a quorum.

Our restated certificate and restated bylaws will also provide that all stockholder actions must be effected at a duly called meeting of stockholders and will eliminate the right of stockholders to act by written consent without a meeting. Our restated bylaws will also provide that only our

chairman of the board, chief executive officer or the board of directors pursuant to a resolution adopted by a majority of the total number of authorized directors may call a special meeting of stockholders.

Our restated bylaws will also provide that stockholders seeking to present proposals before a meeting of stockholders to nominate candidates for election as directors at a meeting of stockholders must provide timely advance notice in writing, and will specify requirements as to the form and content of a stockholder's notice.

Our restated certificate and restated bylaws will provide that the stockholders cannot amend many of the provisions described above except by a vote of 66²/3% or more of our outstanding common stock.

The combination of these provisions will make it more difficult for our existing stockholders to replace our board of directors as well as for another party to obtain control of us by replacing our board of directors. Since our board of directors has the power to retain and discharge our officers, these provisions could also make it more difficult for existing stockholders or another party to effect a change in management. In addition, the authorization of undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change our control.

These provisions are intended to enhance the likelihood of continued stability in the composition of our board of directors and its policies and to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to reduce our vulnerability to hostile takeovers and to discourage certain tactics that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers for our shares and may have the effect of delaying changes in our control or management. As a consequence, these provisions may also inhibit fluctuations in the market price of our stock that could result from actual or rumored takeover attempts. We believe that the benefits of these provisions, including increased protection of our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure our company, outweigh the disadvantages of discouraging takeover proposals, because negotiation of takeover proposals could result in an improvement of their terms.

Our restated certificate will provide that the Court of Chancery of the state of Delaware will be the exclusive forum for: any derivative action or proceeding brought on our behalf; any action asserting a breach of fiduciary duty; any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our restated certificate or our restated bylaws; or any action asserting a claim against us that is governed by the internal affairs doctrine. The enforceability of similar choice of forum provisions in certain other companies' certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with any action, a court could find the choice of forum provisions contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in such action.

The transfer agent and registrar for our common stock is . The transfer agent's address is .

We intend to apply for listing of our common stock on the NASDAQ Global Market under the trading symbol "TWOU".

Prior to this offering, no public market existed for our common stock. Future sales of shares of our common stock in the public market after this offering, or the perception that these sales could occur, could adversely affect prevailing market prices for our common stock and could impair our future ability to raise equity capital.

Based on the number of shares outstanding on , upon completion of this offering and assuming no exercise of the underwriters' option to purchase additional shares, shares of common stock will be outstanding, assuming no outstanding options or warrants are exercised. All of the shares of common stock sold in this offering will be freely tradable without restrictions or further registration under the Securities Act, except for any shares sold to our "affiliates," as that term is defined under Rule 144 under the Securities Act. The remaining shares of common stock held by existing stockholders are "restricted securities," as that term is defined in Rule 144 under the Securities Act. Restricted securities may be sold in the public market only if registered or if their resale qualifies for exemption from registration described below under Rule 144 promulgated under the Securities Act.

As a result of contractual restrictions described below and the provisions of Rules 144 and 701, the shares sold in this offering and the restricted securities will be available for sale in the public market as follows:

In general, persons who have beneficially owned restricted shares of our common stock for at least six months, and any affiliate of the company who owns either restricted or unrestricted shares of our common stock, are entitled to sell their securities without registration with the SEC under an exemption from registration provided by Rule 144 under the Securities Act.

Any person who is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding, a sale may sell an unlimited number of restricted securities under Rule 144 if:

Any person who is not deemed to have been an affiliate of ours at the time of, or at any time during the three months preceding, a sale and has held the restricted securities for at least one year, including the holding period of any prior owner other than one of our affiliates, will be entitled

to sell an unlimited number of restricted securities without regard to the length of time we have been subject to Exchange Act periodic reporting or whether we are current in our Exchange Act reporting.

Persons seeking to sell restricted securities who are our affiliates at the time of, or any time during the three months preceding, a sale, would be subject to the restrictions described above. They are also subject to additional restrictions, by which such person would be required to comply with the manner of sale and notice provisions of Rule 144 and would be entitled to sell within any three-month period only that number of securities that does not exceed the greater of either of the following:

Additionally, persons who are our affiliates at the time of, or any time during the three months preceding, a sale may sell unrestricted securities under the requirements of Rule 144 described above, without regard to the six month holding period of Rule 144, which does not apply to sales of unrestricted securities.

Rule 701 under the Securities Act, as in effect on the date of this prospectus, permits resales of shares in reliance upon Rule 144 but without compliance with certain restrictions of Rule 144, including the holding period requirement. Most of our employees, executive officers or directors who purchased shares under a written compensatory plan or contract may be entitled to rely on the resale provisions of Rule 701, but all holders of Rule 701 shares are required to wait until 90 days after the date of this prospectus before selling their shares. However, substantially all Rule 701 shares are subject to lock-up agreements as described below and in the section of this prospectus titled "Underwriting" and will become eligible for sale upon the expiration of the restrictions set forth in those agreements.

As soon as practicable after the completion of this offering, we intend to file with the SEC one or more registration statements on Form S-8 under the Securities Act to register the shares of our common stock that are issuable pursuant to our 2008 stock incentive plan and 2013 equity incentive plan. These registration statements will become effective immediately upon filing. Shares covered by these registration statements will then be eligible for sale in the public markets, subject to vesting restrictions, any applicable lock-up agreements described below and Rule 144 limitations applicable to affiliates.

We and the holders of substantially all of our common stock outstanding on the date of this prospectus, including each of our executive officers and directors, have entered into lock-up agreements with the underwriters or otherwise agreed, subject to certain exceptions, that we and they will not, directly or indirectly, offer, sell, contract to sell, pledge, grant any option to purchase,

make any short sale, or otherwise dispose of or hedge any of our shares of common stock, any options or warrants to purchase shares of our common stock, or any securities convertible into, or exchangeable for or that represent the right to receive shares of our common stock, without the prior written consent of the representatives of the underwriters for a period of 180 days from the date of this prospectus.

On the date beginning six months after the date of this prospectus, the holders of shares of our common stock issuable upon the conversion of our redeemable convertible preferred stock, other shares of our common stock and shares of our common stock issuable upon the exercise of an outstanding warrant, or their transferees, as well as additional shares that may be acquired by certain holders after the completion of this offering, will be entitled to specified rights with respect to the registration of their shares under the Securities Act. Registration of these shares under the Securities Act would result in the shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of the registration. See "Description of Capital Stock — Registration Rights" for additional information.

The following is a general discussion of the material U.S. federal income and estate tax considerations applicable to non-U.S. holders with respect to their ownership and disposition of shares of our common stock issued pursuant to this offering. All prospective non-U.S. holders of our common stock should consult their own tax advisors with respect to the U.S. federal, state, local and non-U.S. tax consequences of the purchase, ownership and disposition of our common stock. In general, a non-U.S. holder means a beneficial owner of our common stock (other than a partnership or an entity or arrangement treated as a partnership for U.S. federal income tax purposes) that is not, for U.S. federal income tax purposes:

This discussion is based on current provisions of the U.S. Internal Revenue Code of 1986, as amended, which we refer to as the Code, existing U.S. Treasury Regulations promulgated thereunder, published administrative rulings and judicial decisions, all as in effect as of the date of this prospectus. These laws are subject to change and to differing interpretation, possibly with retroactive effect. Any change or differing interpretation could alter the tax consequences to non-U.S. holders described in this prospectus.

We assume in this discussion that a non-U.S. holder holds shares of our common stock as a capital asset within the meaning of Section 1221 of the Code (generally, for investment). This discussion does not address all aspects of U.S. federal income and estate taxation that may be relevant to a particular non-U.S. holder in light of that non-U.S. holder's individual circumstances, nor does it address any aspects of U.S. state, local or non-U.S. taxes. This discussion also does not consider any specific facts or circumstances that may apply to a non-U.S. holder and does not address the special tax rules applicable to particular non-U.S. holders, such as holders that own, or are deemed to own, more than 5% of our capital stock (except to the extent specifically set forth below), corporations that accumulate earnings to avoid U.S. federal income tax, tax-exempt organizations, banks, financial institutions, insurance companies, brokers, dealers or traders in securities, commodities or currencies, tax-qualified retirement plans, holders subject to the alternative minimum tax or Medicare contribution tax, holders who hold or receive our common stock pursuant to the exercise of employee stock options or otherwise as compensation, holders holding our common stock as part of a hedge, straddle or other risk reduction strategy, conversion transaction or other integrated investment, holders deemed to sell our common stock under the constructive sale provisions of the Code, controlled foreign corporations, passive foreign investment companies and certain former U.S. citizens or long-term residents.

In addition, this discussion does not address the tax treatment of partnerships (or entities or arrangements that are treated as partnerships for U.S. federal income tax purposes) or persons that hold their common stock through such partnerships. If a partnership, including any entity or arrangement treated as a partnership for U.S. federal income tax purposes, holds shares of our common stock, the U.S. federal income tax treatment of a partner in such partnership will generally

depend upon the status of the partner and the activities of the partnership. Such partners and partnerships should consult their own tax advisors regarding the tax consequences of the purchase, ownership and disposition of our common stock.

There can be no assurance that the Internal Revenue Service, which we refer to as the IRS, will not challenge one or more of the tax consequences described herein, and we have not obtained, nor do we intend to obtain, a ruling with respect to the U.S. federal income or estate tax consequences to a non-U.S. holder of the purchase, ownership or disposition of our common stock.

Distributions, if any, on our common stock generally will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. If a distribution exceeds our current and accumulated earnings and profits, the excess will be treated as a tax-free return of the non-U.S. holder's investment, up to such holder's adjusted tax basis in the common stock. Any remaining excess will be treated as capital gain from the sale or exchange of such common stock, subject to the tax treatment described below in "—Gain on Sale, Exchange or Other Disposition of Our Common Stock." Any such distribution will also be subject to the discussion below under the heading "Foreign Accounts."

Dividends paid to a non-U.S. holder will generally be subject to withholding of U.S. federal income tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty between the United States and such holder's country of residence.

Dividends that are treated as effectively connected with a trade or business conducted by a non-U.S. holder within the United States and, if an applicable income tax treaty so provides, that are attributable to a permanent establishment or a fixed base maintained by the non-U.S. holder within the United States, are generally exempt from the 30% withholding tax if the non-U.S. holder satisfies applicable certification and disclosure requirements. However, such U.S. effectively connected income, net of specified deductions and credits, is taxed at the same graduated U.S. federal income tax rates applicable to U.S. persons (as defined in the Code). Any U.S. effectively connected income received by a non-U.S. holder that is a corporation may also, under certain circumstances, be subject to an additional "branch profits tax" at a 30% rate or such lower rate as may be specified by an applicable income tax treaty between the United States and such holder's country of residence.

