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industry consolidation (such as the ~~recent~~ acquisition of edX Inc. by 2U, Inc.) in 2021) and the number and rate of new entrants.


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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, or other for-profit higher education service providers, perform poorly, it could nonetheless 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 learners, including the inability to obtain employment in their ~~fields.~~fields, or to earn sufficient income to repay debt incurred for their education. 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, as well as entire industries in the case of recruiting practices by for-profit higher education companies. Even though we do not ~~market our solutions to~~enter into university partnerships with these institutions, this negative media attention and regulatory scrutiny may nevertheless add to the skepticism about online higher education generally, including our solutions.

Certain service providers assisting higher education institutions with online program development and management, typically referred to as online program managers or OPMs, are also under intense media and other scrutiny, which has led to calls for reform and enforcement by policymakers and members of Congress. Even though we do not have the kinds of affiliations or business models that have been the focus of this scrutiny, this negative media attention and regulatory scrutiny may lead to additional limitations or restrictions on our business, and our ability to grow our business and achieve profitability could be harmed.

The impact of these negative public perceptions on our current and future business is difficult to predict. If these few situations, or any additional misconduct, cause all online learning programs to be viewed unfavorably by the public or policymakers, ~~unfavorably,~~ we may find it difficult to enter into or renew agreements with our educator partners or attract additional learners for ~~our partners’~~their programs. In addition, this perception or any further governmental investigation could serve as the impetus for more restrictive legislation or regulation, 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 ability to succeed due to increased regulation and decreased demand. Any of these factors could negatively impact our ability to increase our educator partner base and grow ~~our partners’~~their programs, which would make it difficult to continue ~~to grow~~growing our business and could negatively affect our stock price.

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Our growth strategy may ~~acquire other companies~~contemplate acquisitions, and we may be unsuccessful in executing, implementing, integrating, or ~~technologies that could divert our management’s attention, result in additional dilution to our stockholders, and otherwise disrupt our operations and harm our results of operations.~~

leveraging such acquisitions.

We may choose to expand our business by making acquisitions that could be ~~material to our business.~~material. To date, we have only completed one acquisition, and our ability as an organization to successfully identify, evaluate, acquire, and integrate technologies or businesses is unproven and limited. Acquisitions involve many risks, including the following:

•

an acquisition may negatively affect our results of operations and financial condition because it may require us to incur charges or assume substantial debt or other liabilities, may cause adverse tax consequences or unfavorable accounting treatment, may expose us to claims and disputes by third parties, including ~~intellectual property~~IP claims and disputes, or may not generate sufficient financial return to offset additional costs and expenses related to the acquisition;

•

we may encounter difficulties or unforeseen expenditures in integrating the business, technologies, products, personnel, or operations of any ~~company~~entity or business that we acquire, particularly if key personnel of the acquired ~~company~~entity or business decide not to work for us;

•

an acquisition may disrupt our ongoing business and distract our management;

•

an acquisition may result in a delay or reduction of customer purchases for both us and the ~~company~~entity or business we acquired due to customer uncertainty about continuity and effectiveness of ~~service from either company;~~

service;

•

an acquisition may involve ~~the~~ entry into geographic or business markets in which we have little or no prior experience or where competitors have stronger market positions;


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•

we may face challenges inherent in effectively managing an increased number of employees in diverse locations;

•

we may experience strain on our financial and managerial controls and reporting systems and procedures;

•

our use of cash to pay for acquisitions would limit other potential uses for our cash;

•

if we incur debt to fund such acquisitions, such debt may subject us to material restrictions on our ability to conduct our business;

•

we may incur impairment charges related to potential write-downs of acquired assets or goodwill; and

•

to the extent that we issue a significant amount of equity or ~~equity-linked~~equity-based securities in connection with an acquisition, existing stockholders may be diluted.

We may not succeed in addressing these or other risks, which could harm our business and operating results.

We may invest in private companies, and if the value of any such equity investments were to decline, it could adversely affect our results of operations and financial condition.

We may from time to time make equity investments in private companies where we do not have the ability to exercise significant influence over results. Investments in private companies are inherently risky. The companies in which we may invest include early-stage companies that may still be developing products and services with limited cash to support the development, marketing, and sales of their products, and whose financial statements are often unaudited. Further, our ability to liquidate such investments will typically be dependent on a liquidity event, such as a public offering or acquisition, as no public market currently exists for the securities held in the investees. Valuations of ~~privately-held~~privately held companies are inherently complex and uncertain due to the lack of a liquid market for the securities of such companies and the potential lack of comparable acquisitions in the market as a comparison for such valuations, among other factors. If we determine that any of our investments in such companies have experienced a decline in value, we will recognize an expense to adjust the carrying value to its estimated fair value. Negative changes in the estimated fair value of private companies in which we invest could have a material adverse effect on our results of operations and financial condition.

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Our directors may encounter conflicts of interest involving us and other organizations with which they may be affiliated, including matters that involve corporate opportunities.

Most of our directors are, and any future directors may be, affiliated with other entities, including venture capital or private equity funds or businesses that may be complementary, competitive, or potentially competitive to our ~~company.~~Company. They may also in the future become affiliated with entities that are engaged in business or other activities similar to our business. Additionally, all of our officers and directors, in the course of their other business activities, may become aware of investments, business opportunities, or information that may be appropriate for presentation to us as well as to other entities to which they owe a fiduciary duty. As a result, directors and officers may encounter perceived or actual conflicts of interest involving us and other entities with which they are or become affiliated, including matters that involve corporate opportunities. For example, a portfolio company of a director-affiliated venture fund may become a competitor of ours or a potential strategic partner. In addition, as our growth strategy includes considering potential acquisitions, it is possible an entity affiliated with one of our directors could be an acquisition target or a competitive acquirer. Further, to the extent we engage in transactions with any director-affiliated entity, it could create actual, or the perception of, additional conflicts of interest, including with respect to our ability to negotiate terms equivalent to those that could be obtained in an arms’-length negotiation with an unaffiliated third party. For instance, Dr. Ng, one of our co-founders and Chairman of our board of directors, owns DeepLearning.AI Corp., a developer of educational content relating to ~~artificial intelligence~~AI that offers courses through our platform. Although we view DeepLearning.AI Corp. as a valued business partner and believe our agreement is on commercially reasonable terms, there may nonetheless be a perception of a conflict of interest. As a result of the foregoing, our directors and officers may have conflicts of interest in determining to which entity particular opportunities or information should be presented. If, as a result of such potential conflicts, we are deprived of investment, business, or information, the execution of our business plan and our ability to effectively compete may be adversely affected. Our directors are also not obligated to commit their time and attention exclusively to our business, and accordingly, they may encounter conflicts of interest in allocating their time and resources between us and other entities with which they are affiliated.


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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, and in particular of our ~~Chief Executive Officer.~~chief executive officer. The expertise of our senior management team in negotiating with businesses, ~~governments, educational institutions,~~governmental and other organizations, and educational institutions is critical in navigating the complex approval processes of these entities. We do not maintain key-person insurance on any of our employees, including our senior management team, and our management and other U.S. employees are generally employed on an at-will basis. The loss of the services of any individual on our senior management team would 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 ~~sales and marketing, data science, technology and content development, and support teams~~highly-qualified employees to continue to attract and retain qualified learners in our educator partners’ programs, thereby generating revenue for us. In particular, our technology and content development employees provide the technical expertise underlying our technology-enabled services that support our online ~~course~~educational offerings and the ~~certification, degree and other~~ credentialing programs offered on our platform, as well as the learners enrolled in these programs. Competition for these employees is intense. We may be unable to attract or retain these key personnel that are critical to our success, resulting in harm to our relationships with educator partners, loss of expertise or know-how, and unanticipated recruitment and training costs.

In addition, any changes to our organizational or compensation structure may be negatively perceived by current or prospective employees and may result in attrition or cause difficulty in the recruiting process.

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 will be~~cash equivalents, and marketable securities are sufficient to meet our minimum anticipated cash requirements for at least the next ~~twelve~~12 months. We may, however, need to raise additional funds to respond to business challenges or opportunities, expand our business through acquisitions, accelerate our growth, develop new offerings, or enhance our 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 seek debt financing, we may be subject to onerous terms and restrictive covenants. Lack of sufficient capital resources could significantly limit our ability to manage our business and to take advantage of business and strategic opportunities. Further, any additional capital raised through the sale of equity or issuance of debt securities with an equity component would dilute our existing stockholders. 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.

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We believe our long-term value as a company will be greater if we invest in growth, which may negatively impact our results of ~~Contents~~

operations in the near term.

We believe our long-term value as a company will be greater if we ~~focus on growth, which may negatively impact~~balance our ~~results of operations in the near term.~~

~~We believe our long-term value as a company will be greater if we focus on~~ longer-term growth ~~over~~and short-term results. AsAs a result, our results of operations may be negatively impacted in the near term relative to a strategy solely focused on maximizing short-term profitability. Significant expenditures on sales and marketing efforts, developing and enhancing our platform, and expanding our research and development efforts may not ultimately grow our business or lead to expected long-term results. If our strategy does not lead to expected growth or if we are ultimately unable to achieve results of operations at the levels expected by securities analysts and investors, the market price of our common stock could decline.

~~Our current operations are international in scope and we plan to expand our international operations, which exposes us to risks inherent in international operations.~~

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. In addition to our employee base in the United States, including Puerto Rico, we have employees in Australia, Bulgaria, Canada, Germany, India, Singapore, the United Arab Emirates, and the United Kingdom in several functional areas, including product and software development, sales and marketing, talent recruitment, and general facilities management, and we have retained professional employer organizations and staffing agencies to engage personnel in certain international locations. Our international operations subject us to the compensation and benefits regulations of those jurisdictions, as well as other employer duties and obligations, that differ from the compensation and benefits regulations and duties and obligations in the United States. Further, enrollments of learners from other countries requires us to comply with international data privacy regulations of those countries. 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.

We intend to expand our international operations and continue to establish a worldwide partner and learner base. Our expansion efforts into international markets may not be successful. In addition, we face risks in doing business internationally, including risks associated with sales to international governments and entities, that could constrain our operations, increase our cost structure, compromise our growth prospects and damage our reputation, including:

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the need to localize and adapt online certification, degree, and other credentialing programs for specific countries, including translation into foreign languages and ensuring that these programs enable our partners to comply with local education laws and regulations;

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local laws restricting learners from pursuing certifications, degrees, or other credentials through online education platforms such as ours or limiting the availability of financial aid to finance online education;

•

~~different data privacy and protection laws, see "Risk Factors—Risks Related to Privacy, Cybersecurity, and Infrastructure";~~

•

difficulties in staffing and managing employees and contractors in foreign countries, including in countries in which foreign employees may become part of labor unions, employee representative bodies, workers’ councils or collective bargaining agreements, and challenges relating to work stoppages or slowdowns;

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different pricing environments, longer sales cycles, longer accounts receivable payment cycles, restrictions on remitting payments to the United States or converting local currency into U.S. dollars, difficulties in adopting and supporting new and different payment preferences, and collections issues;

•

~~new and different sources of competition and practices which may favor local competitors;~~

•

weaker protection for intellectual property and other legal rights than in the United States and practical difficulties in enforcing intellectual property and other rights outside of the United States;

•

compliance and operational challenges related to the complexity of multiple, conflicting and changing governmental laws and regulations, including, but not limited to, employment, tax, privacy and data protection, foreign investment restrictions or requirements, economic sanctions and export controls, U.S. and other anti-boycott authorities, anti-money laundering laws, supply chain transparency and anti-modern slavery laws, and anti-bribery and corruption laws and regulations such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act;

•

~~increased financial accounting and reporting burdens and complexities;~~

•

~~risks associated with foreign tax regimes, trade tariffs, foreign investment restrictions or requirements, or similar issues, which could negatively impact international adoption of our offerings;~~

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adverse tax consequences, including corporate tax consequences, such as double taxation, transfer pricing burdens, taxation of dividends, and the potential for required withholding taxes for our overseas employees;

•

difficulties in managing foreign business operations, including the potential need to localize our business infrastructure, translating our policies and information technology systems into the local language, and local challenges related to technology, internet speed and availability, among other challenges; and

•

regional, global, economic, and political conditions, including geopolitical tensions or hostilities within or beyond areas where we currently have, or may in the future have, international operations, such as the ongoing Ukraine-Russia border conflict.

Further, as we continue to expand internationally, we will become more exposed to fluctuations in currency exchange rates. Future agreements with international partners may provide for payments to us to be denominated in local currencies, and in such cases, fluctuations in the value of the U.S. dollar and foreign currencies could impact our operating results when translated into U.S. dollars which risks may be heightened due to increased volatility of foreign currency exchange rates as a result of the COVID-19 pandemic or other geopolitical events. Further, the strengthening of the U.S. dollar relative to foreign currencies could increase the real cost of our platform for our learners and partners outside of the United States, which could lead to the lengthening of our sales cycle or reduced demand for our platform. If we are not able to successfully hedge against the risks associated with currency fluctuations, our financial condition and results of operations would be adversely affected. To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedging transactions may be limited and we may not be able to successfully hedge our exposure, which would adversely affect our financial condition and results of operations.

