Investor Presentation May 2019 Forward Looking Statements This - - PowerPoint PPT Presentation

Investor Presentation

May 2019

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Forward Looking Statements

This presentation and related discussion may contain forward-looking statements which are not statements of historical fact and are subject to the Safe Harbor provisions created by the Private Securities Litigation Reform Act of 1995, including, without limitation, statements regarding management's intentions, hopes, beliefs or expectations, and statements regarding the Company's outlook for the remainder of 2019 and beyond. These forward-looking statements are based on current information and expectations and are subject to various risks and uncertainties. The Company's actual performance or results may differ materially from those expressed in or suggested by such statements due to various factors, including without limitation: the success of our strategic priorities and investments, our successful integration of acquired companies, growth and margin expansion, technology investments, ability to identify, acquire and integrate mergers and acquisitions targets, core business revenue growth, and creation of long-term growth and value. Additional information on factors that could cause actual plans implemented and actual results achieved to differ materially from those set forth in the forward-looking statements is included from time to time in the Company's filings with the Securities and Exchange Commission ("SEC"), including, but not limited to, the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018 filed with the SEC on March 12, 2019, the Company's quarterly reports on Form 10-Q and the Company's current reports on Form 8-K which are available at www.zovio.com. You should not place undue reliance on any forward-looking statements. Forward-looking statements are made on the basis of management's good faith beliefs, expectations and assumptions regarding future events based on information available at the time such statements are made. Forward- looking statements speak only as of the date they are made. The Company assumes no obligation to update or revise any forward-looking statements to reflect actual results or any changes in assumptions, expectations or other factors affecting such forward-looking statements, except to the extent required by applicable securities laws.

Zovio partners with educational institutions and companies to find the most meaningful ways to enhance the experiences they deliver. We do this by using advanced data and analytics to better understand learner preferences to make interactions more personalized and effective. This drives more successful learning experiences that help people make progress in their lives.

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Compelling Investment Opportunity

• Advanced tools and experience delivering education services at large scale
• Development partnerships with key technology industry giants
• Large addressable industry with attractive supply/demand disparities
• Track record of innovation, centered on advanced data and analytics
• Primed for growth to guide decision making in higher education institutions

and corporations, while delivering personalized learning processes

• Aligned with key structural shifts in higher education
• Highly fragmented industry ripe for consolidation
• Laying the foundation for double-digit revenue growth and low double-digit EBITDA

margins in three years

• Strong, experienced management team
• Investment in key talent, including the addition of

Chief Operating Officer, Chief Strategy Officer, and Chief Technology Officer

Leader in Large, Shifting Industry Culture of Innovation Clear Strategic Plan to Transform Business Positioning for Accelerating Growth / Margin Expansion Deep, Strong Leadership

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Who We Serve

For Higher Ed

Enrollment, Retention, Academic, Tuition Offer institutions innovative marketing, enrollment, and student services – powered by data & analytics – to take their programs

• nline and fulfill their critical recruitment

and retention needs

Employers

Offer diverse set of L&D solutions that go beyond upskilling – demonstrate return on investment via increased employee retention – and partner with employers to help fulfill talent pipeline needs

Learners

Provide learners with a personalized

• nline education experience tailored to

their individual learning and support needs – while achieving strong learner

• utcomes and a demonstrated return on

tuition dollars invested

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How We Work

Data Analytics

Analyzing learners’ experiences helps us remove the guesswork surrounding their

• success. We help our clients tailor each

individual experience using data and analytics to make every interaction

• personal. With predictive modeling, we

can provide reliable outcomes based on past and present course data.

People and Services

Success is built on strong partnerships. When you need to develop your admissions process and attract qualified learners, Zovio’s team provides the expertise you need. Zovio offers a broad set of solutions to help drive revenue growth.