A non-U.S. holder of our common stock who claims the benefit of an applicable income tax treaty between the United States and such holder's country of residence generally will be required to provide a properly executed IRS Form W-8BEN (or successor form) and satisfy applicable certification and other requirements. Non-U.S. holders are urged to consult their tax advisors regarding their entitlement to benefits under a relevant income tax treaty.

A non-U.S. holder that is eligible for a reduced rate of U.S. withholding tax under an income tax treaty may obtain a refund or credit of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS.

Subject to the discussion below regarding backup withholding and foreign accounts, in general, a non-U.S. holder will not be subject to any U.S. federal income tax on any gain realized upon such holder's sale, exchange or other disposition of shares of our common stock unless:

Shares of our common stock that are owned or treated as owned at the time of death by an individual who is not a citizen or resident of the United States, as specifically defined for U.S. federal estate tax purposes, are considered U.S. situs assets and will be included in the individual's gross estate for U.S. federal estate tax purposes. Such shares, therefore, may be subject to U.S. federal estate tax, unless an applicable estate tax or other treaty provides otherwise.

We must report annually to the IRS and to each non-U.S. holder the gross amount of the dividends on our common stock paid to such holder and the tax withheld, if any, with respect to

such dividends. Non-U.S. holders will have to comply with specific certification procedures to establish that the holder is not a U.S. person (as defined in the Code) in order to avoid backup withholding at the applicable rate with respect to dividends on our common stock. Dividends paid to non-U.S. holders subject to the U.S. withholding tax, as described above in "—Distributions on Our Common Stock", generally will be exempt from U.S. backup withholding.

Information reporting and backup withholding will generally apply to the proceeds of a disposition of our common stock by a non-U.S. holder effected by or through the U.S. office of any broker, U.S. or foreign, unless the holder certifies its status as a non-U.S. holder and satisfies certain other requirements, or otherwise establishes an exemption. Generally, information reporting and backup withholding will not apply to a payment of disposition proceeds to a non-U.S. holder where the transaction is effected outside the United States through a non-U.S. office of a broker. However, for information reporting purposes, dispositions effected through a non-U.S. office of a broker with substantial U.S. ownership or operations generally will be treated in a manner similar to dispositions effected through a U.S. office of a broker. Non-U.S. holders should consult their own tax advisors regarding the application of the information reporting and backup withholding rules to them.

Copies of information returns may be made available to the tax authorities of the country in which the non-U.S. holder resides or is incorporated under the provisions of a specific treaty or agreement.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to a non-U.S. holder may be allowed as a credit against the non-U.S. holder's U.S. federal income tax liability, if any, and may entitle such holder to a refund, provided that the required information is timely furnished to the IRS.

The Code generally imposes a U.S. federal withholding tax of 30% on dividends and the gross proceeds of a disposition of our common stock paid to a "foreign financial institution" (as specifically defined for this purpose), unless such institution enters into an agreement with the U.S. government to, among other things, withhold on certain payments and to collect and provide to the U.S. tax authorities substantial information regarding U.S. account holders of such institution (which includes certain equity and debt holders of such institution, as well as certain account holders that are foreign entities with U.S. owners). A U.S. federal withholding tax of 30% also applies to dividends and the gross proceeds of a disposition of our common stock paid to a non-financial foreign entity, unless such entity provides the withholding agent with either a certification that it does not have any substantial direct or indirect U.S. owners or provides information regarding substantial direct and indirect U.S. owners of the entity. The withholding provisions described above will generally apply to dividends on our common stock paid on or after July 1, 2014 and with respect to gross proceeds of a sale or other disposition of our common stock on or after January 1, 2017. Under certain circumstances, a non-U.S. holder might be eligible for refunds or credits of such taxes. An intergovernmental agreement between the United States and an applicable foreign country may modify the requirements described in this paragraph.

We and the underwriters named below have entered into an underwriting agreement with respect to the shares being offered. Subject to certain conditions, each underwriter has severally agreed to purchase the number of shares indicated in the following table. Goldman, Sachs & Co. and Credit Suisse Securities (USA) LLC are the representatives of the underwriters.

The underwriters are committed to take and pay for all of the shares being offered, if any are taken, other than the shares covered by the option described below unless and until this option is exercised.

The underwriters have an option to buy up to an additional shares to cover sales by the underwriters of a greater number of shares than the total number set forth in the table above. They may exercise that option for 30 days. If any shares are purchased pursuant to this option, the underwriters will severally purchase shares in approximately the same proportion as set forth in the table above.

The following table shows the per share and total underwriting discounts and commissions to be paid to the underwriters by us. Such amounts are shown assuming both no exercise and full exercise of the underwriters' option to purchase additional shares of our common stock.

Shares sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $ per share from the initial public offering price. After the initial offering of the shares, the representatives may change the offering price and the other selling terms. The offering of the shares by the underwriters is subject to receipt and acceptance and subject to the underwriters' right to reject any order in whole or in part.

We, our officers, directors and holders of substantially all of our outstanding capital stock have agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of their common stock or securities convertible into or exchangeable for shares of common stock during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of Goldman, Sachs & Co and Credit Suisse Securities (USA) LLC. See "Shares Eligible for Future Sale — Lock-Up Agreements" for a discussion of certain transfer restrictions.

Prior to the offering, there has been no public market for the shares. The initial public offering price has been negotiated among us and the representatives. Among the factors to be considered in determining the initial public offering price of the shares, in addition to prevailing market conditions, will be our historical performance, estimates of our business potential and earnings

prospects, an assessment of our management and the consideration of the above factors in relation to market valuation of companies in related businesses.

We intend to apply to list our common stock on the NASDAQ Global Market under the symbol "TWOU".

In connection with the offering, the underwriters may purchase and sell shares of common stock in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering, and a short position represents the amount of such sales that have not been covered by subsequent purchases. A "covered short position" is a short position that is not greater than the amount of additional shares for which the underwriters' option described above may be exercised. The underwriters may cover any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to cover the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase additional shares pursuant to the option described above. "Naked" short sales are any short sales that create a short position greater than the amount of additional shares for which the option described above may be exercised. The underwriters must cover any such naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of common stock made by the underwriters in the open market prior to the completion of the offering.

The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.

Purchases to cover a short position and stabilizing transactions, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of our stock, and together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of our common stock. As a result, the price of our common stock may be higher than the price that otherwise might exist in the open market. The underwriters are not required to engage in these activities and may end any of these activities at any time. These transactions may be effected on the NASDAQ Global Market, in the over-the-counter market or otherwise.

The underwriters do not expect sales to discretionary accounts to exceed five percent of the total number of shares offered.

We estimate that the total expenses of the offering, excluding underwriting discounts and commissions, will be approximately $ million.

We have agreed to pay the filing fees incident to, and the fees and disbursements of counsel for the underwriters in connection with, any required review by FINRA in connection with this offering in an amount not to exceed $25,000.

We have agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act.

The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. Certain of the underwriters and their respective affiliates have provided, and may in the future provide, a variety of these services to the issuer and to persons and entities with relationships with the issuer, for which they received or will receive customary fees and expenses.

In the ordinary course of their various business activities, the underwriters and their respective affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to our assets, securities and/or instruments (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with us. The underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments.

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a Relevant Member State), each underwriter has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date) it has not made and will not make an offer of shares to the public in that Relevant Member State prior to the publication of a prospectus in relation to the shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of shares to the public in that Relevant Member State at any time:

For the purposes of this provision, the expression an "offer of shares to the public" in relation to any shares in any Relevant Member State means the communication in any form and by any

means of sufficient information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase or subscribe for the shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State, and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

The shares may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), (ii) to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a "prospectus" within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the SFA), (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the shares are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries' rights and

interest in that trust shall not be transferable for six months after that corporation or that trust has acquired the shares under Section 275 except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; or (3) by operation of law.

The securities have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (the Financial Instruments and Exchange Law) and each underwriter has agreed that it will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.

The validity of the shares of common stock being offered by this prospectus will be passed upon for us by Cooley LLP, Reston, Virginia. Certain legal matters in connection with this offering will be passed upon for the underwriters by Goodwin Procter LLP, Boston, Massachusetts.

The consolidated financial statements and schedules of 2U, Inc. as of December 31, 2011 and 2012, and for each of the years in the two-year period ended December 31, 2012, have been included herein and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

We have filed with the SEC a registration statement on Form S-1 under the Securities Act, with respect to the shares of common stock being offered by this prospectus. This prospectus does not contain all of the information in the registration statement and its exhibits. For further information with respect to 2U and the common stock offered by this prospectus, we refer you to the registration statement and its exhibits. Statements contained in this prospectus as to the contents of any contract or any other document referred to are not necessarily complete, and in each instance, we refer you to the copy of the contract or other document filed as an exhibit to the registration statement. Each of these statements is qualified in all respects by this reference.

You can read our SEC filings, including the registration statement, over the internet at the SEC's website at www.sec.gov. You may also read and copy any document we file with the SEC at its public reference facilities at 100 F Street, N.E., Washington, D.C. 20549. You may also obtain copies of these documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities.

Upon completion of this offering, we will be subject to the information reporting requirements of the Exchange Act, and we will file reports, proxy statements and other information with the SEC. These reports, proxy statements and other information will be available for inspection and copying at the public reference room and web site of the SEC referred to above. We also maintain a website at www.2U.com, at which you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The information contained in, or that can be accessed through, our website is not part of, and is not incorporated into, this prospectus.

We have audited the accompanying consolidated balance sheets of 2U, Inc. and subsidiary (the Company) as of December 31, 2011 and 2012, and the related consolidated statements of operations, changes in stockholders' deficit, and cash flows for each of the years then ended. In connection with our audit of the consolidated financial statements, we also have audited financial statement Schedule II — Valuation and Qualifying Accounts. These consolidated financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of 2U, Inc. and subsidiary as of December 31, 2011 and 2012, and the results of their operations and their cash flows for each of the years then ended, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

2U, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

	December 31,

	December 31,						September 30, 2013			Pro Forma September 30, 2013
	2011			2012			September 30, 2013			Pro Forma September 30, 2013
							(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	23,958		$	25,190		$	7,400		$	7,400
Accounts receivable		1,390			248			17,205			17,205
Advance to clients, current		—			498			830			830
Prepaid expenses		799			823			1,113			1,113

Total current assets		26,147			26,759			26,548			26,548
Property and equipment, net		3,940			4,871			5,479			5,479
Capitalized content development costs, net		5,642			6,608			8,704			8,704
Related party receivables		—			265			265			265
Advance to clients, non-current		996			498			—			—
Other non-current assets		411			876			1,480			1,480

Total assets	$	37,136		$	39,877		$	42,476		$	42,476

Liabilities, redeemable convertible preferred stock and stockholders' (deficit) equity
Current liabilities:
Accounts payable	$	1,636		$	2,964		$	3,612		$	3,612
Accrued expenses and other current liabilities		5,107			6,037			11,370			11,370
Deferred revenue		5,738			736			13,525			13,525
Refunds payable		1,069			1,228			1,471			1,471