Our results of operations could be adversely affected by natural disasters, public health crises, political crises, ~~political or~~ geopolitical crises, ~~the physical effects of climate changes~~ or other catastrophic events.

Our business and operations could be materially and adversely affected in the event of earthquakes, floods, fires, telecommunications failures, blackouts or other power losses, break-ins, acts of terrorism, an outbreak of hostilities, political or geopolitical crises, such as ~~Russia's recent invasion of~~ the conflicts in Ukraine and the Middle East, inclement weather, ~~the physical effects of climate change,~~ public health crises, pandemics or ~~endemics,~~epidemics, or other catastrophic events.


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For example, the uncertain nature, magnitude, and duration of hostilities stemming from Russia’s ~~recent~~ military invasion of Ukraine or conflicts in the ~~Ukraine,~~Middle East, such as the Israel-Hamas war, including the potential effects of sanctions and retaliatory ~~cyber-attacks~~cyberattacks on the world economy and markets, have contributed to increased market volatility and uncertainty, and may impact our customers’ intent or ability to pay for services, which could negatively impact our results of operations. ~~Furthermore,~~The Israel-Hamas war has resulted in significant military activity in the Middle East, which may further escalate regional instability and could disrupt our operations and the business of our significant customers, educator partners, and learners in the Middle East and North Africa region, which could negatively impact our results of operations. The continued turmoil in Ukraine and the Middle East could have a depressing effect on the global economy, which could dampen our business activity and reduce the demand for our online learning solutions.

In addition, although the COVID-19 pandemic has subsided, pandemics or other public health crises could impact our business, key metrics, and results of operations. For example, a resurgence of the COVID-19 pandemic or the emergence of another widespread health crisis could adversely impact our business if our employees or our partners’ or third-party service providers’ employees become ill and are unable to perform their duties, and our operations, internet, or mobile networks, or the operations of one or more of our third-party service providers, is impacted. Although we believe our business was positively impacted to some extent by several trends related to the height of the COVID-19 pandemic, including the increased need or willingness of businesses, governmental organizations, educational institutions and learners to adopt remote, online, and asynchronous learning and training, we cannot be certain that these trends will continue given that the risk and barriers associated with in-person learning and training have significantly decreased. In addition, in the event of another widespread public health crisis, we may experience an adverse impact to our business and the value of our common stock as a result of the crisis’ impact on the global economy and financial markets, including inflation or recession. More generally, a public health crisis or other catastrophic event could adversely affect economies and financial markets and lead to an economic downturn, which could harm our business, financial condition, and operating results.

Further, our executive offices are located in the San Francisco Bay Area, an earthquake-sensitive area and one that has been ~~increasingly~~increasingly vulnerable to wildfires and floods, and damage to or total destruction of our executive offices resulting from earthquakes may not be covered in whole or in part by any insurance we may have. If floods, fire, inclement weather including extreme rain, wind, heat, or cold, or accidents due to human error were to occur and cause damage to our properties or other locations from which our employees are working, or if our operations or the operations of our service providers were interrupted by telecommunications failures, blackouts, acts of terrorism or outbreak of hostilities, political or geopolitical crises, or public health crises, our results of operations would suffer, especially if such events were to occur during peak periods. We may not be able to effectively shift our operations due to disruptions arising from the occurrence of such events, and our business could be affected adversely as a result.

To the extent that any catastrophic event adversely affects our business, results of operations, financial condition, and cash flows, it may also heighten many of the other risks described in this “Risk Factors” section.

Our metrics and market estimates used to evaluate our performance are subject to inherent challenges in measurement, and real or perceived inaccuracies in those estimates may harm our reputation and negatively affect our business.

The metrics we use to evaluate our growth, measure our performance, and make strategic decisions are calculated using internal company data and have not been validated by a third party. Our metrics and market estimates may differ from estimates published by third parties or from similarly titled metrics of our competitors or peers due to differences in methodology or the assumptions on which we rely. Additionally, ~~the~~ metrics and forecasts ~~in this Annual Report on Form 10-K~~ relating to the size and expected growth of our addressable market may prove to be inaccurate. Even if the markets in which we compete meet the size estimates and growth we have forecasted, our business could fail to grow at similar rates, if at all. If securities analysts or investors do not consider our or market metrics to be accurate representations of our business, or if we discover material inaccuracies in such estimates, then the market price of our common stock could decline, our reputation and brand could be harmed, and our business, financial condition, and results of operations could be adversely affected.

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Increasing scrutiny and evolving expectations from customers, educator partners, regulators, investors, and other stakeholders with respect to our environmental, social, and governance(“ESG”)practices may impose additional costs on us, expose us to new or additional risks, or harm our reputation.

Companies are facing increasing scrutiny from customers, partners, regulators, investors, and other stakeholders related to their ~~environmental, social and governance (“ESG”)~~ESG practices and ~~disclosure.~~disclosures. Investor advocacy groups, investment funds, and influential investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, diversity, labor conditions, and human rights. Increased ESG related compliance costs could result in increases to our overall operational costs. Failure to adapt to or comply with regulatory requirements or investor, employee or stakeholder expectations and standards could negatively impact our reputation, ability to do business with certain educator partners, and the price of our common stock. New government regulations could also result in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, diligence, and disclosure. ~~Further,~~Collecting, measuring, and reporting ESG information and metrics can be costly, difficult and time consuming, and can present numerous operational, reputational, financial, legal and other risks, any of which could have a material impact on us, including on our reputation and stock price. Inadequate processes to collect and review this information prior to disclosure could subject us to potential liability related to such information. Furthermore, several U.S. states have enacted or proposed “anti-ESG” policies or legislation. While these policies and related legislation are generally targeted to investment advisory firms and mutual funds, if these investors viewed our ESG practices as contradicting such “anti-ESG” policies, such investors may not invest in the Company and it could negatively affect the price of our common stock.

Our current ESG disclosures, including the metrics we set as a PBC and other any standards we may set for ourselves, or a failure to meet these metrics or standards, may influence our reputation and the value of our brand. For example, we have elected to share publicly certain information about our ESG initiatives and information, and our commitment to the recruitment, engagement, and retention of a diverse workforce. Our business may face increased scrutiny related to these activities, including from the investment community, and our failure to achieve progress in these areas on a timely basis, or at all, could impact our ability to hire and retain employees, increase our educator partner base, reelect our board of directors, or attract and retain certain types of investors, which could adversely affect our reputation, business, and financial performance.

Climate change may have an adverse impact on our business.

Risks related to rapid climate change may have an increasingly adverse impact on our business and those of our customers, educator partners, and learners in the longer term. Any of our primary locations and the locations of our customers, educator partners, and learners may be vulnerable to the adverse effects of climate change. For example, our California headquarters has historically experienced, and is projected to continue to experience, climate-related events at an increasing frequency, including drought, water scarcity, floods, heat waves, wildfires and resultant air quality impacts, and power ~~shutoffs~~shut-offs associated with wildfire prevention. Furthermore, it is more difficult to mitigate the impact of these events on our employees while they work from ~~home as a result of the COVID-19 pandemic.~~home. Changing market dynamics, global policy developments, and the increasing frequency and impact of extreme weather events on critical infrastructure in the U.S. and elsewhere have the potential to disrupt our business and the business of our customers, educator partners, and learners, and may cause us to experience higher attrition, losses, and additional costs to maintain our operations. Further, the effects of climate change may negatively impact regional and local economic activity, which could lead to an adverse effect on our customers, educator partners, and learners and impact the communities in which we operate. Overall, climate change, its effects, and the resulting, unknown impact could have a material adverse effect on our financial condition and results of operations.

We are a remote-first company, which could have a negative impact on the execution of our business plans and operations and create productivity, connectivity, and oversight challenges.

We are a remote-first company, allowing for almost all roles to be open to remote employees on an ongoing basis. Our remote-first employment policy could have a negative impact on the execution of our business plans and operations and create productivity, connectivity, and oversight challenges. For example, if a natural disaster, power outage, connectivity issue, or other event occurred that impacted our employees’ ability to work remotely, it may be difficult for us to continue our business for a period of time. The shift to remote working may also result in consumer privacy, IT security, and fraud vulnerabilities, which, if exploited, could result in significant recovery costs and harm to our reputation. Operating in a predominantly remote work environment and providing and maintaining the operational infrastructure necessary to support a remote work environment also present significant challenges to maintaining our company culture, including employee engagement and productivity. As a result, our culture, information technology requirements, cybersecurity risk, and business operations could be adversely affected.


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Risks Related to Regulatory Matters and Litigation

If our educator partners fail to comply with international, federal, and state education laws and regulations, including any applicable state authorizations for their programs, it could harm our business and reputation.

Higher education is heavily regulated in the ~~United States~~U.S. and most international jurisdictions. ~~For example, numerous~~Numerous U.S. states require education providers to be licensed or authorized in such ~~state~~state(s) simply to enroll persons located in that state into an online education program or to conduct related activities such as marketing. If any of our educator partners were found to be in non-compliance with any of the laws, regulations, standards, or policies related to state authorization, the educator partner could lose ~~their~~its ability to operate in certain states, and if such non-compliance extended to a material contingent of our educator partners and ~~such partners~~they lost the ability to operate in certain states, our revenue could decline.

Additionally, the vast majority of our U.S.-based college and university partners participate in the federal student financial assistance programs under Title IV of the Higher Education Act of 1965, as amended ~~(“HEA”~~(respectively, “Title IV” and “HEA”), and are subject to extensive regulation by the U.S. Department of Education (“DOE”), as well as various state agencies, licensing boards, and accrediting agencies. 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 agency recognized by the DOE, and be certified by the DOE as an eligible institution.

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The regulations, standards, and policies of our ~~college and~~ university partners’ regulators are complex, change frequently, and are often subject to differing ~~interpretation.~~interpretations. Changes in, or new interpretations of, applicable laws, regulations, or standards could compromise our ~~college and~~ university partners’ accreditation, authorization to offer online learning in various states or countries, permissible activities, or access to federal funds under the Title IV programs. We cannot predict with certainty how the requirements applicable to our ~~college and~~ university partners will be interpreted, including in the case of new laws or regulations for which no, or insufficient, interpretative guidance exists, or whether our ~~college and~~ university partners will be able to comply with these requirements in the future. Some regulations were designed to regulate in-person, correspondence or other types of learning experiences not offered online and may be difficult to interpret or apply to the types of programs offered by our university partners on our platform. In addition, there is no assurance that degrees or certifications earned through an institution in one jurisdiction will be recognized as valid or sufficient in other jurisdictions, including internationally, for employment, to satisfy prerequisites for advanced degrees, or other opportunities. Our international ~~college and~~ university partners are subject to similarly extensive legislation, regulation, and oversight.

Our future growth could be impaired if we or our educator partners 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.~~

jurisdictions.

Our U.S.-based ~~college and~~ university partners are required to obtain the appropriate approvals from the DOE and applicable state and accrediting regulatory agencies for new programs, which may be conditioned, delayed, or denied in a manner that could impair our future growth. Similar approvals and reviews may be required for programs from our educator partners based outside of the ~~United States,~~U.S., and for ~~our partners~~them to offer programs in other countries. Education regulatory agencies may experience increases in the volume of requests for approvals as a result of new distance learning programs and adjustments to new regulations. Any such increases in volume could result in delays to various approvals our ~~partner institutions~~educator partners request, and any such delays could in turn delay the timing of our ability to generate revenue from ~~our partners’~~their programs.


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Our educator partners, both U.S. and international, may be required to be authorized in certain states to offer online programs, engage in advertising or recruiting and operate externships, internships, technical training, or other forms of field experience, depending on state ~~law.~~and international laws. Although many of our programs are offered by U.S.-based higher education institutions that hold such authorizations or participate in an appropriate state reciprocity agreement, such as ~~SARA,~~the State Authorization Reciprocity Agreement (“SARA”), other educator partners are not traditional education institutions or operate outside of the ~~United States~~U.S. and do not hold such state authorizations. Further, even U.S.-based higher education institutions could lose a necessary authorization either because it lapses or is revoked by a state agency. Such partners could also lack, or lose, the ability to participate in a reciprocity agreement that provides the basis for their authorization in multiple states. For example, California higher education institutions currently do not participate in SARA. Unless we choose to seek authorization in our own name, which we have not done to date, the loss of or failure by aan educator partner to obtain a necessary state authorization would, among other things, limit our ability to deliver content to learners in that state, either for degree or ~~nondegree~~non-degree programs, render the partner and its learners in that state ineligible to participate in Title IV or other financial aid programs, diminish the attractiveness of the educator partner’s programs, and ultimately compromise our ability to generate revenue. In addition, if we or any of our educator partners fail to comply with any state agency’s rules, regulations, or standards beyond authorizations, the state agency could limit the ability of the educator partner to offer programs in that state or limit our ability to perform our contractual obligations to our educator partner in that state.