Technology

Zovio’s technology is multi-faceted and benefits learners, educators, institutions, and corporations alike. With an innovative approach to address any issue, Zovio’s tools can help boost student and employee retention and overall satisfaction. Key Takeaway Powering radically innovative experiences that are simple, predictive, and tailored to every individual

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Large Addressable Market Supports Growth Opportunity

• Professional Adjacency
• Industry Training, Readiness & Tools
• Corporate Training & Talent Tools
• Higher Ed Institutions / OPM
• Recruiting / Enrollment
• Student Success
• Career Services
• Data & Analytics

Key Takeaway Positioning Zovio to be a disruptive technology leader in a highly fragmented market

$33 Billion(1)

Total Addressable Market Segment for Zovio

+ $12 Billion

Higher Education Market Segment

$21 Billion

Professional Adjacency Market Segment

(1) Based on Company estimates

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What Differentiates Us Today

Key Takeaway Enabling a better understanding of preferences to make interactions more personalized and effective

Innovative Solutions

• Continuous investment in

technology, data and analytics

• Best-in-class digital marketing

Personalized Experience

• Across channels, devices, platforms

and diverse geographies

Flexible / Scalable

• Suite of comprehensive

products and point solutions

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Technology Leadership

Innovative solutions that personalize each individual experience, using predictive tools and analytics to improve the likelihood of learning success

Continuous Technology Investment New Partnerships

Key Takeaway Zovio’s series of technology tools are flexible and improve the experience and the success of the learner’s journey

Talon

Single sign-on mobile app for access to student portal and LMS Mobile publishing and learnings platform; digitally designed course materials Outcomes-based direct assessment tool

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Driving Sustainable Long-Term Growth

Key Takeaway Addressing the Priority Market Needs - Recruitment, Retention, and the Learner Experience

Serve Large Accounts within Higher Ed Online Services Further Catalyze Entry into Higher Ed Online Services Expand into Skills to Employment Offerings

1 2 3

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Acquisition of Fullstack Academy

• Founded in 2012 by the current

Co-CEO’s

• Headquartered in NYC
• Offers 4 coding programs
• 2 physical campuses, NYC and Chicago
• Highest rated for student experience and

hiring outcomes by CIRR

• Full-time and part-time, as well as
• n-line enrollment available
• A top-rated technology bootcamp in the U.S.
• Partnered with New York City to launch Fullstack

Academy's Cybersecurity Immersive

• Grace Hopper Program, an immersive coding

program offered exclusively for women.

• Expanding university partnerships, leveraging its market

strength of academic quality and outstanding job placements.

• Natural synergy with Zovio’s broad corporate

partnership network for upscaling current employees and helping to fill their talent pipeline.

• Well-positioned competitively and strong fit within

Zovio’s education technology services ecosystem

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Acquisition of TutorMe

• A leading provider of instant online

tutoring services.

• Aligns with Zovio’s education services

and provides a platform to offer additional products in the future.

• Powered by a smart matching engine,

TutorMe provides its tutoring services 24/7 across more than 300 subjects, along with robust analytical dashboards for administrators.

• TutorMe was built by students to help students.
• The technology driving its tutoring services will help

Zovio participate in the $5 billion U.S. subject tutoring market segment.

• TutorMe reaches hundreds of thousands of students

throughout the United States and Canada.

• Tutoring solution seamlessly integrates with learning

management systems and course management systems, making it an easy transition for colleges and universities to provide additional student learning support, leading to better student outcomes.

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Learn@Forbes

Learn@Forbes is for the Professional Learner Unique platform that offers young professionals carefully curated tools and resources they need to reach specific, real-life objectives. Learn@Forbes uses AI and Machine Learning to customize learning paths for individual learners and help corporations identify the best cultural fit when it comes to new hires

Providing lifelong learning opportunities

Molly wants to progress further in accounting, she sees internal postings, wonders what it takes Submits resume, answers L@F questionnaire about background / ambitions & "likes" an accounting job

• pening on L@F's integrated

job posting board Enrolls in expert-led accounting courses from customized playlist Applies to more senior accounting role, after finishing course playlist; gets interview and lands bigger job Student journey

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Organic Investment

Capital Allocation Strategy

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Strategic M&A

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Key M&A Criteria

Building on our existing capabilities to meaningfully serve higher ed institutions Bridging the education-to-employment gap; and/or Helping enterprises upskill and educate their most important asset - their people. 1 2 3

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Transition to High-Growth Company

• Core business revenue growth will be low-single digit,

expanding to mid-single digit growth over a three-year period.