Total current liabilities		13,550			10,965			29,978			29,978
Rebate reserve		1,651			1,891			1,597			1,597
Other non-current liabilities		439			611			630			596

Total liabilities		15,640			13,467			32,205			32,171
Commitments and contingencies (Note 5)
Redeemable convertible preferred stock:
Redeemable convertible Series A preferred stock, $0.001 par value, 10,033,976 shares authorized, issued and outstanding as of December 31, 2011, December 31, 2012 and September 30, 2013; no shares issued and outstanding pro forma; liquidation preference of $12,732 as of September 30, 2013		12,105			12,244			12,349			—
Redeemable convertible Series B preferred stock, $0.001 par value, 5,057,901 shares authorized, issued and outstanding as of December 31, 2011, December 31, 2012 and September 30, 2013; no shares issued and outstanding pro forma; liquidation preference of $22,564 as of September 30, 2013		21,927			22,068			22,175			—
Redeemable convertible Series C preferred stock, $0.001 par value, 4,429,601 shares authorized, issued and outstanding as of December 31, 2011, December 31, 2012 and September 30, 2013; no shares issued and outstanding pro forma; liquidation preference of $32,519 as of September 30, 2013		32,314			32,359			32,394			—
Redeemable convertible Series D preferred stock, $0.001 par value, no shares authorized, issued or outstanding as of December 31, 2011; 3,992,527 shares authorized, 3,339,902 issued and outstanding as of December 31, 2012; liquidation preference of $26,100 as of December 31, 2012; 3,979,730 issued and outstanding as of September 30, 2013; no shares issued and outstanding pro forma; liquidation preference of $31,100 as of September 30, 2013.		—			26,035			31,043			—

Total redeemable convertible preferred stock		66,346			92,706			97,961			—
Stockholders' (deficit) equity:
Common stock, $0.001 par value, 35,984,090 shares authorized, 6,680,085, 7,386,133 and 7,449,152 issued and outstanding as of December 31, 2011, December 31, 2012 and September 30, 2013, respectively; 30,950,360 shares issued and outstanding pro forma		6			7			7			31
Additional paid-in capital		3,817			5,483			6,972			104,943
Accumulated deficit		(48,673	)		(71,786	)		(94,669	)		(94,669	)

Total stockholders' (deficit) equity		(44,850	)		(66,296	)		(87,690	)		10,305

Total liabilities, redeemable convertible preferred stock and stockholders' (deficit) equity	$	37,136		$	39,877		$	42,476		$	42,476

2U, Inc.

Consolidated Statements of Operations

(in thousands, except share and per share amounts)

	Year Ended December 31,						Nine Months Ended September 30,

	2011			2012			2012			2013
							(unaudited)
Revenue	$	29,733		$	55,879		$	39,459		$	58,324
Costs and expenses:
Servicing and support		12,300			14,926			10,516			16,516
Technology and content development		5,117			8,299			5,725			12,944
Program marketing and sales		32,116			45,390			34,491			40,877
General and administrative		5,104			10,342			6,882			10,794

Total costs and expenses		54,637			78,957			57,614			81,131

Loss from operations		(24,904	)		(23,078	)		(18,155	)		(22,807	)
Other income (expense):
Interest expense		(19	)		(73	)		(55	)		12
Interest income		45			38			27			21

Total other income (expense)		26			(35	)		(28	)		33

Loss before income taxes		(24,878	)		(23,113	)		(18,183	)		(22,774	)
Income tax expense		—			—			—			—

Net loss		(24,878	)		(23,113	)		(18,183	)		(22,774	)

Preferred stock accretion		(314	)		(339	)		(254	)		(261	)
Net loss attributable to common stockholders	$	(25,192	)	$	(23,452	)	$	(18,437	)	$	(23,035	)

Net loss per share attributable to common stockholders, basic and diluted	$	(3.77	)	$	(3.33	)	$	(2.66	)	$	(3.11	)

Weighted average common shares outstanding, basic and diluted		6,680,085			7,037,090			6,923,400			7,401,842

Pro forma net loss per share attributable to common stockholders, basic and diluted				$	(0.81	)				$	(0.75	)

Pro forma weighted average common shares outstanding, basic and diluted					29,105,925						30,839,538

2U, Inc.

Consolidated Statements of Changes in Stockholders' Deficit

(in thousands, except share amounts)

	Common Stock

	Common Stock					Additional Paid-In Capital			Accumulated Deficit			Total Stockholders' Deficit
	Shares			Amount		Additional Paid-In Capital			Accumulated Deficit			Total Stockholders' Deficit
Balance, January 1, 2011		6,680,085		$	6	$	3,292		$	(23,795	)	$	(20,497	)
Exercise of stock options		—			—		—			—			—
Accretion of issuance costs on redeemable convertible preferred stock		—			—		(314	)		—			(314	)
Stock-based compensation expense		—			—		839			—			839
Net loss		—			—		—			(24,878	)		(24,878	)

Balance, December 31, 2011		6,680,085			6		3,817			(48,673	)		(44,850	)

Exercise of stock options		706,048			1		610			—			611
Accretion of issuance costs on redeemable convertible preferred stock		—			—		(339	)		—			(339	)
Stock-based compensation expense		—			—		1,395			—			1,395
Net loss		—			—		—			(23,113	)		(23,113	)

Balance, December 31, 2012		7,386,133			7		5,483			(71,786	)		(66,296	)

Exercise of stock options (unaudited)		110,623			—		112			—			112
Repurchase of common shares (unaudited)		(47,604	)		—		(69	)		(109	)		(178	)
Accretion of issuance costs on redeemable convertible preferred stock (unaudited)		—			—		(261	)		—			(261	)
Stock-based compensation expense (unaudited)		—			—		1,707			—			1,707
Net loss (unaudited)		—			—		—			(22,774	)		(22,774	)

Balance, September 30, 2013 (unaudited)		7,449,152		$	7	$	6,972		$	(94,669	)	$	(87,690	)

	Year Ended December 31,						Nine Months Ended September 30,

	2011			2012			2012			2013
							(unaudited)
Cash flows from operating activities
Net loss	$	(24,878	)	$	(23,113	)	$	(18,183	)	$	(22,774	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,551			2,869			2,036			3,082
Stock-based compensation expense		839			1,395			981			1,707
Interest expense incurred in connection with convertible debt		19			—			—			—
Amortization of deferred financing costs		—			74			49			—
Change in the fair value of the Series D redeemable convertible preferred stock warrant		—			(22	)		(8	)		(18	)
Changes in operating assets and liabilities:											—
Accounts receivable		(1,312	)		1,142			(9,729	)		(16,957	)
Advances to clients		(996	)		—			—			166
Prepaid expenses		(590	)		(24	)		(395	)		(290	)
Related party receivable		—			(265	)		—			—
Other assets		(127	)		(133	)		(143	)		(73	)
Accounts payable		(101	)		1,328			1,220			244
Accrued expenses and other current liabilities		3,360			1,047			666			5,096
Deferred revenue		2,144			(5,002	)		3,191			12,789
Refunds payable		513			159			96			243
Rebate reserve		618			240			216			(294	)
Other liabilities		348			120			135			38

Net cash used in operating activities		(18,612	)		(20,185	)		(19,868	)		(17,041	)
Cash flows from investing activities
Expenditures for property, equipment, and internally developed software		(2,512	)		(2,275	)		(1,841	)		(2,116	)
Capitalized content cost expenditures		(3,656	)		(2,578	)		(1,897	)		(3,561	)
Other investing activities		(90	)		(362	)		(345	)		—

Net cash used in investing activities		(6,258	)		(5,215	)		(4,083	)		(5,677	)
Cash flows from financing activities
Proceeds from exercise of stock options		—			611			566			112
Repurchase of common shares		—			—			—			(178	)
Proceeds from issuance of Series C redeemable convertible preferred stock, net of issuance costs		31,510			—			—			—
Proceeds from issuance of Series D redeemable convertible preferred stock, net of issuance costs		—			26,021			26,021			4,994
Proceeds from issuance of convertible debt		750			—			—			—

Net cash provided by financing activities		32,260			26,632			26,587			4,928
Net increase (decrease) in cash and cash equivalents		7,390			1,232			2,636			(17,790	)
Cash and cash equivalents, beginning of period		16,568			23,958			23,958			25,190

Cash and cash equivalents, end of period	$	23,958		$	25,190		$	26,594		$	7,400

Supplemental disclosure of noncash investing and financing activities
Conversion of debt to redeemable convertible preferred stock	$	769		$	—		$	—		$	—
Accretion of issuance costs on redeemable convertible preferred stock		314			339			254			261
Accrued capital expenditures		157			40			30			107
Deferred offering costs included in accounts payable and accrued expenses		—			—			—			568

2U, Inc.

Notes to Consolidated Financial Statements

(dollars in thousands, except per share amounts)

2U, Inc. (the "Company") was incorporated as 2Tor Inc. in the State of Delaware in April 2008 and changed its name to 2U, Inc. in October 2012. Under long-term agreements, the Company provides a proprietary, cloud-based technology platform, bundled with technology-enabled services, that allows leading colleges and universities to deliver high quality online degree programs and courses, extending the universities' reach and distinguishing their brands. The Company's comprehensive learning platform acts as the hub for all student and faculty academic and social interaction. The Company also provides a suite of technology-enabled services that support the complete lifecycle of a higher education program or course, including attracting students, facilitating in-program field placements and providing technical support.

Since its inception, the Company has incurred substantial losses. As of December 31, 2011 and 2012 and September 30, 2013 (unaudited), the accumulated deficit was $48,673, $71,786 and $94,669, respectively. The Company has financed its operations primarily through issuances of redeemable convertible preferred stock and believes it has adequate financial resources, including cash on hand, working capital and available credit facilities, to fund its existing operations. If additional financing were not available, it could limit the Company's opportunity to capitalize on future growth opportunities.

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary and have been prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP"). All intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited interim consolidated balance sheet as of September 30, 2013, and the consolidated statement of operations for the nine months ended September 30, 2012 and 2013, statement of stockholders' deficit for the nine months ended September 30, 2013 and cash flows for the nine months ended September 30, 2012 and 2013 and the related footnotes have been prepared in accordance with U.S. GAAP as contained in the Financial Accounting Standards Board ("FASB") Accounting Standards Codification (the "Codification" or "ASC") for interim financial information. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the results of operations, financial position, changes in stockholders' deficit and cash flows. The results of operations for the nine months ended September 30, 2013 are not necessarily indicative of the results for the full year or the results for any future periods.

The Company has confidentially submitted a Draft Registration Statement on Form S-1 with the United States Securities and Exchange Commission (the "SEC") for the proposed initial public

offering of shares of its common stock (the "IPO"). If the IPO is consummated, all of the redeemable convertible preferred stock outstanding will convert to common stock.

The unaudited pro forma net loss per share for the nine months ended September 30, 2013 assumes the conversion of all outstanding shares of redeemable convertible preferred stock into shares of common stock upon the completion of the IPO as of January 1, 2013 or the time of issuance, if later, and the conversion of the warrants to purchase Series D redeemable convertible preferred stock into common stock warrants as of January 1, 2013. The amounts recorded in 2013 to adjust the Series D warrants liability to fair value have been added back to net loss to arrive at pro forma net loss per share.