We or our educator partners may also be required to obtain appropriate approvals under international education laws and regulations. For example, a recent Indian regulation relating to online higher education requires, among other things, that learning platforms utilized by Indian universities to offer online degrees be approved by a technical committee of the Indian regulator. Seeking such approval could be a complex and time-consuming process, since the requirement is new, and as such there is no certainty as to the timing and standard of review for international platforms, or even whether international platforms are permitted to apply for approval. In addition, we may lack the knowledge and resources to successfully pursue an application without the support of one or more of our Indian university partners. ~~India's~~International education laws and regulations may prohibit or restrict the delivery of online education by extraterritorial entities, or local policies or practice may favor local providers. India’s Ministry of Education recently announced its ~~intention~~intent to ~~consolidate~~launch its first digital university in 2023, the National Digital University, which would allow students to accumulate and strengthen the regulatory framework governing the Education Technology industry in the country. While the Ministry of Education has not yet released an official version of the framework, additional compliance requirements and regulatory restrictionscombine credits from different higher education institutions. Such a program may ~~apply. If enacted, such new requirements and obligations would cause increased costs for compliance and could~~negatively impact our ~~financial and~~ability to effectively expand our Degrees business ~~operations~~ in ~~the region.~~

India.

If we or our educator partners fail to obtain or maintain necessary authorizations, or we or our educator partners violate applicable laws and regulations, learners in relevant programs could be adversely affected, ~~and~~ we could lose our ability to operate in that state or international market, and our ability to generate revenue would be adversely affected.

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

The loss or suspension of aan educator partner’s accreditation or other adverse action by ~~the partner’s~~their institutional accreditor would render the institution or its program ineligible to participate in Title IV programs or similar government funding programs that may be in place and available to students enrolled at our Degrees partners based in and outside of the ~~United States.~~U.S. This loss, suspension or other adverse action could prevent the educator partner from offering certain educational programs, could prevent students enrolled at our Degrees partners from accessing such funding programs, and could make it impossible for the graduates of the educator partner’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 activities are subject to international, federal, and state education accessibility, ~~and~~ consumer protection laws and regulations, and other requirements.

As a service provider to higher education institutions both in the ~~United States~~U.S. and internationally, either directly or indirectly through our arrangements with educator partners, we are required to comply with certain education laws and regulations.


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Our platform is also subject to various requirements relating to accessibility for learners with disabilities. Certain requirements of Title II and Title III of the Americans with Disabilities Act apply to us and to our public and private university partners, Section 504 of the Rehabilitation Act of 1974 (the “Rehabilitation Act”) applies to our educator partners that receive federal funding, and Section 508 of the Rehabilitation Act, which sets accessibility standards for websites of federal departments and agencies, applies to certain of our government customers. Further, in the absence of definitive federal rulemaking, the Web Content Accessibility Guidelines ~~2.1,~~2.2, a set of recommendations and technical standards for making websites accessible to individuals with disabilities published by the World Wide Web Consortium, have become the effective standard for learner-facing aspects of our platform. We may not be successful in ensuring that our offerings and services meet these changing statutory and regulatory requirements, which could make our solutions less attractive to our educator partners and customers and which could subject us to third-party lawsuits, regulatory fines, or other action or liability, and we expect to incur ongoing costs of compliance. ~~In addition, we have structured our learner~~

Our subscription plans to charge learners on a recurring basis, and as a result we must comply with complex international, federal, and state laws and regulations related to automatic renewal, unfair competition, and false advertising. These laws, among other things, require us to make specific disclosures in ~~specific~~clear and conspicuous ways at the time a learner purchases a subscription, and obtain the learner’s affirmative, express consent to the recurring ~~charges.~~charges, as well as provide learners with refunds easily and promptly. The penalties for failing to comply with these requirements can be severe, including rendering the subscription contract null and void, and allowing the consumer to treat any services provided under such a contract as a gift, and any failure to comply with these requirements may constitute violations of more general consumer protection ~~laws.~~

~~Failure~~laws, which could subject us to ~~comply~~third-party lawsuits, regulatory fines, or other action or liability, and we expect to incur ongoing costs of compliance.

In addition to the above, we have made, and will continue to make, certain contractual commitments to our educator partners regarding compliance with ~~any of these~~ laws and regulations, and failure to comply 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 or the DOE, such as changes in spending policies or budget priorities for government funding of colleges, universities, schools, and other education providers, could result in adverse legislation or regulatory action.

Our educator partners include colleges, universities, and other education providers, many of which depend substantially on government funding. ~~Accordingly, any~~Any general decrease, delay, or change in federal, state, or local funding for colleges, universities, and other education providers could cause our current and potential partners to reduce their use of our platform, or delay development of content for our platform, any of which could cause us to lose learners and revenue. For

example, a government shutdown as a result of failure to enact funding legislation for the government's next fiscal year, which in turn could negatively impact our business, financial condition, and results of operations.

In addition, 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 pending reauthorization of the HEA and the associated negotiated rulemaking or otherwise. These changes may place additional regulatory burdens on postsecondary schools participating in the Title IV programs generally, and specific changes may be targeted at companies like us that serve higher education within the ~~United States.~~U.S. The adoption of any laws or regulations that limit our ability to provide our bundled services to our educator partners could compromise our ability to offer 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.

Regulatory activities and initiatives of the DOE may have similar consequences for our business even in the absence of Congressional action. No assurances can be given as to how any new rules may affect our business.


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~~Our~~While our degree business model ~~has been validated by~~is designed to align with guidance from a DOE ~~“dear colleague letter”, but~~“Dear Colleague” Letter, such ~~validation~~guidance is not codified by statute or regulation and may be subject to change.

Each institution that participates in Title IV programs agrees, as a condition of its eligibility to participate in those programs, that 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.” The vast majority of our U.S.-based university partners, and a some of our non-U.S. university partners, participate in the 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 learners, the DOE provided clarifying guidance in March 2011 interpreting the incentive compensation rule as permitting tuition revenue-sharing arrangements known as the “bundled services exception.” Our current business model relies heavily on the bundled services exception to enter into tuition revenue-sharing agreements with ~~partner colleges and universities.~~

our Title IV participating university partners.

The ~~“dear colleague letter” (“DCL”)~~DCL issued by the DOE on March 17, 2011, sets forth the ~~official~~ guidance of the DOE regarding various regulations that were implemented around that time. The DCL affirms 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.” The DCL, however, in Example 2-B, clarified an important exception to this prohibition for a business model that complies with the bundled services exception: “A third party that is not affiliated with the institution it serves and is not affiliated with any other institution that provides educational services, which third party provides bundled services to the institution including marketing, enrollment application assistance, recruitment services, course support for online delivery of courses, the provision of technology, placement services for internships, or student career counseling, may receive from an institution an amount based on tuition generated for the institution by the third-party’s activities for all bundled services that are offered and provided collectively, as long as the third party does not make prohibited compensation payments to its employees, and the institution does not pay the third party separately for student recruitment services provided by the entity.”

The DCL guidance indicates 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 our U.S.-based university partners are designed to follow Example 2-B in the DCL. However, the inherent ambiguity in the DCL and the incentive compensation rule creates the risk that DOE or a court, including, notably, in the context of a “whistleblower” claim under the federal False Claims Act, could disagree with that interpretation. If the DOE or a court determined that our business model or even the practices of a subcontractor did not meet the bundled services exception, we could have contractual obligations to our ~~U.S.-based~~Title IV participating university partners, such as indemnifying a partner from private claims or government investigations or demands for repayment of Title IV program funds. Even if such claims are without merit, they could cause reputational harm, cause us to incur significant defense costs, result in the termination of our ~~U.S.-based~~Title IV participating partner agreements, and negatively impact our ability to enter into new agreements.

Further, because the bundled services rule was promulgated by agency guidance through the DCL and is not codified by statute or regulation, there is risk that the exception could be altered or removed without prior notice, public comment period, or other administrative procedural requirements that accompany formal agency rulemaking. ~~Although~~The DCL has been criticized by commentators and lawmakers, including in a June 2022 report by the U.S. House Committee on Appropriations, which urged the DOE ~~has not publicly stated an intention~~ to rescind the guidance. On February 15, 2023, the DOE announced that it is reviewing its DCL guidance on incentive compensation compliance. As a result, if the guidance is rescinded or amended, such changes may materially and adversely impact our business and operations as we may need to alter ~~its guidance,~~or replace the ~~bundled services exception could be reviewed, altered, or vacated~~current tuition revenue-sharing models in ~~the future.~~ our agreements with Title IV participating university partners.

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 whether the exception in the DCL would be upheld by a court or how it would be interpreted. The revision, removal, or invalidation of the bundled services exception by Congress, the DOE, or a court, whether in an action involving our ~~company~~Company or our university partners, or in action that does not involve us, could require us to change our business model and renegotiate the terms of our ~~college and~~ university partner agreements and could compromise our ability to generate ~~revenue.~~

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Expected guidance from the DOE could classify us as a third-party servicer (“TPS”) under the HEA and could impose new compliance burdens on us and our Title IV participating university partners.

On February 15, 2023, the DOE issued “Requirements and Responsibilities for Third-Party Servicers and Institutions” (“GEN-23-03”). Prior to GEN-23-03 and based on longstanding DOE policy, only companies that assisted in financial aid administration functions were classified as a TPS. GEN-23-03 expanded the scope of TPS status to include companies that provide (among other things) recruiting services to Title IV participating universities. A Title IV participating university that engages a TPS must include specific provisions in the TPS contract and must report each TPS contract to the DOE. A company classified as a TPS falls under direct DOE oversight, is jointly and severally liable with the university for any HEA violations, and must undergo an annual audit. Subsequent to the receipt of numerous comments related to GEN-23-03 and a legal challenge, the DOE has delayed implementation of GEN-23-03 and intends to issue updated guidance on Third Party Servicers in early 2024. The DOE has not provided any estimate of the timing for re-issuance. If we are considered a TPS under the new guidance to those Title IV participating university partners who receive recruiting services from us, those university partners could hesitate to engage us for recruiting services to avoid compliance obligations, and we would incur additional expense in complying with TPS requirements, which could materially and adversely impact our business and operations.

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

Under our contracts with U.S.-based college and university partners, we are required to comply with other regulations promulgated by the DOE and comparable state laws that affect our marketing activities, including the misrepresentation rule. The misrepresentation rule is broad in scope and applies to statements our employees or agents may make about the nature of aan educator partner’s program, ~~a partner’s~~their financial charges, or the employability of ~~a partner’s~~their program graduates. A violation of this rule or other federal or state regulations applicable to our marketing activities by an employee or agent performing services for educator partners could damage our reputation, result in the termination of educator partner agreements, require us to pay fines or other monetary penalties, and require us to pay the fees associated with indemnifying aan educator partner from private claims or government investigations.

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We are required to comply with ~~The~~the Family Educational Rights and Privacy Act (“FERPA”), for certain of our offerings, 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 learner’s education records without the learner’s consent. ~~Our~~Certain U.S.-based university degree and certificate partners and Coursera for Campus customers and their learners disclose to us certain information that originates from or composes a learner education record under FERPA. Through our contracts to provide services to these institutions, we are indirectly subject to FERPA, and we may not transfer or otherwise disclose any personally identifiable information from a learner record to another party other than in a manner permitted under the statute and any applicable contract.FERPA. If we violate FERPA, it could result in a material breach of agreement with one or more of our educator partners and Coursera for Campus customers could harm our reputation. Further, in the event that we disclose learner information in violation of FERPA, the DOE could require aan educator partner to suspend our access to their learner information for at least five years.

We could face liability, or our reputation might be harmed, as a result of the activities of our customers and educators for content on or accessible through our platform.

In some instances, various articles or other third-party content may be posted to our platform by customers and educators 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. In addition, third parties may allege misappropriation, plagiarism, or similar claims related to content appearing on our platform. Any such claims, including claims of defamation, disparagement, negligence, breach of warranty, misappropriation, or personal harm, 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, or may choose to, alter or cease our uses of such material, which may include changing or removing courses or content from courses or altering the functionality of our platform, or be required to pay monetary damages.


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While we rely on a variety of statutory and common-law frameworks and defenses, including those provided by the Digital Millennium Copyright Act of 1998 (“DMCA”), the Communications Decency Act of 1996 (“CDA”), the fair-use doctrine in the ~~United States~~U.S., and the ~~E-Commerce~~e-Commerce Directive in the European Union (“EU”), differences between statutes, limitations on immunity, requirements to maintain immunity, and moderation efforts in the many jurisdictions in which we operate may affect our ability to rely on these frameworks and defenses, or create uncertainty regarding liability for information or content uploaded by educator partners or learners or otherwise contributed by third-parties to our platform. For example, while Section 230 of the CDA provides certain legal protections to online platforms from litigation related to content posted by users of their platforms, Section 230 has faced increasing litigation challenges and legislative proposals regarding the scope of its ~~protection.~~protection, including the Gonzalez v. Google case challenging Section 230, which the Supreme Court recently announced it will hear. These actions may increase the uncertainty of litigation risk for online platforms such as ours. As an additional example, Article 17 of the Directive on Copyright in the Digital Single Market was passed in the E.U., which affords copyright owners some enforcement rights that may conflict with U.S. safe harbor protections afforded to us under the DMCA. Member states in the EU are in the process of determining how Article 17 will be implemented in their particular country. Moreover, regulators in the ~~United States~~U.S. and in other countries in which we operate may introduce new regulatory regimes that increase potential liability for information or content available on our platform, or which impose additional obligations to monitor such information or content, which could increase our costs.