• Over the same three-year period, as aggressive growth is

pursued through meaningful internal investments and M&A, we expect to achieve double-digit revenue growth.

• Non-GAAP EBITDA margins to return to low double-digits

within a three-year period.

Core Business (FY 2019) Core Business Low Single- Digit Rev Growth Additional M&A 3-year Model Double-Digit Rev Growth Non-GAAP EBITDA (FY 2019) Non-GAAP EBITDA Margin (3-Year) Low Double-Digit Breakeven

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Strong Leadership Team

Andrew Clark, Founder, President & Chief Executive Officer Andrew has been an entrepreneur for the past 15 years. He has years of experience introducing the newest and best innovations into higher education. He is passionate about taking new innovative ideas and bringing them to life to help others. Kevin Royal, EVP & Chief Financial Officer Previously CFO at Maxwell Technologies, Inc., Blue Coat Systems, Inc., and Novellus Systems, Inc. Vickie Schray, EVP & Chief External Affairs Officer Over her 20-year career, she has strategically brought together stakeholders and led major national reforms and initiatives to improve quality, access, and affordability of higher education. Tom McCarty, SVP & Chief Marketing Officer Tom has led his own marketing and management consulting firm where he brought his expertise in marketing, student inquiry, strategy, predictive modeling, and analytics to clients ranging from institutions

• f higher education to medium-sized

businesses and nonprofits. Gregory Finkelstein, EVP & Chief Operating Officer Greg was a founder and executive operator

• f both an Inc. 500 bootcamp business

started in the mid ‘90s, and Deltak, one of the first OPMs started in the mid 2000s. Gregory led Deltak through their acquisition by Wiley in 2012 growing it 2.5x in less than 5 years post acquisition John Semel, EVP & Chief Strategy Officer Primary architect of M&A strategy for Apollo- backed Mood Media and John Wiley and Sons, where he acquired five businesses, including Deltak, during his eight years at Wiley. Umang Jain, EVP & Chief Technology Officer Umang brings more than 20 years of experience in applying technology and leadership skills to drive efficiencies and innovation in business. Prior to joining Zovio in 2019, he served as the CIO for Hill Physicians Medical Group, where he successfully drove the digital transformation of the company.

Conversion Update, 2018 Financials, and Outlook

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Conversion Update

• Completed transfer of programs from University of the Rockies into Ashford University
• In early February 2019, announced receipt by AU NFP, a nonprofit California public benefit corporation, of the IRS

Determination of Nonprofit Status.

• In mid-March 2019, WASC deferred action on the change of control application filed by Ashford University to separate the

University from Zovio and convert the university to a nonprofit institution.

• Requested additional documentation and will be planning a video visit this spring.
• Anticipate receiving notice from WASC in July 2019
• Using additional time to work towards a favorable outcome

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2018 Financials & Future Outlook

2018 Results

• Ashford: Establish a strong foundation for an independent, self-sustaining nonprofit

Ashford to flourish over the long term.

• New Enrollment(3): Expect to return to year-over-year growth in Q2 2019, continuing

through 2019.

• EBITDA(3): Including the impact of acquisitions, we expect our EBITDA margin to be

break even in 2019 due in part to our investments in technology, talent, and other costs associated with repositioning of the business.

$443.4M

Revenue

$12.0M(1)

Non-GAAP Op Inc

88%(2)

New Enrollments from Home Grown Sources

(1) See reconciliation from GAAP to Non-GAAP Measures in appendix (2) Q4 2018 results; an increase from 83% in Q4 2017 (3) Outlook provided on May 9, 2019

Future Outlook

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Summary

A Leader in Large, Shifting Industry Culture of Innovation Clear Strategic Plan to Transform Business Positioning for Accelerating Growth / Margin Expansion Deep, Strong Leadership

Appendix

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Reconciliation of GAAP to Non-GAAP Financial Measures