The unaudited pro forma net loss per share for the year ended December 31, 2012 assumes the conversion of all outstanding shares of redeemable convertible preferred stock into shares of common stock upon the completion of the IPO as of January 1, 2012 or the time of issuance, if later, and the conversion of the warrants to purchase Series D redeemable convertible preferred stock into common stock warrants as of the date of issuance. The amounts recorded in 2012 to adjust the Series D warrants liability to fair value have been added back to net loss to arrive at pro forma net loss per share.

The Company believes that the unaudited pro forma net loss per share provides material information to investors because the conversion of the redeemable convertible preferred stock into common stock is expected to occur upon the closing of the IPO and, therefore, the disclosure of pro forma net loss per share provides a measure of net loss per share that is comparable to what will be reported as a public company.

The preparation of financial statements in accordance with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. On an ongoing basis, the Company evaluates its estimates, including those related to the useful lives of long-lived assets, fair value measurement and income taxes, among others. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable, the results of which form the basis for making judgments about the carrying value of assets and liabilities. Actual results could differ from those estimates.

Cash and cash equivalents consist of bank checking and money market accounts and investments in certificates of deposit that mature in less than three months. The Company considers all highly liquid marketable securities with maturities at the time of purchase of three months or less to be cash equivalents, and they are carried at fair value.

The Company recognizes revenue when all of the following conditions are met: (i) persuasive evidence of an arrangement exists, (ii) rendering of services is complete, (iii) fees are fixed or determinable and (iv) collection of fees is reasonably assured.

The Company derives revenue under long-term contracts that typically range from 10 to 15 years in length. Under these contracts, the Company enables access to its cloud-based technology platform and provides technology-enabled marketing, content development and supporting services to its clients and their faculty and students. The Company is entitled to a contractually specified percentage of net program proceeds from its clients. These net program proceeds represent gross proceeds billed by clients to students, less credit card fees, shared program expenses and other specified charges the Company has agreed to exclude in its contract with a client. A refund allowance is established for our share of tuition and fees ultimately uncollected by our clients. The Company also offered rebates to a group of students who enrolled in a specific client program between 2009 and 2011, which the Company will pay to the student if he or she completes the degree and certain post-graduation work requirements within a specified period of time. These rebates and refunds offset the net program proceeds recognized as revenue. Revenue is recognized ratably over the service period, which the Company defines as the first through the last day of classes for each term in a client's program.

The Company generates revenue from multiple-deliverable contractual arrangements with its clients. Under each of these arrangements, the Company provides (i) a cloud-based technology platform that serves as a learning platform for client faculty and students and which also enable a comprehensive range of other client functions, (ii) program marketing and application services for student acquisition, (iii) in conjunction with the client's faculty members, content development for courses and (iv) faculty and student support services, including technical field training and support, non-academic student advising, academic progress monitoring and career services.

In order to treat deliverables in a multiple-deliverable contractual arrangement as separate units of accounting, deliverables must have standalone value upon delivery. The services are provided solely in support of courses offered over the Company's platform and for students of the online courses delivered over our platform. Accordingly, the Company has determined that no individual deliverable has standalone value upon delivery and, therefore, deliverables within the Company's multiple-deliverable arrangements do not qualify for treatment as separate units of accounting. Accordingly, the Company considers all deliverables to be a single unit of accounting and recognizes revenue from the entire arrangement over the term of the service period.

Advance payments are recorded as deferred revenue until services are delivered or obligations are met, at which time revenue is recognized. Deferred revenue as of a particular balance sheet date represents the excess of amounts received as compared to amounts recognized in revenue in the consolidated statements of operations as of the end of the reporting period, and such amounts are reflected as a current liability on the Company's consolidated balance sheets.

The Company expenses advertising costs as incurred. The amount expensed for the years ended December 31, 2011 and 2012 and for the nine months ended September 30, 2013 was not material. The Company records its advertising costs as program marketing and sales expense in the Company's consolidated statements of operations.

The carrying amounts of certain assets and liabilities, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and other current liabilities, approximate their respective fair values due to their short-term nature.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on the Company's principal or, in the absence of a principal, most advantageous, market for the specific asset or liability.

U.S. GAAP provides for a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The fair value hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs when determining fair value. The three tiers are defined as follows:

The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting

period. This determination requires significant judgments to be made. The following tables summarize the conclusions reached as of December 31, 2011 and 2012 and September 30, 2013:

In order to determine the fair value of the Series C and Series D redeemable convertible preferred stock warrants, the Company used an option pricing model for both 2011 and 2012 and for the nine months ended September 30, 2013. The valuation required the input of subjective assumptions, including the risk-free interest rate, the value of the underlying securities and the expected stock price volatility. The risk-free interest rate assumption was based upon observed interest rates for constant maturity U.S. Treasury securities consistent with the term of the warrants. The expected stock price volatility assumption was based on historical volatilities for publicly traded stock of comparable companies over the term of the warrants.

As further discussed in Note 9, the Company issued a warrant to purchase 48,896 shares of the Company's Series C redeemable convertible preferred stock at an exercise price of $7.16 per share. The warrant had a performance condition and if the Company met the performance condition, the warrant could be exercised. As of December 31, 2011, the Company concluded that there was a remote probability that the performance condition would be met, so the fair value of the warrant was estimated to be zero.

Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs

The following table presents the changes in the Company's Level 3 instruments measured at fair value on a recurring basis:

Accounts receivable are stated at realizable value. The Company extends a minimal amount of uncollateralized credit to its clients. The Company utilizes the allowance method to provide for doubtful accounts based on management's evaluation of the collectability of the amounts due. The Company's estimate is based on historical collection experience and a review of the current status of accounts receivable. Historically, actual write-offs for uncollectible accounts have not significantly differed from the Company's estimates. As of December 31, 2011 and 2012 and September 30, 2013, the Company determined that no allowance for doubtful accounts was necessary.

Financial instruments that subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. All of the Company's cash is held at financial institutions that management believes to be of high credit quality. The Company's bank accounts exceed federally insured limits at times. The Company has not experienced any losses on cash to date. To manage accounts receivable risk, the Company evaluates the creditworthiness of its clients and maintains an allowance for doubtful accounts, if needed.

The Company has two contracts with the same university that accounted for an aggregate of 94% and 78% of its revenue for the years ended December 31, 2011 and 2012, respectively, and an aggregate of 99% and 51% of accounts receivable as of December 31, 2011 and 2012, respectively. Additionally, the Company has a contract with another university that accounted for approximately 15% of its revenue for the year ended December 31, 2012.

Property and equipment is stated at cost less accumulated depreciation and amortization. Computer software is included in property and equipment and consists of purchased software and internally-developed software. Expenditures for major additions, construction and improvements are capitalized. Depreciation and amortization is expensed using the straight-line method over the estimated useful lives of the related assets, which range from three to five years for computer hardware and three to ten years for furniture and office equipment. Leasehold improvements are depreciated on a straight-line basis over the lesser of the remaining term of the leased facility or the estimated useful life of the improvement, which ranges from five to ten years. Useful lives of significant assets are periodically reviewed and adjusted prospectively to reflect the Company's current estimates of the respective assets' expected utility. Repair and maintenance costs are expensed as incurred.

The Company capitalizes certain costs associated with internally-developed software, primarily consisting of direct labor associated with creating the software. Software development projects generally include three stages: the preliminary project stage (all costs are expensed as incurred), the application development stage (certain costs are capitalized and certain costs are expensed as incurred) and the post-implementation/operation stage (all costs are expensed as incurred). Costs capitalized in the application development stage include costs of designing the application, coding, integrating the Company's and the university's networks and systems, and the testing of the software. Capitalization of costs requires judgment in determining when a project has reached the application development stage and the period over which the Company expects to benefit from the use of that software. Once the software is placed in service, these costs are depreciated on the straight-line method over the estimated useful life of the software, which is generally three years. Internal software development costs of $1,514 and $1,078 were capitalized during the years ended December 31, 2011 and 2012, respectively. Amortization expense related to the capitalized internally-developed software was $426 and $887 for the years ended December 31, 2011 and 2012, respectively, and is included in technology and content development costs in the accompanying consolidated statements of operations. The net book value of capitalized internally- developed software was $2,318 and $2,508 at December 31, 2011 and 2012, respectively.

The Company works with each client's faculty members to develop and maintain educational content that is delivered to their students through the Company's cloud-based technology platform. The online content developed jointly by the Company and its clients consists of subjects chosen and taught by clients' faculty members and incorporates references and examples designed to remain relevant over extended periods of time. Online delivery of the content, combined with live, face-to-face instruction, provides the Company with rapid user feedback that it uses to make ongoing corrections, modifications and improvements to the course content. The Company's clients retain all intellectual property rights to the developed content, although the Company retains the rights to the content packaging and delivery mechanisms. Much of the Company's new content development uses proven delivery platforms and is therefore primarily subject-specific in nature. As a result, a significant portion of content development costs qualify for capitalization due to the focus

of the Company's development efforts on the unique subject matter of the content. Costs related to the Company's pilot program with a consortium of undergraduate schools are currently being expensed, given the limited history with this program and the significant difference between this service and the Company's core service offerings, management is currently unable to conclude that the costs will be recoverable.

The costs that qualify for capitalization are external direct costs, payroll and payroll-related costs. The costs related to general and administrative functions are not capitalizable and are expensed as incurred. Capitalization ends when content has been fully developed by both the Company and the client, at which time amortization of the capitalized content development costs begins. The capitalized costs are recorded in capitalized content costs on the consolidated balance sheets and are amortized using the straight-line method over the estimated useful life of the respective capitalized content program, which is generally five years. Given the rapid change in technologies, it is reasonably possible that the capitalized content development costs and internally developed software could become obsolete before the estimated useful lives are complete.

The Company reviews long-lived assets, which consist of property and equipment and capitalized content costs, for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. Recoverability of the long-lived asset is measured by a comparison of the carrying value of the asset or asset group to the future undiscounted net cash flows expected to be generated by the asset or asset group. If such assets are not recoverable, the impairment to be recognized is measured by the amount by which the carrying value of the asset exceeds the estimated fair value (discounted cash flow) of the asset or asset group. For the years ended December 31, 2011 and 2012, no impairment of long-lived assets was deemed to have occurred.

The Company records a refunds payable liability related to the amounts owed to clients as a result of students defaulting on their payments to the client. The Company may receive its portion of net program proceeds prior to the client collecting the full amount of tuition and applicable fees from its students. The Company calculates the refunds payable liability by estimating the future amounts owed to the client resulting from non-payment by students. The Company's estimate is based on historical collection experience, market and income trends, and a review of the client's accounts receivable aging.