We are subject to governmental export and import controls and anti-corruption laws and regulations that could impair our ability to compete in international markets and subject us to liability if we are not in full compliance with applicable laws.

Our business activities are subject to various restrictions under U.S. export and import and similar laws and regulations, including the U.S. Department of Commerce’s Export Administration Regulations and various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Controls. The U.S. export control laws and U.S. economic sanctions laws include restrictions or prohibitions on the purchase or sale of certain technology, goods, and services to U.S. embargoed or sanctioned countries, governments, persons, and entities. In addition, various countries regulate the import of certain technology and have enacted or could enact laws that could limit our ability to provide learners access to our platform or could limit our learners’ ability to access or use our services in those countries.

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Although we take precautions to prevent our platform from being provided in violation of such laws, our platform could be provided inadvertently in violation of such laws, despite the precautions we take. If we fail to comply with these laws and regulations, we and certain of our employees could be subject to civil or criminal penalties, including the possible loss of export privileges and fines. We may also be adversely affected through penalties, reputational harm, loss of access to certain markets, or otherwise. In addition, various countries regulate the import and export of certain encryption and other technology, including import and export permitting and licensing requirements, and have enacted laws that could limit our ability to distribute our platform or could limit our learners’ ability to access our platform in those countries. Changes in our platform, or changes in export and import regulations, such as ~~recent changes applicable~~the increase of sanctions on Russian parties, and discretionary decisions to ~~certain regions of Ukraine,~~suspend activities in Russia, may prevent our international learners from utilizing our platform or, in some cases, prevent the export or import of our platform to certain countries, governments, or persons altogether. AnyAny change in export or import regulations, economic sanctions, or related legislation or changes in the countries, governments, persons, or technologies targeted by such regulations, could result in decreased use of our platform by, or in our decreased ability to export or sell subscriptions to our platform to, existing or potential learners internationally, or could restrict our ability to acquire technology, services, or content. Any decreased use of our platform or limitation on our ability to export or sell our platform would adversely affect our business, results of operations, and financial results.

We are also subject to various domestic and international anti-corruption laws, such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act, as well as other similar anti-bribery, anti-kickback laws, and anti-money laundering regulations. These laws and regulations generally prohibit companies and their employees and intermediaries from authorizing, offering, providing, and accepting improper payments or benefits for improper purposes. These laws also require that we keep accurate books and records and maintain compliance procedures designed to prevent any such actions. Although we take precautions to prevent violations of these laws, our exposure for violating these laws increases as our international presence expands and as we increase sales and operations in foreign jurisdictions.


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We may become involved in claims, lawsuits, government investigations, and other proceedings that could adversely affect our business, financial condition, and results of operations.

From time to time, we may become involved in litigation matters ~~such as matters incidental to the ordinary course of our business,~~ including ~~intellectual property,~~IP, commercial, employment, class action, securities, whistleblower, accessibility, and other litigation and claims, and governmental and other regulatory investigations and proceedings. For example, we are currently party to a class action lawsuit alleging certain violations of the VPPA (as defined below). See “Legal Proceedings.”

Such matters can be time-consuming, divert management’s attention and resources, cause us to incur significant expenses or liability, or require us to change our business practices. In addition, the expense of litigation and the timing of these expenses from period to period are difficult to estimate, subject to change, and could adversely affect our financial condition and results of operations. Because of the potential risks, expenses, and uncertainties of litigation, we may, from time to time, settle disputes, even where we have meritorious claims or defenses, by agreeing to settlement agreements. Any of the foregoing could adversely affect our business, financial condition, and results of operations. Refer to Note 9, “Commitments and Contingencies”, in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K.

Risks Related to Privacy, Cybersecurity, and Infrastructure

If sensitive information about our educator partners, their employees, or our learners is disclosed, or if we or our third-party providers are subject to ~~cyber-attacks,~~cyberattacks, use of our platform could be curtailed, we may be exposed to liability, and our reputation would suffer.

Although we do not directly collect, transmit, and store financial information, such as credit cards and other payment information, except in very limited circumstances related to Enterprise customers, we utilize third-party payment processors who provide these services on our behalf. We also collect and store certain ~~personally identifiable information~~personal data provided by our educator partners, learners, and potential learners, such as names, email addresses, and ~~email addresses.~~other data pertaining to their activity on our platform. The collection, transmission, and storage of such information is subject to stringent legal and regulatory obligations. Some of our third-party service providers, such as identity verification and payment processing providers, also regularly have access to personal data. In an effort to protect sensitive information, we rely on a variety of security measures, including encryption and authentication technology licensed from third parties. However, advances in computer capabilities, increasingly sophisticated tools and methods used by hackers and ~~cyber terrorists,~~cyberterrorists, new discoveries in the field of cryptography, or other developments may result in our failure or inability to adequately protect sensitive information.

In addition, there may be scamming or phishing attempts, such as impersonating our personnel or our educator partners’ personnel, in an effort to obtain personal information from our learners or otherwise make inappropriate use of our platform, which could expose us to liability, reduce learner and educator partner satisfaction with our platform, or damage our reputation. For example, we have had several instances of users impersonating professors and inviting learners to off-platform forums in an effort to entice the learners to buy unrelated educational content.

Our platform is vulnerable to power outages, telecommunications failures, and catastrophic events, as well as computer viruses, worms, malicious code, break-ins, phishing attacks, denial-of-service attacks, ransomware, and other ~~cyber-attacks.~~cyberattacks. Any of these incidents could lead to interruptions or shutdowns of our platform, loss of data, or unauthorized disclosure of ~~personally identifiable~~personal data or other sensitive information. ~~Cyber-attacks~~Cyberattacks could also result in the theft of our ~~intellectual property. If~~IP. As we gain greater global visibility, we may face a higher risk of being targeted by ~~cyber-attacks.~~cyberattacks. Advances in computer capabilities, new technological discoveries, or other developments may result in ~~cyber-attacks~~cyberattacks becoming more sophisticated and more difficult to detect.

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Any failure or perceived failure by us to comply with our privacy policies, our privacy or data protection obligations to learners or other third parties, or our privacy or data protection legal obligations, or any compromise of security that results in the unauthorized access, release, use, or transfer of sensitive information, which may include ~~personally identifiable information~~personal data or other data, may result in governmental enforcement actions, litigation, or public statements against us by consumer advocacy groups or others and could cause learners to lose trust in us, which could have an adverse effect on our business.

Furthermore, under the terms of our agreements with degree partners and customers, and our primary legal obligations, we are responsible for the costs of investigating and disclosing data breaches. In addition to costs associated with investigating and fully disclosing a data breach in such instances, we could be subject to substantial costs to remedy the data breach, substantial monetary fines, or private claims by affected parties, and our reputation would likely be harmed.


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Further, if we or our third-party service providers experience security breaches that result in platform performance or availability problems or the loss or unauthorized disclosure of sensitive information, our reputation and ability to maintain existing, or attract new, educator partners and learners could be materially adversely affected, and our existing educator partners could scale back their programs or elect to not renew their agreements, prospective learners could decline to enroll or stay enrolled in our educator partners’ programs, and we could be subject 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~~Company by prospective educator partners or learners.

We and our third-party service providers may not have the resources or technical sophistication to anticipate or prevent all such ~~cyber-attacks.~~cyberattacks. Moreover, techniques used to obtain unauthorized access to systems change frequently and may not be known until launched against us or our third-party service providers. Security breaches can also occur as a result of non-technical issues, including intentional or inadvertent breaches by our employees or employees of our third-party service ~~providers.~~

providers or theft or loss of devices.

We expect to incur ongoing costs associated with the detection and prevention of data security breaches and other security-related incidents. We may incur additional costs in the event of a data security breach or other security-related incident. Any actual or perceived compromise of our systems or data security measures or those of third parties with whom we do business, or any failure to prevent or mitigate the loss of personal or other confidential information and delays in detecting or providing notice of any such compromise or loss could disrupt our operations, harm the perception of our security measures, damage our reputation, cause some learners or educator partners to decrease or stop their use of our platform or relationships with us, and could subject us to litigation, government action, increased transaction fees, regulatory fines or penalties, or other additional costs and liabilities that could harm our business, financial condition, and operating results.

We cannot be certain that our insurance coverage will cover or be adequate for data handling or data security liabilities or loss of revenue if our platform is unavailable for any reason, that insurance will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or ~~co-insurance~~coinsurance requirements, could have a material and adverse effect on our business, including our financial condition, operating results, and reputation.

If the personally identifiable information we collect from our partners, customers, and learners 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 partners and customers, we may directly or indirectly have access to personally identifiable information from learners and prospective learners, such as names and email addresses. In the event that the personally identifiable information is unlawfully accessed or acquired, the majority of states and many international jurisdictions have laws that require institutions to investigate and promptly disclose the data breach to learners, usually in writing. Under the terms of our agreements with partners and customers, we may be responsible for the costs of investigating and disclosing data breaches to learners and, in many cases, to partners and customers as well. In addition to costs associated with investigating and fully disclosing a data breach in such instances, we could be subject to substantial costs to remedy the data breach, substantial monetary fines or private claims by affected parties and our reputation would likely be harmed.

Disruption to or failures of our platform could result in our educator partners and learners becoming unsatisfied with our platform and could harm our reputation.

The performance and reliability of our platform and the underlying technology are critical to our operations, reputation, and ability to attract and retain educator partners and learners. Our educator partners rely on our platform to offer their courses and programs online, and learners must access our platform on a frequent and reliable basis. Our platform is complex and relies on infrastructure provided by third parties, and may contain defects, errors, or vulnerabilities, or may not perform as contemplated. These errors, defects, disruptions, breaches, or other performance problems with our platform could damage our or our educator partners’ reputations, decrease educator partner and learner satisfaction and retention, negatively impact our ability to attract new learners and educator partners, and could result in large indemnity payments to learners and educator partners for losses suffered or incurred in connection with any such defects or errors on our platform, or other liabilities relating to or arising from our platform. In addition, sustained or recurring disruptions in our platform or its underlying technology could adversely affect our and our educator partners’ compliance with applicable regulations and accrediting body standards.

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Further, if we fail to accurately predict the rate or timing of the growth of our platform, we may be required to incur significant additional costs to maintain reliability. We also depend on the development and maintenance of the ~~Internet~~internet infrastructure, including maintenance of reliable ~~Internet~~internet networks with the necessary speed, data capacity, and security. If we experience failures in our technology infrastructure or do not expand our technology infrastructure successfully, then our ability to attract and retain partners and learners, our growth prospects, and our business would suffer.


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We have experienced, and expect that in the future, we will experience, interruptions, delays, and outages in service and availability from time to time due to a variety of factors, including infrastructure changes, human or software errors, website hosting disruptions, ~~and~~ capacity constraints, and lack of network connectivity in one or more regions, which could affect the availability of services on our platform and prevent or inhibit the ability of learners to access or complete courses and programs on our platform. In particular, our technology infrastructure is currently hosted by third-party data center facilities operated by Amazon Web Services (“AWS”). Further, our platform and underlying technology is supported by multiple third-party providers. Any disruption in its services, or any failure of AWS or any ~~future~~other third-party provider to handle the demands of our platform, could significantly harm our business and damage our reputation. We do not have control over the operations of the facilities of the third-party providers that we use, and these facilities may be vulnerable to damage or interruption from natural disasters, cybersecurity attacks, terrorist attacks, power outages, and similar events or acts of misconduct.

If we do not maintain the compatibility of our learning management platform with third-party applications that our customers use, our revenue will decline.

A number of our customers integrate our learning management platform with certain learning management systems or learning experience platforms using application programming interfaces ~~(“APIs”)~~ for user management, usage reporting, and content listings, and we expect this number of customers to grow. The functionality and popularity of our platform depends, in part, on our ability to integrate our platform with third-party applications and software. Third-party providers of applications may change the features of their applications and software, restrict our access to their applications and software or alter the terms governing use of their applications and access to those applications and software in an adverse manner. Such changes could functionally limit or terminate our ability to use these third-party applications and software in conjunction with our platform, which could negatively impact our offerings and harm our business. If we fail to integrate our platform with new third-party applications and software that our learners and educator partners can utilize, we may not be able to offer the functionality that ~~our learners and partners~~they need, which would negatively impact our ability to generate revenue and adversely impact our business.

Our payments system depends on third-party providers and is subject to evolving laws and regulations.

We rely on third-party payment processors to process payments made by learners on our platform. We have engaged third-party service providers to perform underlying card processing, currency exchange, identity verification, and fraud analysis services. If these service providers do not perform adequately or if they terminate their relationships with us or refuse to renew their agreements with us on commercially reasonable terms, we will need to find an alternate payment processor and may not be able to secure similar terms or replace such payment processors in an acceptable timeframe. Further, the software and services provided by our third-party payment processors may not meet our expectations, contain errors or vulnerabilities, be compromised or experience ~~outages.~~outages, or such processors may impose additional authentication, validation, or other requirements. Any of these risks could cause us to lose our ability to accept online payments, ~~make payments to our partners, or~~ conduct other payment transactions, or make it difficult for our customers to make payments to us, any of which could make our platform less convenient and attractive and harm our ability to attract and retain educator partners and learners. In addition, if these providers increase the fees they charge us, our operating expenses could increase.