The Company has recorded a rebate reserve liability that results from having offered students who first enrolled in a specific Master of Arts in Teaching program between April 2009 and June 2011 a rebate if they complete their degree and teach for five consecutive years in a designated low-income school. The Company accounts for the rebate reserve as a contingent sales incentive and has recorded a rebate reserve liability to recognize the obligation to rebate amounts to students who satisfactorily complete the rebate requirements.

The Company sometimes advances payments to its clients in order to fund start-up expenses of the program on behalf of the client. Advances to clients are stated at realizable value. The advances are repaid to the Company on terms as required in the respective agreements. The Company recognizes imputed interest expense on these advance payments when there is a significant amount of imputed interest.

The Company's net loss equals comprehensive loss for all periods presented as the Company has no components of other comprehensive income.

The Company accounts for stock-based compensation awards based on the fair value of the award as of the grant date. For awards subject to service-based vesting conditions, the Company recognizes stock-based compensation expense on a straight-line basis over the awards' requisite service period, adjusted for estimated forfeitures. For awards subject to both performance and service-based vesting conditions, the Company recognizes stock-based compensation expense using an accelerated recognition method when it is probable that the performance condition will be achieved.

See Note 10 for a discussion of assumptions used in calculating the fair value of stock options.

The Company uses the two-class method to compute net loss per common share because the Company has issued securities, other than common stock, that contractually entitle the holders to participate in dividends and earnings of the Company. The two-class method requires earnings for the period to be allocated between common stock and participating securities based upon their respective rights to receive distributed and undistributed earnings. Holders of each series of the Company's redeemable convertible preferred stock are entitled to participate in distributions, when and if declared by the board of directors, that are made to common stockholders, and as a result are considered participating securities.

Under the two-class method, for periods with net income, basic net income per common share is computed by dividing the net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Net income attributable to common stockholders is computed by subtracting from net income the portion of current year earnings that the participating securities would have been entitled to receive pursuant to their dividend rights had all of the year's earnings been distributed. No such adjustment to earnings is made during periods with a net loss, as the holders of the participating securities have no obligation to fund losses. Diluted net loss per common share is computed under the two-class method by using the weighted average number of shares of common stock outstanding, plus, for periods with net income attributable to common stockholders, the potential dilutive effects of stock

options and warrants. In addition, the Company analyzes the potential dilutive effect of the outstanding participating securities under the "if-converted" method when calculating diluted earnings per share, in which it is assumed that the outstanding participating securities convert into common stock at the beginning of the period. The Company reports the more dilutive of the approaches (two-class or "if-converted") as its diluted net income per share during the period. Due to net losses for the years ended December 31, 2011 and 2012 and for nine months ended September 30, 2012 and 2013, basic and diluted loss per share were the same, as the effect of potentially dilutive securities would have been anti-dilutive.

In July 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2013-11, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists." This guidance provides financial statement presentation guidance on whether an unrecognized tax benefit must be presented as either a reduction to a deferred tax asset or separately as a liability. ASU No. 2013-11 will be effective for interim or annual periods beginning after December 15, 2013, which the Company will adopt as of January 1, 2014. The adoption of this guidance is not expected to have a material impact on the Company's financial condition, results of operations or disclosures.

In May 2011, the FASB issued ASU 2011-04, "Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS." ASU 2011-04 represents the converged guidance of the FASB and the International Accounting Standards Board on fair value measurement and has resulted in common requirements for measuring fair value and for disclosing information about fair value measurements, including a consistent meaning of the term "fair value." The Company adopted ASU 2011-04 effective January 1, 2012 and has retrospectively applied the provisions of ASU 2011-04 for all periods presented.

Depreciation expense for the years ended December 31, 2011 and 2012 and the nine months ended September 30, 2013 was $683, $1,344 and $1,515, respectively.

The Company recorded amortization expense related to capitalized content development costs of $863, $1,495 and $1,532 for the years ended December 31, 2011 and 2012 and the nine months ended September 30, 2013 (unaudited), respectively.

As of December 31, 2012, the estimated future amortization expense for the capitalized content costs is as follows:

On April 5, 2012, the Company secured a revolving line of credit from a bank for an aggregate borrowing base not to exceed $10,000. As of September 30, 2013, the Company had not drawn on the line of credit. The line of credit will expire on April 5, 2014. The availability of this credit line is subject to the Company's compliance with certain reporting and financial covenants. The Company is currently in compliance with all such covenants.

From time to time, the Company may become involved in legal proceedings or other contingencies in the ordinary course of its business. The Company is not presently involved in any legal proceeding or other contingency that, if determined adversely to it, would individually or in the aggregate have a material adverse effect on its business, operating results, financial condition or cash flows.

When the Company enters into new program agreements with its clients, the Company commits to meet certain staffing and spending investment thresholds related to program marketing and sales activities. The Company believes it is currently in compliance with all such commitments.

The Company leases office facilities under non-cancelable operating leases in California, New York, Maryland, Missouri, North Carolina and Hong Kong. The Company also leases furniture and office equipment under non-cancelable leases. As of December 31, 2012, the future minimum lease payments (net of aggregate expected sublease payments of $988) were as follows:

The future minimum lease payments due under non-cancelable operating lease arrangements contain fixed rent increases over the term of the lease. Rent expense on these operating leases is recognized over the term of the lease on a straight-line basis. The excess of rent expense over future minimum lease payments due has been reported in other non-current liabilities in the accompanying consolidated balance sheets. As of December 31, 2011 and 2012, the deferred rent liability related to these leases totaled $349 and $469, respectively.

Total rent expense (net of sublease income of $109 and $284) for the years ended December 31, 2011 and 2012 was $1,205 and $1,654, respectively.

The components of loss before income taxes for the years ended December 31 were as follows:

A reconciliation between the Company's statutory federal income tax rate and the effective tax rate for the years ended December 31, is as follows:

The significant components of the Company's deferred tax assets and liabilities as of December 31 are as follows:

	2011			2012

Deferred tax assets:
Accrued expenses and other	$	318		$	686
Minimum guarantee		191			—
Rebate reserve		629			724
Deferred rent		123			165
Stock compensation		101			263
Net operating loss carryforwards		17,421			26,386
Valuation allowance		(15,072	)		(23,864	)

Total deferred tax assets	$	3,711		$	4,360

Deferred tax liabilities:
Prepaid expenses	$	(147	)	$	(187	)
Capitalized content development costs		(2,150	)		(2,532	)
Capitalized software development costs		(883	)		(961	)
Property and equipment		(531	)		(680	)

Total deferred tax liabilities	$	(3,711	)	$	(4,360	)

Net deferred tax assets/liabilities	$	—		$	—

At December 31, 2011 and 2012, the Company had federal net operating loss ("NOL") carryforwards of $43,081 and $63,186, respectively, which expire between 2029 and 2032. At December 31, 2011 and 2012, the Company had individual state net operating loss carryforwards up to $6,864 and $51,245, respectively, which expire between 2021 and 2032. For financial reporting purposes, a full valuation allowance has been established to offset the deferred tax assets related to the NOL carryforwards. The total increase in the valuation allowance was $8,792 for the year ended December 31, 2012, as the Company has not generated taxable income since inception and does not have sufficient deferred tax liabilities to recover the deferred tax assets. The utilization

of the loss carryforwards to reduce future income taxes will depend on the Company's ability to generate sufficient taxable income prior to the expiration of the NOL carryforwards. In addition, a certain portion of the above NOLs may be subject to Internal Revenue Code section 382 limitations, which may limit their future use. The Company has experienced a number of transactions which could lead to a limitation of its NOLs under section 382 of the Internal Revenue Code. The Company intends to complete a study regarding this limitation in the next twelve months. It is reasonably possible that the results of the study will reduce the reported net operating losses and other deferred tax assets.

The Company has estimated its annual effective tax rate for the full fiscal years 2012 and 2013 and applied that rate to its income before income taxes in determining its provision for income taxes for the nine months ended September 30, 2012 and 2013. The Company also recorded discrete items in each respective period as appropriate. The Company's consolidated effective tax rate for the nine months ended September 30, 2012 and 2013 was 0%.

The Company permanently reinvests cumulative undistributed earnings of its non-U.S. subsidiary in non-U.S. operations. U.S. federal income taxes have not been provided for in relation to undistributed earnings to the extent that they are permanently reinvested in the Company's non-U.S. operations. It is not practical at this time to determine the income tax liability that would result upon repatriation to the United States. As of December 31, 2012 and September 30, 2013, the undistributed earnings of the Company's foreign subsidiary were immaterial.

The Company applies the provisions of ASC 740-10 to uncertain tax positions. ASC 740-10 clarifies accounting for income taxes by prescribing a minimum probability threshold that a tax position must meet before a financial statement benefit is recognized. If the probability for sustaining a tax position is greater than 50%, then the tax position is warranted and recognition should be at the highest amount which would be expected to be realized upon settlement. The Company did not identify any tax positions that would be required for inclusion in the financial statements. As of September 30, 2013, the Company had not made any changes to its tax positions as of December 31, 2012.

The Company recognizes interest and penalties related to uncertain tax position in income tax expense. As of December 31, 2011 and 2012 and September 30, 2013, the Company had no accrued interest or penalties related to tax contingencies.

The Company has analyzed its filing positions in all significant federal, state and foreign jurisdictions where it is required to file income tax returns, as well as open tax years in these jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local tax examinations by tax authorities for the years prior to 2010. No income tax returns are currently under examination by the taxing authorities.

The following table summarizes the Company's issuances of redeemable convertible preferred stock:

Series A, Series B, Series C and Series D redeemable convertible preferred stock are collectively referred to as the "Preferred Stock" and individually as the "Series A," "Series B," "Series C" and "Series D." Each of the purchase prices per share above is referred to as the Original Issue Price, and excludes the cost of issuance. Any costs incurred in connection with the issuance of the various classes of Preferred Stock have been recorded as a reduction of the carrying amount of the Preferred Stock and were accreted through a charge to additional paid-in capital through September 30, 2013.

On February 7, 2011, the Company issued a convertible promissory note for $750, which was convertible at the option of the Company. In connection with the issuance of Series C preferred stock in 2011, the Company converted the promissory note into 104,776 shares of Series C preferred stock and issued the holder a warrant to purchase 48,896 shares of Series C preferred stock.

The following table presents a summary of activity for the Preferred Stock issued and outstanding for the years ended December 31, 2011 and 2012 and for the nine months ended September 30, 2013:

	Redeemable Convertible Preferred Stock

	Series A		Series B		Series C		Series D		Total Amount
Balance, January 1, 2011	$	11,966	$	21,786	$	—	$	—	$	33,752
Issuance of redeemable convertible preferred stock net of issuance costs		—		—		31,510		—		31,510
Conversion of promissory note into redeemable convertible preferred stock		—		—		769		—		769
Accretion of issuance costs on redeemable convertible preferred stock		139		141		35		—		315

Balance, December 31, 2011		12,105		21,927		32,314		—		66,346
Issuance of redeemable convertible preferred stock net of issuance costs		—		—		—		26,021		26,021
Accretion of issuance costs on redeemable convertible preferred stock		139		141		45		14		339

Balance, December 31, 2012		12,244		22,068		32,359		26,035		92,706
Issuance of redeemable convertible preferred stock net of issuance costs (unaudited)		—		—		—		4,994		4,994
Accretion of issuance costs on redeemable convertible preferred stock (unaudited)		105		107		35		14		261

Balance, September 30, 2013 (unaudited)	$	12,349	$	22,175	$	32,394	$	31,043	$	97,961

The Preferred Stock shares are redeemable at the election of the Preferred Stock holders. On April 3, 2012, the Company amended its Amended and Restated Certificate of Incorporation to change the earliest possible Preferred Stock redemption date to any date after June 19, 2016, but within ninety days after the receipt of a written request from at least 75% of the holders of the outstanding shares of the respective series of Preferred Stock. As of December 31, 2012, the redemption values of the Series A, B, C, and D Preferred Stock were $12,732, $22,564, $32,519, and $26,100, respectively.