The laws and regulations related to payments are complex and vary across different jurisdictions in the ~~United States~~U.S. and globally. As a result, we are required to spend significant time and effort to comply with those laws and regulations. ~~For example, the Reserve Bank of India has imposed additional requirements for recurring credit card payments.~~ Any failure or claim of our failure to comply, or any failure by our third-party service providers to comply, could cost us substantial resources, could result in liabilities, or could force us to stop offering certain third-party payment services. For example, in late 2021, the Reserve Bank of India imposed additional requirements for recurring credit card payments, and until financial institutions satisfied the new requirements, learners were unable to use credit cards from such institutions to purchase subscriptions. In 2022, Nigerian banks imposed limits on foreign currency spending, and later announced plans to suspend international card transactions completely. In addition, as we expand our international operations, we will need to accommodate international payment method alternatives. As we expand the availability of new payment methods in the future, including internationally, we may become subject to additional regulations and compliance requirements.


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Further, through our agreement with our third-party credit card processors, we are indirectly subject to payment card association operating rules and certification requirements, including the Payment Card Industry Data Security Standard. We are also subject to rules governing electronic funds transfers. Any change in these rules and requirements could make it difficult or impossible for us to comply. If we fail to comply with these rules or requirements, we may be subject to additional fines and higher transaction fees and lose our ability to accept credit and debit card payments from our learners, process electronic funds transfers, or facilitate other types of online payments, and our business and operating results could be adversely affected.

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Our business depends to a significant degree on continued access to the ~~Internet~~internet and mobile networks.

Our educator partners and learners rely on access to the ~~Internet~~internet and mobile networks to access our platform. Internet service providers may choose to disrupt or degrade our access to our platform or increase the cost of such access. Internet service providers or mobile network operators could also attempt to charge us for providing access to our platform. In January 2018, the Federal Communications Commission (the “FCC”) released an order reclassifying broadband ~~Internet~~internet access as an information service, subject to certain provisions of Title I of the Communications Act. Among other things, the order eliminates rules adopted in 2015 that prohibited broadband providers from blocking, impairing, or degrading access to legal content, applications, services, or non-harmful devices, or engaging in the practice of paid prioritization ~~e.g.~~(e.g., the favoring of some lawful ~~Internet~~internet traffic over other traffic in exchange for higher ~~payments.~~payments). The order was contested and affirmed in federal court, and the parties declined to appeal the decision to the Supreme Court. A number of states have also enacted or are considering legislation or executive actions that would regulate the conduct of broadband providers. OnWhile President Biden signed Executive Order 14036 on July 9, 2021, ~~President Biden signed an executive order~~ which, among other things, instructed the FCC to restore the net neutrality ~~rules. We~~rules, we cannot predict whether the FCC will restore such rules, and if they do, whether the order or state initiatives will be modified, overturned, or vacated by legal action of the court, federal or state legislation, or the FCC. If net neutrality rules are not implemented, our business could be subject to increased costs and a loss of existing ~~users,~~learners, impair our ability to attract new ~~users,~~learners, and materially and adversely impact our business and opportunities for growth. Outside of the ~~United States,~~U.S., government regulation of the ~~Internet,~~internet, including the idea of ~~network~~net neutrality, may be developing or non-existent. As a result, we could face discriminatory or anti-competitive practices that could impede our growth prospects, increase our costs, and harm our business.

If the mobile solutions available to our learners and partners are not effective, the use of our platform could decline.

Learners have been increasingly accessing our platform on mobile devices through our app in recent years. The smaller screen size and reduced functionality associated with some mobile devices may make the use of our platform more difficult or our educator partners may believe that online learning through such mobile devices is not effective. Learners accessing our network primarily on mobile devices may not enroll in the courses or the ~~certification, degree, or other~~ credentialing programs offered on our platform as often as those accessing our platform through personal computers, which could result in less revenue for us. If we are not able to provide our educator partners with the functionality to deliver a rewarding experience on mobile devices, their ability to attract learners to their programs may be harmed and, consequently, our business may suffer.

As new mobile devices and mobile features are released, we may encounter problems in developing or supporting apps for them. In addition, supporting new devices and mobile device operating systems may require substantial time and resources.

The success of our mobile apps could also be harmed by factors outside our control, such as:

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actions taken by mobile app distributors;

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unfavorable treatment received by our mobile apps, especially as compared to competing apps, such as the placement of our mobile apps in a mobile app download store;

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increased costs in the distribution and use of our mobile app; or

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changes in mobile operating systems, such as iOS and Android, that degrade the functionality of our mobile website or mobile apps or that give preferential treatment to competitive offerings.

If our educator partners or customers, including learners, encounter difficulty accessing or using, or if they choose not to use, our mobile platform, our growth prospects and our business may be adversely affected.


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Our use and processing of personal information and other data is subject to laws and obligations relating to privacy and data protection, and our failure to comply with such laws and obligations could harm our business.

In the ordinary course of our business, and in particular in connection with merchandising our ~~service~~services to our learners, we collect, process, store, and use personal information and data supplied by learners. Numerous federal, state, and foreign laws, rules, and regulations govern privacy, data protection, and the collection, use, and protection of personal information and other types of data we collect, use, disclose, and otherwise process. These laws, rules, and regulations are constantly evolving, and we expect that there will continue to be new proposed laws, regulations, and industry standards concerning privacy, data protection, and information security in the ~~United States,~~U.S., the ~~European Union,~~EU, and globally.

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In the ~~United States,~~U.S., a significant example of this is the California Consumer Privacy Act (the “CCPA”), which provides data privacy rights for California consumers and new operational requirements for covered companies. The CCPA provides that covered companies must provide ~~new~~ disclosures to California consumers and afford such consumers new data privacy rights that include the right to request a copy from a covered company of the personal information collected about them, the right to request deletion of such personal information, and the right to request to opt-out of certain sales of such personal information. ~~On January 1, 2023 the~~The California Privacy Rights Act (the “CPRA”) ~~will come into effect and~~, effective as of January 1, 2023, significantly ~~modify~~modifies the CCPA, including by imposing additional obligations on covered companies and expanding consumers’ rights with respect to certain sensitive personal information and rights to object to sharing information for behavioral advertising purposes, potentially resulting in further uncertainty and requiring us to incur additional costs and expenses in an effort to comply. The CPRA also creates a new state agency that will be vested with authority to implement and enforce the CCPA and the CPRA. Additionally, the Virginia Consumer Data Protection Act, ~~will come into effect on~~effective from January 1, 2023, the Colorado Privacy Act and the Connecticut Data Privacy Act, both effective from July 1, 2023, and the ~~Colorado~~Utah Consumer Privacy Act, ~~will enter into force on July 1,~~effective from December 31, 2023, ~~both of which~~each impose similar requirements on covered businesses. New privacy laws have also recently been passed in Indiana (Indiana Consumer Data Protection Act), Iowa (Iowa Consumer Data Protection Act), Montana (Montana Consumer Data Privacy Act) and Tennessee (Tennessee Information Protection Act), which will become effective between 2024 and 2026. There are a number of additional proposals for U.S. federal and state privacy laws that, if passed, could increase our potential liability, add layers of complexity to compliance in the U.S. market, increase our compliance costs, and adversely affect our business. In addition, all 50 states have laws, including obligations to provide notification of security breaches of computer databases that contain personal information to affected individuals, state officers, and others. Aspects of ~~the CCPA, the CPRA,~~these U.S. state privacy laws and other laws and regulations relating to data protection, privacy, and information security, as well as their enforcement, remain unclear, and we may be required to modify our practices in an effort to comply with them.

The CCPA and CPRA could mark the beginning of a trend toward more stringent privacy legislation in the United States. In addition to California, Colorado and Virginia, other states are also considering privacy legislation. The CCPA has prompted a number of additional proposals for federal and state privacy legislation that, if passed, could increase our potential liability, add layers of complexity to compliance in the U.S. market, increase our compliance costs and adversely affect our business.

~~The~~EU General Data Protection Regulation ~~(the~~and UK General Data Protection Regulation (together, “GDPR”) ~~imposes~~impose stringent EU data protection requirements on businesses processing personal data of EU and UK data ~~subjects.~~subjects, respectively. The GDPR is wide-ranging in scope and imposes numerous additional requirements on companies that process personal data, including ~~imposing special requirements in respect of the~~requiring that lawful bases exist for all processing of personal data, requiring ~~that consent of individuals to whom the personal data relates is obtained in certain circumstances, requiring additional~~ disclosures to individuals regarding data processing activities, requiring that safeguards are implemented to protect the security ~~and confidentiality~~ of personal data, creating mandatory data breach notification requirements in certain circumstances, and requiring that certain measures (including contractual ~~requirements)~~obligations) are ~~put in place~~taken when engaging third-party processors or transferring data overseas. The GDPR also provides individuals with various rights in respect of their personal data, including rights of access, erasure, portability, rectification, restriction, and objection. Complying with the GDPR remains an onerous and potentially costly obligation as interpretations of the specific requirements emerge through the courts, enforcement decisions and ~~enforcement decisions.~~regulatory guidance. In addition, where ~~we transfer~~personal data ~~directly from customers in~~subject to the ~~EEA directly~~GDPR is transferred to non-adequate jurisdictions (e.g., where an EU customer transfers personal data to us in the ~~US (notwithstanding recent positive developments through the implementation of updated Standard Contractual Clauses)~~U.S.), there is still considerable uncertainty surrounding the future trajectory of the perception of such transfers by EU courts and data protection authorities following the decision on July 16, 2020 by the Court of Justice of the ~~European Union (ECJ)~~EU in its Case C-311/18 Data Protection Commissioner v Facebook Ireland and Maximillian ~~Schrems.~~

Schrems and associated enforcement action by certain EU data protection authorities (such as the Irish Data Protection Commission in May 2023). The European Commission issued an adequacy decision in respect of the EU-U.S. Data Privacy Framework on July 10, 2023, permitting transfers of personal data from the EU to U.S. organizations certified under the Framework, without additional transfer mechanisms. However, legal challenges to the validity of this adequacy decision have already been lodged in the EU, with further challenges expected.


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Similar data privacy laws, rules, and regulations in other countries may also impact our business. The People’s Republic of China implemented the Personal Information Protection Law on November 1, 2021, which includes both similarities and differences to the GDPR. India has drafted a complete overhaul of its privacy regime with the draft Personal Data Protection Bill 2019. This bill, while not yet law, would grant Indian data subjects many of the same rights as granted by the GDPR to EU data subjects and impose similar obligations on businesses processing the personal data of Indian data subjects. Singapore also amended its privacy law in 2021, imposing additional obligations on businesses processing the data of Singaporean data subjects, including restrictions on foreign transfers. In addition, the Brazilian General Data Protection Law, in force since late 2020, is a comprehensive data protection regime modeled in part on the GDPR. In August 2023, the Indian Parliament passed a new data privacy law, the Digital Personal Data Protection Act, 2023, whichcompletely overhauls India’s privacy regime. The law has received the President’s assent and is expected to come into force shortly.

Furthermore, the future approach of legislators and regulators with respect to AI may ~~also~~ have ~~implications for~~a significant impact on our business.

On October 30, 2023, President Biden signed Executive Order 14110, “Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence (AI)”, for which the impact to private businesses is not clear. In December 2023, the EU reached provisional agreement on their Artificial Intelligence Act (“AI Act”), which is expected to take effect in 2026. The AI Act will introduce significant compliance obligations and regulatory fines for breaches on all operators of AI systems. A particular risk of the AI Act is the potential classification of certain uses of AI systems in an educational context as high risk, significantly increasing the compliance burden associated with running such AI systems and which may bring into question the feasibility of operating AI systems for certain use cases. The full extent and applicability of these requirements to our use cases will not be certain unless and until the proposal becomes law.

We cannot yet fully determine the impact that these or future laws, rules, and regulations may have on our business or operations. These laws, rules, and regulations may be inconsistent from one jurisdiction to another, subject to differing interpretations, and may be interpreted to conflict with our practices.

Additionally, we may be bound by contractual requirements applicable to our collection, use, processing, and disclosure of various types of data, including personal information, and may be bound by, or voluntarily comply with, self-regulatory or other industry standards relating to these matters.

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Any failure or perceived failure by us or any third parties with which we do business to comply with these laws, rules, and regulations, or with other obligations to which we or such third parties are or may become subject, may result in actions against us by governmental entities or private claims and litigation. For example, we are currently party to a class action lawsuit alleging certain violations of the VPPA. See “Legal Proceedings.” Any such action would be expensive to defend, may require the expenditure of substantial legal and other costs and substantial time and resources, may result in fines, penalties, or other liabilities, and likely would damage our reputation and adversely affect our business and operating results. In many jurisdictions, enforcement actions and consequences for non-compliance with protection, privacy, and information security laws and regulations are rising. In the ~~United States,~~U.S., possible consequences for non-compliance include enforcement actions in response to rules and regulations promulgated under the authority of federal agencies and state attorneys general and legislatures and consumer protection agencies. In the EU, data protection authorities may impose large penalties for violations of the data protection laws, including potential fines of up to €20 million or 4% of annual global revenue, whichever is greater. The authorities have shown a willingness to impose significant fines and issue orders preventing the processing of personal data on non-compliant businesses. Data ~~participants~~subjects also have a private right of action, as do consumer associations, to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of applicable data protection laws. In addition, privacy advocates and industry groups have regularly proposed, and may propose in the future, self-regulatory standards that may legally or contractually apply to us. If we fail to follow these ~~security~~ standards, even if no customer information is compromised, we may incur significant fines or experience a significant increase in costs.

Further, in view of new or modified federal, state, or foreign laws and regulations, industry standards, contractual obligations, and other legal obligations, or any changes in their interpretation, we may find it necessary or desirable to fundamentally change our business activities and practices or to expend significant resources to modify our services, and otherwise adapt to these changes. We may be unable to make such changes and modifications in a commercially reasonable manner or at all, and our ability to develop new features could be limited. Privacy, data protection, and information security concerns, whether valid or invalid, may inhibit the use and growth of our platform, particularly in certain foreign countries.


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Use of social media, emails, push notifications, and text messages in ways that do not comply with applicable laws and regulations, lead to the loss or infringement of ~~intellectual property,~~IP, or result in unintended disclosure may harm our reputation or subject us to fines or other penalties.

We use social media, emails, push notifications, and text messages as part of our omni-channel approach to marketing. As laws and regulations evolve to govern the use of these channels, the failure by us, our employees, our partners, or third parties acting at our direction to comply with applicable laws and regulations in the use of these channels could adversely affect our reputation or subject us to fines or other penalties. In addition, our employees, our educator partners, or third parties acting at our direction may knowingly or inadvertently make use of social media in ways that could lead to the loss or infringement of ~~intellectual property,~~IP, as well as the public disclosure of proprietary, confidential, or sensitive personal information of our business, employees, learners, educator partners, or others. Information concerning us, or our educator partners, ~~and~~or learners, whether accurate or not, may be posted on social media platforms at any time and may have an adverse impact on our brand, reputation, or business. The harm may be immediate without affording us an opportunity for redress or correction and could have a material adverse effect on our reputation, business, operating results, financial condition, and prospects.

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Risks Related to Intellectual Property

Any failure to obtain, maintain, protect, or enforce our ~~intellectual property~~IP and proprietary rights could impair our ability to protect our proprietary technology and our brand and could materially harm our business.

We rely on a combination of ~~intellectual property~~IP rights, contractual protections, and other practices to protect our brand, proprietary information, technologies, and processes. We primarily rely on copyright, ~~and~~ trade secret and patent laws to protect our proprietary technologies and processes, including the algorithms we use throughout our business. Others may independently develop the same or similar technologies and processes, or may improperly acquire and use information about our technologies and processes, which may allow them to provide a service similar to ours, which could harm our competitive position. Our principal trademark assets include the registered trademark “Coursera” and our logos and taglines. We also hold the rights to the “Coursera.org” ~~Internet~~internet domain name and various related domain names, which are subject to ~~Internet~~internet regulatory bodies and trademark and other related laws of each applicable jurisdiction. If we are unable to protect our trademarks or domain names, our brand recognition and reputation would suffer, we would incur significant expense establishing new brands, and our operating results would be adversely impacted. As of December 31, ~~2021,~~2023, we had 1620 issued patents relating to technology features of our platform, including identity verification, content delivery and navigation, and automation, which patents expire between 2034 and ~~2039,~~2040, and a number of U.S. pending patent applications also relating to certain technology features of our platform. We cannot predict whether any pending patent application will result in an issued patent that will effectively protect and enforce our ~~intellectual property.~~IP. 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 technology and services will be protected by any patent or patent application. Further, to the extent we pursue patent protection for our innovations, patents we may apply for may not issue, and patents that do issue or that we acquire may not provide us with any competitive advantages or may be challenged by third parties. There can be no assurance that any patents we obtain will adequately protect our inventions or survive a legal challenge, as the legal standards relating to the validity, enforceability, and scope of protection of patent and other ~~intellectual property~~IP rights are uncertain.

Third parties may challenge any patents, copyrights, trademarks, and other ~~intellectual property~~IP and proprietary rights owned or held by us or may knowingly or unknowingly infringe, misappropriate, or otherwise violate our patents, copyrights, trademarks, and other proprietary rights. We may be required to spend significant resources to monitor and protect our ~~intellectual property~~IP rights, and the efforts we take to protect and enforce our proprietary rights may not be sufficient. Even if we do detect violations, we may need to engage in litigation to enforce our ~~intellectual property~~IP rights. Any enforcement efforts we undertake, including litigation, could be time-consuming and expensive and could divert our management’s attention. In addition, our efforts may be met with defenses and counterclaims challenging the validity and enforceability of our ~~intellectual property~~IP rights or may result in a court determining that our ~~intellectual property~~IP rights are unenforceable. If we are unable to cost-effectively protect or enforce our ~~intellectual property~~IP rights, then our business could be harmed. An adverse decision in any of these legal actions could limit our ability to assert our ~~intellectual property~~IP or proprietary rights, limit the value of our ~~intellectual property~~IP or proprietary rights, or otherwise negatively impact our business, financial condition, and results of operations. If the protection of our ~~intellectual property~~IP and proprietary rights is inadequate to enforce and prevent use or misappropriation by third parties, the value of our brand and other intangible assets may be diminished, competitors may be able to more effectively mimic our service and methods of operations, the perception of our business and service to customers and potential customers may become confused in the marketplace, and our ability to attract customers may be adversely affected.


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We may be subject to ~~intellectual property~~IP claims, which are extremely costly to defend, could require us to pay significant damages, and could limit our ability to use certain technologies in the future.

Companies in the technology industry are frequently subject to litigation based on allegations of infringement or other violations of ~~intellectual property~~IP rights. We periodically receive notices that claim we have infringed, misappropriated, or misused other parties’ ~~intellectual property~~IP rights. To the extent we gain greater public recognition, we may face a higher risk of being the subject of ~~intellectual property~~IP claims. Any ~~intellectual property~~IP claims against us, with or without merit, could be time consuming and expensive to settle or litigate and could divert the attention of our management. Litigation regarding ~~intellectual property~~IP rights is inherently uncertain due to the complex issues involved, and we may not be successful in defending ourselves in such matters.

In addition, some of our competitors have extensive portfolios of issued patents. Many potential litigants, including some of our competitors and patent holding companies, have the ability to dedicate substantial resources to enforcing their ~~intellectual property~~IP rights. Any claims successfully brought against us could subject us to significant liability for damages, and we may be required to stop using technology or other ~~intellectual property~~IP alleged to be in violation of a third party’s rights. We also might be required to seek a license for third-party ~~intellectual property.~~IP. Even if a license is available, we could be required to pay significant royalties or submit to unreasonable terms, which would increase our operating expenses. We may also be required to develop alternative non-infringing technology, which could require significant time and expense. If we cannot license or develop technology for any allegedly infringing aspect of our business, we would be forced to limit our service and may be unable to compete effectively. Any of these results could harm our business.

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Confidentiality agreements with employees and others may not adequately prevent disclosure of trade secrets and proprietary information.

We have devoted substantial resources to the development of our ~~intellectual property~~IP and proprietary rights. In order to protect our ~~intellectual property~~IP and proprietary rights, we rely in part on confidentiality agreements with our employees, licensees, independent contractors, and other advisors. These agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. In addition, others may independently discover trade secrets and proprietary information, and in such cases we could not assert any trade secret rights against such parties. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position.

Our use of ~~“open source”~~open source software (“OSS”) could negatively affect our ability to offer our solutions and subject us to possible litigation.

A substantial portion of our platform and our solutions ~~incorporates so-called “open source” software,~~incorporate OSS, and we may incorporate additional ~~open source software~~OSS in the future. ~~Open source software~~OSS is generally freely accessible, usable, and modifiable. Certain ~~open source~~OSS licenses may, in certain circumstances, require us: (i) to offer our solutions that incorporate ~~the open source software~~OSS for no cost; (ii) to make available source code for modifications or derivative works we create based upon incorporating or using ~~the open source software;~~OSS; and (iii) to license such modifications or derivative works under the terms of the particular ~~open source~~OSS license. If an author or other third party that distributes ~~open source software~~OSS 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, could be required to disclose our proprietary code, and could be subject to significant damages, including being enjoined from the offering of our solutions that contained the ~~open source software~~OSS and being required to comply with one or more of 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.~~OSS. Litigation could consume management’s time and attention, could be costly for us to defend, and could have a negative effect on our operating results and financial condition.


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

Faculty and learners 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 educator partners are contractually required to ensure that proper assignments, licenses, consents, and releases are obtained for their course material, but we do not 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~~educational 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 learners could damage our reputation, regardless of whether such claims have merit.

~~Risks Relating to Our Existence as a Public Benefit Corporation~~

~~Although we operate as a Delaware public benefit corporation, we cannot provide any assurance that we will achieve our public benefit purpose.~~

As a Delaware public benefit corporation (“PBC”), we are required to produce a public benefit and to operate in a responsible and sustainable manner, balancing our stockholders’ pecuniary interests, the best interests of those materially affected by our conduct, and the public benefit identified by our certificate of incorporation. There is no assurance that we will achieve our public benefit purpose or that the expected positive impact from being a PBC will be realized, which could have a material adverse effect on our reputation, which in turn may have a material adverse effect on our business, results of operations and financial condition.

As a PBC, we are required to publicly report at least biennially on our overall public benefit performance and on our assessment of our success in achieving our specific public benefit purpose. If we are not timely or are unable to provide this Annual Report on Form 10-K or if the report is not viewed favorably by parties doing business with us or by regulators or others reviewing our credentials, our reputation and status as a PBC may be harmed.

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~~If our publicly reported B Corp score declines, our reputation could be harmed and our business could suffer.~~

We have been certified as a B Corp through B Lab. B Corp certification requires us to meet rigorous standards of social and environmental performance, accountability, and transparency. We believe that our B Corp status enables us to strengthen our credibility and trust among our customers and partners. Our business model and brand could be harmed if we are unable to maintain certification as a B Corp. To maintain certification, we must undergo a reassessment in the year following our initial public offering, and every three years thereafter. Whether due to our choice or our failure to meet B Lab’s certification requirements, any change in our status could create a perception that we are more focused on financial performance and no longer as committed to the values shared by B Corps. Likewise, our reputation could be harmed if our publicly reported B Corp score declines and there is a perception that we are no longer committed to the B Corp standards. Similarly, our reputation could be harmed if we take actions that are perceived to be misaligned with B Corp values.

~~As a PBC, our focus on a specific public benefit purpose and producing a positive effect for society may negatively impact our financial performance.~~

Unlike traditional Delaware corporations, whose directors have a fiduciary duty to focus exclusively on maximizing stockholder value, our directors have a fiduciary duty to consider not only the stockholders’ interests, but also the company’s specific public benefit and the interests of other stakeholders affected by our actions. Therefore, we may take actions that we believe will be in the best interests of those stakeholders materially affected by our specific benefit purpose, even if those actions do not maximize our financial results. While we intend for this public benefit designation and obligation to provide an overall net benefit to us and our partners and learners, it could instead cause us to make decisions and take actions without seeking to maximize the income generated from our business, and hence available for distribution to our stockholders. Our pursuit of longer-term or non-pecuniary benefits may not materialize within the timeframe we expect or at all and may have an immediate negative effect on any amounts available for distribution to our stockholders. Accordingly, being a PBC and complying with our related obligations could harm our business, results of operations, and financial condition, which in turn could cause our stock price to decline.

Additionally, as a PBC, we may be less attractive as a takeover target than a traditional company and, therefore, your ability to realize your investment through an acquisition may be limited. PBCs may also not be attractive targets for activists or hedge fund investors because new directors would still have to consider and give appropriate weight to the public benefit along with stockholder value, and stockholders can enforce this through derivative suits. Further, by requiring the boards of directors of PBCs to consider additional constituencies other than maximizing stockholder value, Delaware public benefit corporation law could potentially make it easier for a board to reject a hostile bid, even where the takeover would provide the greatest short-term financial yield to investors.

Our directors have a fiduciary duty to consider not only our stockholders’ interests, but also our specific public benefit and the interests of other stakeholders affected by our actions. If a conflict between such interests arises, there is no guarantee such a conflict would be resolved in favor of our stockholders.

While directors of traditional Delaware corporations are required to make decisions they believe to be in the best interests of their stockholders, directors of a PBC have a fiduciary duty to consider not only the stockholders’ interests, but also the company’s specific public benefit and the interests of other stakeholders affected by the company’s actions. Under Delaware law, directors are shielded from liability for breach of these obligations if they make informed and disinterested decisions that serve a rational purpose. Thus, unlike traditional Delaware corporations that must focus exclusively on stockholder value, our directors are not merely permitted, but obligated, to consider our specific public benefit and the interests of other stakeholders. In the event of a conflict between the interests of our stockholders and the interests of our specific public benefit or our other stakeholders, our directors must only make informed and disinterested decisions that serve a rational purpose; thus, there is no guarantee such a conflict would be resolved in favor of our stockholders, which could harm our business, results of operations, and financial condition, which in turn could cause our stock price to decline.