The Preferred Stock is convertible, at the option of the holder, into shares of common stock at a ratio equal to the Original Issue Price for such series divided by the conversion price for such series. Each series is convertible on a one-for-one basis. The conversion price for each series of

Preferred Stock is subject to adjustment in the event of any stock dividend, stock split, combination of shares, reorganization, recapitalization, reclassification or similar event.

Additionally, each share of Preferred Stock will automatically convert into common stock, at the then-current conversion price for such series, upon the earliest to occur of (i) immediately prior to the closing of a public offering of shares of the Company's common stock resulting in a deemed total market valuation for the Company of $330,000, based on the public offering price, and which results in aggregate cash proceeds to the Company of not less than $50,000, or (ii) the date specified by vote or written consent of (a) the holders of at least 66²/3% of the voting power of the outstanding shares of Series A Preferred Stock, voting together as a class, (b) the holders of at least a majority of the voting power of the outstanding shares of Series B Preferred Stock, voting together as a class, (c) the holders of at least 60% of the voting power of the outstanding shares of Series C Preferred Stock, voting together as a class, and (d) the holders of at least 60% of the voting power of the outstanding shares of Series D Preferred Stock, voting together as a class.

The holders of the Preferred Stock are entitled to the number of votes equal to the number of shares of common stock into which their shares of Preferred Stock are convertible. Certain transactions and actions require a minimum voting consent of the holders of the shares of the outstanding Preferred Stock, as set forth in the Company's Amended and Restated Certificate of Incorporation.

The holders of the Preferred Stock are entitled to receive dividends on a pari passu basis on each outstanding share of preferred stock (subject to adjustment in the event of any stock splits, stock dividends, reclassifications or similar events), payable in preference and priority to any declaration or payment of any dividend on the common stock of the Company. As of December 31, 2012 and September 30, 2013, the dividends are payable at the rate of (i) $0.101512 per share per year on each outstanding share of Series A Preferred Stock; (ii) $0.356896 per share per year on each outstanding share of Series B Preferred Stock; (iii) $0.587307 per share per year on each outstanding share of Series C Preferred Stock; and (iv) $0.625168 per share per year on each outstanding share of Series D Preferred Stock. The dividends are payable when and if declared by the board of directors and are noncumulative. No dividends have been declared on the Preferred Stock through September 30, 2013.

The holders of the common stock are entitled to receive dividends if and when declared by the Company, but not until all dividends on the Preferred Stock have been either paid or declared and the Company has set aside the funds to pay those dividends declared.

In the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary (each, a "Liquidation Event"), the holders of Series B, Series C, and Series D are

entitled to receive in preference to the holders of Series A an amount per share equal to the respective Original lssue Price plus any declared and unpaid dividends.

If the assets of the Company are insufficient to make payment in full, the assets will be distributed ratably in proportion to the full amounts to which the respective stockholders would otherwise be entitled. Thereafter, the holders of Series A shares are entitled to receive an amount per share equal to the Series A Original lssue Price plus all declared and unpaid dividends.

After the payment of the full liquidation preferences of the preferred Stock as set forth above, the remaining assets of the Company available for distribution in such Liquidation Event, if any, shall be distributed ratably to the holders of the Common Stock.

As of December 31, 2012, the Company was authorized to issue 59,498,095 total shares of capital stock, consisting of 35,984,090 shares of common stock and 23,514,005 shares of preferred stock. At December 31, 2012, the Company had reserved a total of 28,458,129 of its authorized shares of common stock for future issuance as follows:

As described in Note 7, in connection with the issuance and sale of the Series C preferred stock in 2011, the Company converted an outstanding promissory note into shares of Series C preferred stock and issued the holder a warrant to purchase 48,896 shares of the Company's Series C redeemable convertible preferred stock with an exercise price of $7.16 per share. The warrant was valued at $20 on the date of grant. The fair value of the warrant was estimated to be de minimis at December 31, 2011 due to the remote probability of meeting the performance criteria for the warrant to vest. The warrant expired unexercised on January 31, 2012.

In connection with the line of credit secured in April 2012, the Company issued a warrant to purchase 12,797 shares of the Company's Series D redeemable convertible preferred stock with an exercise price of $7.81 per share. The warrant was valued at $74 on the date of grant and at $52 at December 31, 2012 and $34 at September 30, 2013, respectively. The warrant remained outstanding as of September 30, 2013 and will expire in 2022.

The inputs to the fair value model for the warrants are considered Level 3 inputs under ASC 820, Fair Value Measurements and Disclosures. The inputs and valuation techniques used to measure the fair value of the warrants are discussed in Note 2. All changes in the fair value of the warrants are recorded as a component of interest expense. The Company recorded reductions of interest expense of $0 and $22 for the years ended December 31, 2011 and 2012, and $8 and $18 for the nine months ended September 30, 2012 and 2013, respectively, related to the fair value adjustment of the warrants.

The Company established the 2008 Stock lncentive Plan (the "Stock lncentive Plan") on October 28, 2008, pursuant to which the Company has authorized 6,980,000 shares of its common stock for issuance to its employees, directors and consultants as of September 30, 2013. The Stock lncentive Plan permits the granting of incentive stock options, restrictive stock and deferred stock to eligible participants.

As of December 31, 2012, the Company had 817,125 shares allocated to the Stock lncentive Plan, but not yet issued. As of September 30, 2013, the Company had 639,381 shares allocated to the Stock lncentive Plan, but not yet issued. The terms of stock option grants under the Stock lncentive Plan, including the exercise price per share and vesting periods, are determined by the Company's board of directors or the compensation committee thereof. Stock options are granted at exercise prices of not less than the estimated fair market value of the Company's common stock at the date of grant. Stock options are generally subject to service-based vesting conditions and vest at various times from the date of the grant, with most options vesting in tranches, generally over a period of four years. Certain stock options granted during the year ended December 31, 2012 are subject to both performance and service-based vesting conditions. Stock options generally expire ten years from the grant date.

Stock-based compensation expense related to stock options is included in the following line items in the accompanying consolidated statements of operations:

The Company values stock options using the Black-Scholes-Merton option pricing model, which requires the input of subjective assumptions, including the risk-free interest rate, expected life of the option, expected stock price volatility and dividend yield. Additionally, the recognition of

expense requires estimation of the number of options that will ultimately vest and those that will be forfeited. The Company estimates the expected forfeitures of share-based awards at the grant date and recognizes the compensation cost only for those awards expected to vest.

The risk-free interest rate assumption is based upon observed interest rates for constant maturity U.S. Treasury securities consistent with the expected term of the Company's employee stock options. The expected life represents the period of time the stock options are expected to be outstanding and is based on the "simplified method." Under the "simplified method," the expected life of an option is presumed to be the mid-point between the vesting date and the end of the contractual term. The Company used the "simplified method" due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the stock options. Expected volatility is based on historical volatilities for publicly traded stock of comparable companies over the estimated expected life of the stock options. The Company assumed no dividend yield because dividends are not expected to be paid in the near future, which is consistent with the Company's history of not paying dividends.

The following table summarizes the assumptions used for estimating the fair value of the stock options granted:

			Weighted- Average Exercise Price per Share			Aggregate Intrinsic Value

Outstanding balance at December 31, 2011	3,709,813		$	1.32
Granted	2,259,251			3.58
Exercised	(706,048	)		0.88
Forfeited	(380,319	)		2.47
Expired	(115,870	)		3.08

Outstanding balance at December 31, 2012	4,766,827			2.32	7.72	$	16,363

Granted (unaudited)	1,006,000			5.75	9.50
Exercised (unaudited)	(110,623	)		1.01	5.93
Forfeited (unaudited)	(178,256	)		4.00
Expired (unaudited)	—			—

Outstanding balance at September 30, 2013 (unaudited)	5,483,948			2.92	7.41		30,334

Exercisable at December 31, 2012	2,139,808			1.01	6.08		10,134

Vested and expected to vest at December 31, 2012	4,410,256			2.24	7.61		15,466

Exercisable at September 30, 2013 (unaudited)	3,047,162			1.71	6.28		20,543

Vested and expected to vest at September 30, 2013 (unaudited)	5,313,508			2.87	7.37		29,649

Total compensation cost related to the nonvested awards not yet recognized as of December 31, 2012 was $3,864 and will be recognized over a weighted average period of approximately 2.9 years. The total compensation cost related to the nonvested awards not yet recognized as of September 30, 2013 was $5,791 and will be recognized over a weighted average period of approximately 3.0 years.

The aggregate intrinsic value of the employee options exercised during the year ended December 31, 2012 and the nine months ended September 30, 2013 was $1,647 and $526, respectively. No employee options were exercised during the year ended December 31, 2011.

Diluted loss per share is the same as basic loss per share for all periods presented because the effects of potentially dilutive items were anti-dilutive given the Company's net loss. The following

securities have been excluded from the calculation of weighted average common shares outstanding because the effect is anti-dilutive:

Basic and diluted net loss per share attributable to common stockholders is calculated as follows:

The numerator and denominator used in computing pro forma net loss per share for the year ended December 31, 2012 and the nine months ended September 30, 2013 have been adjusted to assume (i) the conversion of all outstanding shares of redeemable convertible preferred stock to common stock as of the beginning of the period or at the time of issuance, if later, and (ii) the

reclassification of the Series D warrant liability to additional paid-in capital as of the beginning of the period.

	Year Ended December 31, 2012			Nine Months Ended September 30, 2013

				(unaudited)
Numerator:
Historical net loss	$	(23,113	)	$	(22,774	)
Amortization of deferred preferred stock offering costs		(339	)		(261	)
Changes in the fair value of the warrant to purchase Series D redeemable convertible preferred stock		22			18

Pro forma numerator for basic and diluted loss per share	$	(23,430	)	$	(23,017	)

Denominator:
Historical denominator for basic and diluted net loss per share weighted-average shares		7,037,090			7,401,842
Plus: conversion of convertible preferred stock to common stock		22,068,835			23,437,696

Pro forma denominator for basic and diluted net loss per share attributable to common stockholders		29,105,925			30,839,538

Pro forma basic and diluted net loss per share attributable to common stockholders	$	(0.81	)	$	(0.75	)

Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker ("CODM") for purposes of allocating resources and evaluating financial performance. The Company's CODM reviews the financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. As such, the Company's operations constitute a single operating segment and one reportable segment. The Company offers similar services to substantially all of its clients, which represent graduate programs to major universities in the United States. The Company is also currently developing services to support undergraduate programs. These activities represent less than 10% of the Company's revenues, expenses and identifiable assets and are therefore combined with the Company's other operations for financial reporting purposes.