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Our focus on the long-term best interests of our company as a PBC and our consideration of all of our stakeholders, including our stockholders, learners, partners, employees, the communities in which we operate, and other stakeholders that we may identify from time to time, may conflict with short- or medium-term financial interests and business performance, which may negatively impact the value of our common stock.

We believe that focusing on the long-term best interests of our company as a PBC and our consideration of all of our stakeholders, including our stockholders, learners, partners, employees, the communities in which we operate, and other stakeholders we may identify from time to time, is essential to the long-term success of our company and to long-term stockholder value. Therefore, we have made, and may in the future, make decisions that we believe are in the long-term best interests of our company and our stockholders, even if such decisions may negatively impact the short- or medium-term performance of our business, results of operations, and financial condition or the short- or medium-term performance of our common stock. Our commitment to pursuing long-term value for the company and its stockholders, potentially at the expense of short- or medium-term performance, may materially adversely affect the trading price of our common stock, including by making owning our common stock less appealing to investors who are focused on returns over a shorter time horizon. Our decisions and actions in pursuit of long-term success and long-term stockholder value, which may include changes to our platform to enhance the experience of our learners, partners, and the communities in which we operate, including by improving the trust and safety of our platform, changes in the manner in which we deliver community support, investing in our relationships with our learners, partners, and employees, investing in and introducing new offerings and services, investing in social impact initiatives consistent with our public benefit objectives, or changes in our approach to working with local or national jurisdictions on laws and regulations governing our business, may not result in the long-term benefits that we expect, in which case our business, results of operations, and financial condition, as well as the trading price of our common stock, could be materially adversely affected.

As a PBC, we may be subject to increased derivative litigation concerning our duty to balance stockholder and public benefit interest, the occurrence of which may have an adverse impact on our financial condition and results of operations.

Stockholders of a PBC (if they, individually or collectively, own the lesser of (i) two percent of the company’s outstanding shares, or (ii) shares with a market value of $2 million or more on the date the lawsuit is instituted) are entitled to file a derivative lawsuit claiming the directors failed to balance stockholder and public benefit interests. Such derivative suits would be subject to the exclusive forum provision in our amended and restated certificate of incorporation, requiring them to be heard in the Delaware Chancery Court (or, if that court lacks subject matter jurisdiction, another federal or state court situated in the State of Delaware). This potential liability does not exist for traditional corporations. Therefore, we may be subject to the possibility of increased derivative litigation, which would require the attention of our management, and, as a result, may adversely impact our management’s ability to effectively execute our strategy. Additionally, any such derivative litigation may be costly, which may harm our financial condition and results of operations.

~~If we cannot maintain our company culture and public benefit commitment, our business could be harmed.~~

We believe that our company culture has been critical to our success. In addition, we believe that our status as a PBC and our commitment to providing global access to flexible and affordable world-class learning that supports personal development, career advancement, and economic opportunity distinguish us from our competitors and promote a relationship among our partners, learners, and employees founded on trust. However, we face a number of challenges that may affect our ability to sustain our corporate culture, including:

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~~a need to identify, attract, reward, and retain people in leadership positions in our organization who share and further our culture, values, mission, and public benefit objectives;~~

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~~the increasing size and geographic diversity of our workforce, and our ability to promote a uniform and consistent culture across all our offices and employees, including in a remote work environment;~~

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~~the market perception about our public benefit objectives;~~

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~~competitive pressures that may divert us from our mission, vision, and values;~~

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~~the continued challenges of a rapidly evolving industry; and~~

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~~the increasing need to develop expertise in new areas of business that affect us.~~

~~If we are unable to maintain our company culture and demonstrate our commitment to our mission as a PBC, it could harm our business and reputation.~~

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Risks Related to Tax, Accounting, and Operations

Our business ~~may be~~is subject to ~~sales and other~~indirect taxes.

The application of indirect taxes, such as sales and use ~~tax,~~taxes, value-added ~~tax (“VAT”),~~taxes, provincial taxes, goods and services ~~tax,~~taxes, business ~~tax,~~taxes, digital service taxes, and gross receipt ~~tax~~taxes to businesses like ours is a complex and evolving issue. ~~For example, as of January 1, 2015, the European Union imposed an obligation on platforms to collect and remit VAT on sales of automatically downloaded digital items.~~ Significant judgment is required to evaluate applicable tax obligations, and ~~as a result amounts recorded are~~we record estimates ~~and~~that could change. In many cases, the ultimate tax determination is uncertain because it is not clear how existing statutes apply to our business. ~~One~~Federal, state, local, or ~~more U.S. states, the federal government or other countries~~foreign jurisdictions may seek to impose additional reporting, ~~record-keeping,~~recordkeeping, or indirect tax collection obligations on businesses like ours that facilitate ~~online commerce.~~e-commerce. For example, in 2018, the U.S. Supreme Court ruled that, in certain situations, states ~~may~~can require online merchants to collect and remit sales taxes on transactions in the state despite not having a physical presence in the state. ~~New taxes~~Indirect tax law changes could ~~also~~ require us to incur substantial costs to ~~capture data and~~ collect and remit ~~taxes. If such obligations were imposed, the additional costs associated with tax collection, remittance,~~taxes and ~~audit requirements could make accessing offerings through our platform less attractive and more costly,~~respond to audits, which could affect our operating results or harm our ~~business.~~

business in the event that we change our pricing to account for the increased obligations.

Amendments to existing tax laws, rules, or regulations or enactment of new unfavorable tax laws, rules, or regulations could have an adverse effect on our business and operating results.

Many of the underlying laws, rules, and regulations imposing taxes and other obligations were established before the growth of the ~~Internet~~internet and ~~ecommerce.~~e-commerce. U.S. federal, state, local, and ~~local~~foreign taxing authorities are currently reviewing the appropriate treatment of companies engaged in ~~Internet commerce~~e-commerce and considering changes to existing tax or other laws that could levy sales, income, consumption, use, or other taxes relating to our activities, and/or impose obligations on us to collect such taxes. If such tax or other laws, rules, or regulations are amended, or if new ~~unfavorable~~ laws, rules, or regulations are enacted, the results could increase our tax payments or other obligations, prospectively or retrospectively, subject us to interest and penalties, decrease the demand for our services if we pass on such costs to our educator partners or learners, result in increased costs to update or expand our ~~technical~~technological or administrative infrastructure, or effectively limit the scope of our business activities if we decided not to conduct business in particular jurisdictions. As a result, these changes may have a material adverse effect on our business, results of operations, financial condition, and prospects.


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Our ability to use our net operating loss (“NOL”) carryforwards and certain other tax attributes may be limited.

We have incurred substantial ~~net operating losses (“NOLs”)~~federal NOLs during ~~our history. Unused~~prior periods. NOLs may carry forward to offset future taxable income; however, they could expire unused and be unavailable to offset future income ~~if we achieve profitability~~tax liabilities. Specifically, the Tax Cuts and Jobs Act imposes certain limitations on the deduction of NOLs generated in tax years that began on or after January 1, 2018, including a limitation on use of NOLs to offset only 80% of taxable income and the disallowance of NOL carrybacks. Although NOLs generated in tax years before 2018 may still be used to offset future ~~unless such~~income without limitation, the recent legislation, among other regulatory and economic changes, may limit our ability to use our NOLs to offset any future taxable income. Our NOLs may similarly expire under ~~applicable tax~~state laws. ~~However,~~In addition, under the rules of Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership ~~change,”~~change”, 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 NOLs and other pre-change tax attributes to offset its post-change taxable income or taxes may be limited. The applicable rules generally operate by focusing on changes in ownership among stockholders considered by the rules as owning, directly or indirectly, 5% or more of the stock of a company, as well as changes in ownership arising from new issuances of stock by the company. As a result of these rules, in the event that we experience one or more ownership changes as a result of future transactions in our stock, ~~then~~ we may be limited in our ability to use our NOL carryforwards to offset our future taxable income, if any. In addition, the Tax Cuts and Jobs Act imposes certain limitations on the deduction of NOLs generated in tax years that began on or after January 1, 2018, including a limitation on use of NOLs to offset only 80% of taxable income and the disallowance of NOL carrybacks. Although NOLs generated in tax years before 2018 may still be used to offset future income without limitation, the recent legislation may limit our ability to use our NOLs to offset any future taxable income.

Our reported results of operations may be adversely affected by changes in generally accepted accounting principles.

Generally accepted accounting principles in the U.S. are subject to interpretation by the Financial Accounting Standards Board, the ~~SEC~~U.S. Securities and Exchange Commission (“SEC”), and various bodies formed to promulgate and interpret ~~appropriate~~ accounting principles. A change in these principles or interpretations could have a significant effect on our reported results of operations and could affect the reporting of transactions completed before the announcement of a change. It is difficult to predict the impact of future changes to accounting principles or our accounting policies, any of which could negatively affect our reported results of operations.

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If our internal control over financial reporting (“ICOFR”) or our disclosure controls and procedures are not effective, we may not be able to accurately report our financial results, prevent fraud, or file our periodic reports in a timely manner, which may cause investors to lose confidence in our reported financial information and may lead to a decline in our stock price.

We are required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act following the later of the date we are deemed to be an “accelerated filer” or a “large accelerated filer,” each as defined in the Securities Exchange Act of 1934 as amended (the “Exchange Act”), or the date we are no longer an “emerging growth company,” as defined in the JOBS Act. In addition, we will be required, pursuant to Section 404(a) to include a report by management on, among other things, the effectiveness of our internal control over financial reporting as of December 31, 2022. Section 404 of the Sarbanes-Oxley Act (“~~Section 404”~~SOX”). In addition, our independent registered public accounting firm is required to annually attest to the effectiveness of our ICOFR. SOX requires that we maintain effective ~~internal control over financial reporting~~ICOFR and disclosure controls and procedures. In particular, on an ongoing basis, we must perform system and process evaluations, document our controls, and perform testing of our key controls over financial reporting to allow management and our independent public accounting firm to report on the effectiveness of our internal control over financial reporting. Our testing, or the subsequent testing by our independent public accounting firm, may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses.ICOFR. If we are not able to comply with ~~the~~SOX requirements, ~~of Section 404 in a timely manner,~~ or if we or our independent public accounting firm identify deficiencies in our ~~internal control over financial reporting~~ICOFR that are deemed to be material weaknesses, the market price of our stock would likely decline, and we could be subject to lawsuits, sanctions, or investigations by regulatory authorities, which would require additional financial and management resources.

We may encounter difficulties in the timely and accurate reporting of our financial results, which would impact our ability to provide our investors with information in a timely manner. As a result, our investors could lose confidence in our reported financial information, and our stock price could decline.

We are an emerging growth company, and the decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors.

We are an “emerging growth company” as defined in the JOBS Act. We take advantage of certain exemptions under the JOBS Act from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404(b) of the 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 any golden parachute payments not previously approved. We may take advantage of these exemptions for up to five years or until we are no longer an “emerging growth company,” whichever is earlier.

In addition, Section 107 of 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 elected to use the extended transition period under the JOBS Act. Accordingly, our consolidated financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.

We cannot predict if investors will find our common stock less attractive if we choose to rely on any of the exemptions afforded to emerging growth companies. If some investors find our common stock less attractive because we rely on any of these exemptions, there may be a less active trading market for our common stock and the market price of our common stock may be more volatile.

We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) in which the fifth anniversary of the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion or (c) in which we become a large accelerated filer, which means that we have been public for at least 12 months, have filed at least one annual report and the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last day of our then-most recently completed second fiscal quarter, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

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Our operations as a public company ~~have required, and are expected to continue to~~ require substantial costs and substantial management attention, and we may not be able to manage our ~~transition into, and~~ operations as a public company effectively or efficiently.

As a public company, we ~~have incurred, and expect to~~ incur significant legal, accounting, and other expenses. Our management team and other personnel ~~devote, and will need to continue to~~ devote a substantial amount of time to, and we may not effectively, or efficiently manage our operations as a public company. For example, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the applicable requirements of ~~the Sarbanes-Oxley Act~~SOX and the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the rules and regulations of the SEC and the ~~NYSE.~~New York Stock Exchange. If, notwithstanding our efforts to comply with these laws, regulations, and standards, we fail to comply, regulatory authorities may initiate legal proceedings against us, and our business may be harmed. Further, failure to comply with these rules might 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. As such, we ~~have invested, and intend to continue to~~ invest resources to comply with evolving laws, regulations, and standards. This investment ~~has resulted in, and may result~~results in increased general and administrative ~~expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities.~~

We also expect that our management and other personnel will need to divert attention from other business matters to devote substantial time to the reporting and other requirements applicable to a public company. In particular, we expect to incur significant expense and devote substantial management effort to complying with the requirements of Section 404. We have hired resources with expertise in compliance with the Sarbanes-Oxley Act and recently commenced the process of compiling the system and processing documentation necessary to perform the evaluation needed to comply with Section 404. As we continue to grow we will hire additional accounting and financial personnel with requisite technical and public company experience. expenses.