Substantially all assets were held and all revenue was generated in the United States during all periods presented. Through September 30, 2013, the Company provided services solely to universities located in the United States; however, the Company has recently signed contracts with universities in England and Australia.

The Company has established a 401(k) plan for eligible employees to contribute up to 100% of their compensation, limited by the IRS-imposed maximum contribution amount. The Company matches 33% of each employee's contribution up to 6% of the employee's salary deferral. For the years ended December 31, 2011 and 2012, the Company made employer contributions of $212 and $296, respectively.

The Company subleases space to an entity related by virtue of common ownership by a major stockholder. The lease requires the subtenant to reimburse the Company for the allocated cost of the space subleased. For the years ended December 31, 2011 and 2012 and the nine months ended September 30, 2012 and 2013, the Company recorded $16, $191, $143 and $143, respectively, as rental income from this related entity.

The Company utilizes the marketing and event planning services of a company that is partially owned by one of the Company's executives. The Company recorded $110 and $273 for the years ended December 31, 2011 and 2012, respectively, and $127 and $278 for the nine months ended September 30, 2012 and 2013, respectively, for the expenses incurred related to the services provided by this related party. Amounts due to the related party as of December 31, 2012 and September 30, 2013 were $70 and $22, respectively, and are recorded in accounts payable on the consolidated balance sheets.

As of December 31, 2012 and September 30, 2013, the Company recorded a note receivable from one of its executives in the amount of $265. The note bore an interest rate of 2.18% and was due in full at the earliest of the employee's termination, a change in control of the Company, an IPO or October 2019. The note was secured by stock options to purchase an aggregate of 869,000 shares held by the executive. The note receivable was recorded as a related party receivable on the consolidated balance sheets.

As described in Note 16, this note was repaid in full subsequent to September 30, 2013 (unaudited).

The Company has evaluated subsequent events that occurred after December 31, 2012 through October 14, 2013, the date on which the financial statements for the year ended December 31, 2012 were issued.

On January 28, 2013, the Company sold 639,828 shares of Series D preferred stock to a third party investor for $7.8146 per share and received gross proceeds of $5,000.

On October 22, 2013 the Company's related party receivable (see Note 14) was repaid in full by the executive. The Company received a cash payment of $271, which included $265 of principal and $6 of accrued interest.

The Company has evaluated subsequent events through December 10, 2013, the date the unaudited interim consolidated financial statements were available for issuance.

Goldman, Sachs & Co.
Credit Suisse
Needham & Company
Oppenheimer & Co.
Pacific Crest Securities

Through and including , 2014 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

The following table sets forth all costs and expenses, other than underwriting discounts and commissions, payable by us in connection with the sale of the common stock being registered. All amounts shown are estimates except for the SEC registration fee and the Financial Industry Regulatory Authority, or FINRA, filing fee.

We are incorporated under the laws of the State of Delaware. Section 102 of the Delaware General Corporation Law permits a corporation to eliminate the personal liability of directors of a corporation to the corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director, except where the director breached his duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware corporate law or obtained an improper personal benefit.

Section 145 of the Delaware General Corporation Law provides that a corporation has the power to indemnify a director, officer, employee or agent of the corporation and certain other persons serving at the request of the corporation in related capacities against expenses (including attorneys' fees), judgments, fines and amounts paid in settlements actually and reasonably incurred by the person in connection with an action, suit or proceeding to which he is or is threatened to be made a party by reason of such position, if such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, in any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful, except that, in the case of actions brought by or in the right of the corporation, no indemnification shall be made with respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or other adjudicating court determines that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

As permitted by the Delaware General Corporation Law, our amended and restated certificate of incorporation and bylaws provide that: (i) we are required to indemnify our directors to the fullest

extent permitted by the Delaware General Corporation Law; (ii) we may, in our discretion, indemnify our officers, employees and agents as set forth in the Delaware General Corporation Law; (iii) we are required, upon satisfaction of certain conditions, to advance all expenses incurred by our directors in connection with certain legal proceedings; (iv) the rights conferred in the bylaws are not exclusive; and (v) we are authorized to enter into indemnification agreements with our directors, officers, employees and agents.

We have entered into agreements with our directors that require us to indemnify them against expenses, judgments, fines, settlements and other amounts that any such person becomes legally obligated to pay (including with respect to a derivative action) in connection with any proceeding, whether actual or threatened, to which such person may be made a party by reason of the fact that such person is or was a director or officer of us or any of our affiliates, provided such person acted in good faith and in a manner such person reasonably believed to be in, or not opposed to, our best interests. The indemnification agreements also set forth certain procedures that will apply in the event of a claim for indemnification thereunder. At present, no litigation or proceeding is pending that involves any of our directors or officers regarding which indemnification is sought, nor are we aware of any threatened litigation that may result in claims for indemnification.

We maintain a directors' and officers' liability insurance policy. The policy insures directors and officers against unindemnified losses arising from certain wrongful acts in their capacities as directors and officers and reimburses us for those losses for which we have lawfully indemnified the directors and officers. The policy contains various exclusions.

In addition, the underwriting agreement filed as Exhibit 1.1 to this Registration Statement provides for indemnification by the underwriters of us and our officers and directors for certain liabilities arising under the Securities Act, or otherwise. Our investor rights agreement with certain investors also provides for cross-indemnification in connection with the registration of the our common stock on behalf of such investors.

The following list sets forth information regarding all unregistered securities sold by us since January 1, 2010 through the date of the prospectus that is a part of this registration statement (the "Prospectus").

The offers, sales and issuances of the securities described in paragraph (1) were exempt from registration under Rule 701 promulgated under the Securities Act in that the transactions were under compensatory benefit plans and contracts relating to compensation as provided under Rule 701. The recipients of such securities were our employees, directors or consultants and received the securities under our 2008 stock incentive plan. Appropriate legends were affixed to the securities issued in these transactions.

The offers, sales and issuances of the securities described in paragraphs (2) through (6) were exempt from registration under Section 4(a)(2) of the Securities Act and Regulation D promulgated under the Securities Act. The recipients represented to us that they acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the securities issued in these transactions. The recipients represented to us that they were accredited investors as defined in Rule 501 promulgated under the Securities Act.

		Description of Document

1.1	†	Form of Underwriting Agreement.
3.1		Amended and Restated Certificate of Incorporation, as amended to date and as currently in effect.
3.2	†	Form of Amended and Restated Certificate of Incorporation to be effective upon completion of this offering.
3.3		Bylaws, as amended to date and as currently in effect.
3.4	†	Form of Amended and Restated Bylaws to be effective upon completion of this offering.
4.1		Reference is made to exhibits 3.1 through 3.4.
4.2	†	Specimen stock certificate evidencing shares of Common Stock.
5.1	†	Opinion of Cooley LLP as to legality.
10.1	*	Services Agreement, by and between the Registrant and University of Southern California, on behalf of the USC Rossier School of Education, dated as of October 29, 2008, as amended to date.
10.2	*	Master Services Agreement, by and between the Registrant and University of Southern California, on behalf of School of Social Work, dated as of April 12, 2010, as amended to date.
10.3		Lease Agreement, by and between the Registrant and MPLX-Landover Co LLC, dated as of June 20, 2008, as amended to date.
10.4	†	Loan and Security Agreement, by and between the Registrant and Comerica Bank.

		Description of Document

10.5		Warrant to purchase shares of Series D Preferred Stock issued to Comerica Bank, dated April 5, 2012.
10.6		Amended and Restated Investor Rights Agreement, dated as of March 27, 2012, by and among the Registrant and certain of its stockholders.
10.7	+	Fourth Amended and Restated 2008 Stock Incentive Plan, as amended to date.
10.8	+	Form of Incentive Stock Option Agreement under 2008 Stock Incentive Plan.
10.9	+	Form of Non-Qualified Stock Option Agreement under 2008 Stock Incentive Plan.
10.10	+†	2013 Equity Incentive Plan.
10.11	+†	Form of Incentive Stock Option Agreement under 2013 Equity Incentive Plan.
10.12	+†	Form of Nonqualified Stock Option Agreement under 2013 Equity Incentive Plan.
10.13	+†	Form of Restricted Stock Unit Award Agreement under 2013 Equity Incentive Plan.
10.14	+†	Non-Employee Director Compensation Plan to be in effect upon the completion of this offering.
10.15	+	Form of Indemnification Agreement with directors.
10.16	+†	Form of Employment Agreement with executive officers to be in effect upon the completion of this offering.
21.1		Subsidiaries of the Registrant.
23.1	†	Consent of KPMG LLP, independent registered public accounting firm.
23.2	†	Consent of Cooley LLP (included in Exhibit 5.1).
24.1		Power of Attorney. Reference is made to the signature page hereto.

The undersigned Registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Landover, State of Maryland, on the day of , 2014.

KNOW ALL BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Christopher J. Paucek, Catherine A. Graham, Todd J. Glassman and Brent B. Siler, and each of them, his or her true and lawful agent, proxy and attorney-in-fact, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission any and all amendments (including post-effective amendments) to this registration statement together with all schedules and exhibits thereto and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments, agreements and other documents as may be necessary or appropriate in connection therewith, (iii) act on and file any supplement to any prospectus included in this registration statement or any such amendment or any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and (iv) take any and all actions which may be necessary or appropriate to be done, as fully for all intents and purposes as he or she might or could do in person, hereby approving, ratifying and confirming all that such agent, proxy and attorney-in-fact or any of his substitutes may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

		Description of Document

1.1	†	Form of Underwriting Agreement.
3.1		Amended and Restated Certificate of Incorporation, as amended to date and as currently in effect.
3.2	†	Form of Amended and Restated Certificate of Incorporation to be effective upon completion of this offering.
3.3		Bylaws, as amended to date and as currently in effect.
3.4	†	Form of Amended and Restated Bylaws to be effective upon completion of this offering.
4.1		Reference is made to exhibits 3.1 through 3.4.
4.2	†	Specimen stock certificate evidencing shares of Common Stock.
5.1	†	Opinion of Cooley LLP as to legality.
10.1	*	Services Agreement, by and between the Registrant and University of Southern California, on behalf of the USC Rossier School of Education, dated as of October 29, 2008, as amended to date.
10.2	*	Master Services Agreement, by and between the Registrant and University of Southern California, on behalf of School of Social Work, dated as of April 12, 2010, as amended to date.
10.3		Lease Agreement, by and between the Registrant and MPLX-Landover Co LLC, dated as of June 20, 2008, as amended to date.
10.4	†	Loan and Security Agreement, by and between the Registrant and Comerica Bank.
10.5		Warrant to purchase shares of Series D Preferred Stock issued to Comerica Bank, dated April 5, 2012.
10.6		Amended and Restated Investor Rights Agreement, dated as of March 27, 2012, by and among the Registrant and certain of its stockholders.
10.7	+	Fourth Amended and Restated 2008 Stock Incentive Plan, as amended to date.
10.8	+	Form of Incentive Stock Option Agreement under 2008 Stock Incentive Plan.
10.9	+	Form of Non-Qualified Stock Option Agreement under 2008 Stock Incentive Plan.
10.10	+†	2013 Equity Incentive Plan.
10.11	+†	Form of Incentive Stock Option Agreement under 2013 Equity Incentive Plan.
10.12	+†	Form of Nonqualified Stock Option Agreement under 2013 Equity Incentive Plan.
10.13	+†	Form of Restricted Stock Unit Award Agreement under 2013 Equity Incentive Plan.
10.14	+†	Non-Employee Director Compensation Plan to be in effect upon the completion of this offering.
10.15	+	Form of Indemnification Agreement with directors.
10.16	+†	Form of Employment Agreement with executive officers to be in effect upon the completion of this offering.
21.1		Subsidiaries of the Registrant.
23.1	†	Consent of KPMG LLP, independent registered public accounting firm.


Delaware	7372	26-2335939
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

Title of Securities being Registered	Proposed Maximum Aggregate Offering Price(1)(2)	Amount of Registration Fee




Common Stock, $0.001 par value per share	$	$


Large Accelerated Filer o		Accelerated Filer o		Non-accelerated Filer ý (Do not check if a smaller reporting company)		Smaller Reporting Company o


	Per Share	Total
Initial public offering price	$	$
Underwriting discount(1)	$	$
Proceeds, before expenses, to 2U, Inc.	$	$

	Shares Purchased					Total Consideration

	Shares Purchased					Total Consideration					Weighted Average Price Per Share
	Number		Percent			Amount		Percent			Weighted Average Price Per Share
Existing stockholders		30,950,360			%	$	102,446,282			%	$	3.31
New investors

Total				100	%	$			100	%


Brent B. Siler Darren K. DeStefano Brian F. Leaf Cooley LLP 11951 Freedom Drive Reston, VA 20190-5656 Telephone: (703) 456-8000 Fax: (703) 456-8100		Todd J. Glassman General Counsel 2U, Inc. 8201 Corporate Drive, Suite 900 Landover, MD 20785 Telephone: (301) 892-4350 Fax: (202) 478-1660		William J. Schnoor Michael J. Minahan Gregg L. Katz Goodwin Procter LLP Exchange Place Boston, MA 02109 Telephone: (617) 570-1000 Fax: (617) 523-1231


Needham & Company		Oppenheimer & Co.		Pacific Crest Securities

		Page

Prospectus Summary			1
Risk Factors			14
Special Note Regarding Forward-Looking Statements			40
Use of Proceeds			42
Dividend Policy			42
Capitalization			43
Dilution			45
Selected Consolidated Financial Data			47
Management's Discussion and Analysis of Financial Condition and Results of Operations			50
Business			76
Management			93
Executive Compensation			100
Certain Relationships and Related Party Transactions			110
Principal Stockholders			116
Description of Capital Stock			119
Shares Eligible for Future Sale			124
Material U.S. Federal Income Tax Consequences to Non-U.S. Holders			127
Underwriting			131
Legal Matters			136
Experts			136
Where You Can Find Additional Information			136
Index to Consolidated Financial Statements			F-1

	As of December 31,

	As of December 31,						As of September 30, 2013
	2011			2012			As of September 30, 2013
	(in thousands)
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	23,958		$	25,190		$	7,400
Accounts receivable		1,390			248			17,205
Total assets		37,136			39,877			42,476
Total liabilities		15,640			13,467			32,205
Total redeemable convertible preferred stock		66,346			92,706			97,961
Additional paid-in capital		3,817			5,483			6,972
Total stockholders' deficit		(44,850	)		(66,296	)		(87,690	)

	Payment Due by Period

	Total		Less than 1 year		1 - 3 years		3 - 5 years		More than 5 years
	(in thousands)
Operating lease obligations	$	12,343	$	2,123	$	4,340	$	3,993	$	1,887

Total	$	12,343	$	2,123	$	4,340	$	3,993	$	1,887

Name

Christopher Paucek	298,767	50	149,383	(20,280	)	129,103	8,112
Robert Cohen	274,375	50	137,188	(25,000	)	112,188	10,000
Catherine Graham	157,197	50	78,599	—		78,599	—
Jeff Rinehart	267,708	50	133,854	(25,000	)	108,854	10,000
James Kenigsberg	221,250	40	88,500	(20,000	)	68,500	8,000

Purchaser		Aggregate Purchase Price

Entities affiliated with Highland Capital Partners(1)	2,747,352	$	12,253,190
Entities affiliated with Redpoint Ventures(2)	1,185,498		5,287,321
Novak Biddle Venture Partners V, LP	672,468		2,999,207
Triumph Capital, LLC(3)	137,125		611,578
Robert Cohen	106,474		474,874

Total	4,848,917	$	21,626,170

Purchaser		Aggregate Purchase Price

Entities affiliated with Bessemer Venture Partners(1)	2,364,282	$	17,353,830
Entities affiliated with Redpoint Ventures(2)	681,075		4,999,091
Novak Biddle Venture Partners V, LP	485,070		3,560,414
Entities affiliated with Highland Capital Partners(3)	475,899		3,493,099
Triumph Capital, LLC(4)	118,494		869,746

Total	4,124,820	$	30,276,179

Purchaser		Aggregate Purchase Price

Entities affiliated with Redpoint Ventures(1)	639,828	$	4,997,057
Entities affiliated with Highland Capital Partners(2)	319,914		2,498,528
Entities affiliated with Bessemer Venture Partners(3)	230,338		1,798,940
Novak Biddle Venture Partners V, LP	127,965		999,407
Triumph Capital, LLC(4)	31,991		249,850

Total	1,350,036	$	10,543,781

Underwriters		Number of Shares

Goldman, Sachs & Co.
Credit Suisse Securities (USA) LLC
Needham & Company, LLC
Oppenheimer & Co. Inc.
Pacific Crest Securities LLC

Total


Goldman, Sachs & Co.		Credit Suisse

	Year Ended December 31,		Nine Months Ended September 30,

	2011	2012	2012	2013
Risk-free interest rate	1.1% - 2.7%	0.8% - 1.1%	0.8% - 1.1%	0.9% - 1.2%
Expected life	5.71 - 6.49	5.65 - 6.15	5.65 - 6.15	5.54 - 6.31
Expected volatility	54% - 57%	57% - 61%	57% - 58%	57% - 58%
Dividend yield	0%	0%	0%	0%
Weighted average grant date fair value	$1.76	$1.91	$1.63	$4.16


Report of Independent Registered Public Accounting Firm			F-2
Consolidated Balance Sheets as of December 31, 2011 and 2012 and September 30, 2013 (unaudited)			F-3
Consolidated Statements of Operations for the years ended December 31, 2011 and 2012 and for the nine months ended September 30, 2012 and 2013 (unaudited)			F-4
Consolidated Statements of Changes in Stockholders' Deficit for the years ended December 31, 2011 and 2012 and for the nine months ended September 30, 2013 (unaudited)			F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2011 and 2012 and for the nine months ended September 30, 2012 and 2013 (unaudited)			F-6
Notes to Consolidated Financial Statements			F-7

	Balance as of December 31, 2011

	Total		Level 1		Level 2		Level 3
Liabilities:
Series C redeemable convertible preferred stock warrant	$	—	$	—	$	—	$	—

	Series C Warrant			Series D Warrant

Balance as of January 1, 2011	$	—		$	—
Issuance of warrant		20			—
Change in fair value of warrant liability		(20	)		—

Balance as of December 31, 2011		—			—
Issuance of warrant		—			74
Change in fair value of warrant liability		—			(22	)

Balance as of December 31, 2012		—			52
Change in fair value of warrant liability (unaudited)		—			(18	)

Balance as of September 30, 2013 (unaudited)	$	—		$	34

	December 31,

	2011			2012			September 30, 2013
							(unaudited)
Capitalized content development costs	$	6,297		$	8,016		$	11,821
Capitalized content development costs in process		641			1,383			1,206
Accumulated amortization		(1,296	)		(2,791	)		(4,323	)

Capitalized content development costs, net	$	5,642		$	6,608		$	8,704


2013	$	2,123
2014		2,161
2015		2,179
2016		2,242
2017		1,751
Thereafter		1,887

Total future minimum lease payments	$	12,343

	2011			2012

Domestic	$	(24,878	)	$	(23,113	)
Foreign		—			—

Total loss before income taxes	$	(24,878	)	$	(23,113	)



U.S. statutory federal income tax rate	35.0	%	35.0	%
Increase (decrease) resulting from:
U.S. state income taxes, net of federal benefits	1.9		5.3
Non-deductible expenses	(1.3	)	(2.1	)
Change in valuation allowance	(35.2	)	(38.1	)
Other	(0.4	)	(0.1	)

Effective tax rate	0.0	%	0.0	%

Issue Date	Series	Purchase Price per Share			Conversion Price per Share

June 2009	Series A	$	1.27	10,033,976	$	1.27
February 2010	Series B	$	4.46	5,057,901	$	4.46
March 2011	Series C	$	7.34	4,429,601	$	7.34
March 2012	Series D	$	7.81	3,339,902	$	7.81
January 2013 (unaudited)	Series D	$	7.81	639,828	$	7.81


For conversion of Series A, Series B, Series C and Series D redeemable convertible preferred stock			22,861,380
Outstanding stock options			4,766,827
Outstanding stock warrants			12,797
Possible future issuance under stock option plans			817,125

Total common shares reserved for future issuance			28,458,129

	Amount to be Paid

SEC registration fee	$	*
FINRA filing fee		*
NASDAQ initial listing fee		*
Blue sky fees and expenses		*
Printing and engraving		*
Legal fees and expenses		*
Accounting fees and expenses		*
Transfer agent and registrar fees		*
Miscellaneous fees and expenses		*

Total	$	*

	Balance at Beginning of Period		Additions Charged To Expense/ Against Revenue		Deductions		Balance at End of Period

Income tax valuation allowance:
Year ended December 31, 2011	$	6,291	$	8,781	$	—	$	15,072
Year ended December 31, 2012		15,072		8,792		—		23,864


		2U, INC.
		By:		Christopher J. Paucek Chief Executive Officer

Signature	Title	Date


Christopher J. Paucek	Chief Executive Officer and Director (Principal Executive Officer)	, 2014
Catherine A. Graham	Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	, 2014
Paul A. Maeder	Director and Chairman of the Board	, 2014

Signature	Title	Date


Mark J. Chernis	Director	, 2014
Timothy M. Haley	Director	, 2014
John M. Larson	Director	, 2014
Michael T. Moe	Director	, 2014
Robert M. Stavis	Director	, 2014