If we are unable to recruit and retain ~~additional~~skilled accounting and finance personnel, ~~or if our accounting and finance team is unable for any reason to respond adequately to the increased demands that will result from being a public company,~~ the quality and timeliness of our financial reporting may suffer, which could result in the identification of material weaknesses in our internal controls. Any consequences resulting from inaccuracies or delays in our reported ~~consolidated financial statements~~Consolidated Financial Statements could cause our stock price to decline and could harm our business, financial condition, and results of operations.

Risks Related to Our Common Stock

The price of our common stock could be volatile, and ~~declines in the price~~you may lose all or part of ~~common stock could subject us to litigation.~~

your investment.

Our stock price may be volatile and may ~~decline.~~decline, and you may not be able to resell your shares at or above the price at which your shares were acquired. The trading price and volume of our common stock could fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

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variations in our operating results and other financial and operational metrics, including the key financial and operating metrics disclosed in this ~~Annual Report on~~ Form 10-K, as well as how those results and metrics compare to analyst and investor expectations;

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speculation in the market about our operating results;

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the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;

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failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates or ratings by any securities analysts who follow us, or our failure to meet these estimates or the expectations of investors;

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events or factors resulting from global health crises such as the COVID-19 pandemic, war or other outbreak of hostilities, geopolitical tensions, acts of terrorism, or responses to these events, or the perception that any such factors or events may occur;

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announcements of new services or enhancements, strategic alliances or significant agreements, or other developments by us or our competitors;

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announcements by us or our competitors of mergers or acquisitions or rumors of such transactions involving us or our competitors;

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changes in management, other key personnel, or our board of directors;

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disruptions in our platform due to hardware, software, or network problems, security breaches, or other issues;

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the strength of the global economy or the economy in the jurisdictions in which we operate, and market conditions in our industry and those affecting our educator partners and learners;


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trading activity by our principal stockholders, and other market participants, in whom ownership of our common stock may be concentrated;

•market perception of, or reaction to, our share repurchase program;

•price and volume fluctuations, and general volatility, in the overall stock market;

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the performance of the equity markets in general and in our industry;

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the operating performance of other similar companies;

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actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally;

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new laws or regulations, or new interpretations of existing laws, or regulations applicable to our business;

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litigation or other claims against us;

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the number of shares of our common stock that are available for public trading; and

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any other factors discussed in this ~~Annual Report on~~ Form 10-K.

In addition, if the market for technology stocks, education stocks, or the stock market in general experiences a loss of investor confidence, whether due to any of the foregoing factors or otherwise, the price of our common stock could decline for reasons unrelated to our business, results of operations, or financial condition. The price of our common stock might also decline in reaction to events that affect other companies, even if those events do not directly affect us. These broad market fluctuations, as well as general economic, political, and market conditions, such as recessions or inflation, may cause declines in the market price of our common stock, and you may not realize any return on your investment in us and may lose some or all of your investment.

Some companies that have experienced volatility in the trading price of their stock have been the subject of securities class action litigation. If we are the subject of such litigation, it could result in substantial costs and could divert our management’s attention and resources, which could adversely affect our business.

~~Future sales of a substantial number of shares of our common stock in the public market, or the perception that such sales could occur, could cause the price of our common stock to decline.~~

The market price of our common stock could decline as a result of substantial sales of our common stock, particularly sales by our directors, executive officers, and significant stockholders, a large number of shares of our common stock becoming available for sale, or the perception in the market that such sales could occur.

In ~~addition,~~addition, as of December 31, ~~2021, 30,388,160~~2023, 29,526,184 shares ~~were~~were issuable upon exercise of outstanding stock options or the vesting of outstanding RSUs. Sales of stock by these ~~equityholders~~equity holders or the perception that such sales could occur could adversely affect the trading price of our common stock.

In addition, registration of shares with existing registration rights would result in the shares becoming freely tradable without restriction under the Securities Act, except for shares held by our affiliates as defined in Rule 144 under the Securities Act, which are subject to the limitations of Rule 144. Sales of securities by any of these stockholders or the perception that such sales could occur could adversely affect the trading price of our common stock.

~~Future sales and issuances of our common stock or rights to purchase common stock could result in additional dilution to our stockholders and could cause the price of our common stock to decline.~~

We may issue additional common stock, convertible securities, or other equity in the future. We also expect to issue common stock to our employees, directors, and other service providers pursuant to our equity incentive plans. Such issuances will be dilutive to investors and could cause the price of our common stock to decline. New investors in such issuances could also receive rights senior to those of holders of our common stock.

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Our actual operating results may not meet our guidance or analyst or investor expectations, which would likely cause our stock price to decline.

From time to time, we have released and may continue to release guidance in our earnings releases, earnings conference calls, or otherwise, regarding our future performance that represent our management’s estimates as of the date of release. If given, this guidance, which will include forward-looking statements, will be based on projections prepared by our management. Projections are based upon a number of assumptions and estimates that, while presented with numerical specificity, are inherently subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond our control. The principal reason that we expect to continue to release guidance is to provide a basis for our management to discuss our business outlook with analysts and investors. With or without our guidance, analysts and investors may publish or otherwise have expectations regarding our business, financial condition, and results of operations, for which we do not accept any responsibility. Guidance is necessarily speculative in nature, and it can be expected that some or all of the assumptions of the guidance furnished by us or analysts will not materialize or will vary significantly from actual results. If our actual performance does not meet or exceed our guidance or analyst or investor expectations, the trading price of our common stock is likely to decline.

If securities analysts or industry analysts downgrade our common stock, publish negative research or reports, or fail to publish reports about our business, our stock price and trading volume could decline.

The market price and trading market for our common stock is influenced by the research and reports that industry or securities analysts publish about us, our business, and our market. If one or more analysts adversely change their recommendation regarding our stock or change their recommendation about our competitors’ stock, our stock price could decline. If one or more analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline or become volatile.


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We do not intend to pay dividends on our common stock for the foreseeable future, so any returns on your investment will be limited to changes in the value of our common stock.

We have never declared or paid any dividends on our common stock. We currently anticipate that we will retain future earnings for the development, operation, and expansion of our business and do not anticipate declaring or paying any dividends for the foreseeable future. In addition, if we were to enter into loan or similar agreements in the future, these agreements may contain restrictions on our ability to pay dividends or make distributions. Any return to stockholders will therefore be limited to the increase, if any, in our stock price, which may never occur.

Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our ~~company~~Company more difficult, limit attempts by our stockholders to replace or remove our current management, and limit the market price of our common stock.

Provisions in our amended and restated certificate of incorporation and bylaws, may have the effect of delaying or preventing a change of control or changes in our management. Our amended and restated certificate of incorporation and bylaws include provisions that:

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authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights, and preferences determined by our board of directors that may be senior to our common stock;

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require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent;

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specify that special meetings of our stockholders can be called only by our board of directors, the Chairman of our board of directors, our President, or our Chief Executive Officer;

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establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors;

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establish that our board of directors is divided into three classes, with each class serving three-year staggered terms;

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prohibit cumulative voting in the election of directors;

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provide that our directors may be removed only for cause;

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provide that vacancies on our board of directors may be filled by a majority of directors then in office, even if less than a quorum; and

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require the approval of our board of directors or the holders of at least 66 2/3% of our outstanding shares of capital stock to amend our bylaws and certain provisions of our certificate of incorporation.

These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in a broad range of business combinations with any interested stockholder for a period of three years following the date on which such stockholder became an interested stockholder. Further, as a PBC, we may be less attractive as a takeover target than a traditional company and, therefore, your ability to realize your investment through an acquisition may be limited. Any delay or prevention of a change of control transaction or changes in our management could cause our stock price to decline or could prevent or deter a transaction that you might support.

~~Our amended and restated charter documents designate the Court of Chancery of the State of Delaware as the sole and~~


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The exclusive forum ~~for certain types of actions and proceedings that~~provision in our organizational documents may ~~be initiated by our stockholders, and provides that federal district courts will be the sole and exclusive forum for Securities Act claims, which could~~ limit ~~our stockholders’~~a stockholder’s ability to ~~obtain what they believe to be~~bring a ~~favorable~~claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, or other ~~employees.~~

employees, which may discourage lawsuits with respect to such claims.

Our amended and restated certificate of incorporation and bylaws provide that, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, the Court of Chancery of the State of Delaware (or, if that court lacks subject matter jurisdiction, another federal or state court situated in the State of Delaware) shall be the sole and exclusive forum for ~~(a)~~(i) any derivative action or proceeding brought on our behalf, ~~(b)~~(ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, or other employees to us or our stockholders, ~~(c)~~(iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our certificate of incorporation or our bylaws, or ~~(d)~~(iv) any action asserting a claim against us governed by the internal affairs doctrine. Our amended and restated charter and bylaws further provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts are the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.

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Our amended and restated bylaws also provide that, to the fullest extent permitted by applicable law and unless we consent in writing to the selection of an alternative forum, the federal district courts of the ~~Exchange Act creates~~U.S. will be the sole and exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. The enforceability of similar exclusive federal ~~jurisdiction over all suits brought~~forum provisions in other companies’ organizational documents has been challenged in legal proceedings, and while the Delaware Supreme Court and certain other state courts have ruled that this type of exclusive federal forum provision is facially valid under Delaware law, there is uncertainty as to whether other courts would enforce ~~any duty or liability created by~~such provisions and that investors cannot waive compliance with the ~~Exchange Act or~~federal securities laws and the rules and regulations thereunder. ~~As a result, the~~This exclusive federal forum provision ~~will~~would not apply to suits brought to enforce ~~any~~a duty or liability created by the Exchange Act or any other claim for which the federal courts of the U.S. have exclusive jurisdiction. Accordingly, the exclusive forum provision does not designate the Court of Chancery as the exclusive forum for any derivative action arising under the Exchange Act, as there is exclusive federal jurisdiction in that instance, and instead designates the federal district court for the District of Delaware for such an action.

Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. As a result, the enforceability of our exclusive forum provision is uncertain, and a court may determine that such provision will not apply to suits brought to enforce any duty or liability created by the Securities Act or any other claim for which the federal and state courts have concurrent jurisdiction. Further, compliance with the federal securities laws and the rules and regulations thereunder cannot be waived by investors in our common stock.

Any person or entity purchasing or otherwise acquiring any interest in our capital stock shall be deemed to have notice of and consented to the provisions of our amended and restated certificate of incorporation and bylaws described above. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage such lawsuits against us and our directors, officers, or other employees. Alternatively, if a court were to find these provisions of our bylaws inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition, and results of operations and result in a diversion of the time and resources of our management and board of directors.

Risks Relating to Our Existence as a Public Benefit Corporation

Although we operate as a Delaware PBC, we cannot provide any assurance that we will achieve our public benefit purpose.

As a Delaware PBC, we are required to produce a public benefit and to operate in a responsible and sustainable manner, balancing our stockholders’ pecuniary interests, the interests of those materially affected by our conduct, and the public benefit identified by our certificate of incorporation. There is no assurance that we will achieve our public benefit purpose or that the expected positive impact from being a PBC will be realized, which could have a material adverse effect on our reputation, which in turn may have a material adverse effect on our business, results of operations, and financial condition.

As a PBC, we are required to publicly report at least biennially on our overall public benefit performance and on our assessment of our success in achieving our specific public benefit purpose. If we are not timely, are unable to provide this report, or if the report is not viewed favorably by parties doing business with us or by regulators or others reviewing our credentials, our reputation and status as a PBC may be harmed.


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If our publicly reported Certified B Corporation

TM (“B Corp”) score declines, or if we lose our certified B Corp status, our reputation could be harmed and our business could suffer.

~~Table~~We have been certified as a B Corp through B Lab. B Corp certification requires us to meet rigorous standards of ~~Contents~~social and environmental performance, accountability, and transparency. We believe that our B Corp status enables us to strengthen our credibility and trust among our customers and educator partners. Our business model and brand could be harmed if we are unable to maintain certification as a B Corp. In 2022, we completed our reassessment following our initial public offering, and to maintain certification, we must undergo a reassessment every three years. B Lab’s certification requirements are subject to periodic changes and updates, including a recently-released proposed new framework, which if adopted in its present form, could make it more difficult to achieve certification. Whethe

r due to our choice or our failure to meet B Lab’s certification requirements, a loss of our certification could create a perception that we are more focused on financial performance and no longer as committed to the values expected of a B Corp. Likewise, our reputation could be harmed if our publicly reported B Corp score declines or if we take actions that are perceived to be misaligned with B Corp values.

As a PBC, our focus on a specific public benefit purpose and producing a positive effect for society may negatively impact our financial performance.

Unlike traditional Delaware corporations, whose directors have a fiduciary duty to focus exclusively on maximizing stockholder value, our directors have a fiduciary duty to consider not only stockholders’ interests, but also the Company’s specific public benefit and the interests of other stakeholders affected by our actions. Therefore, we may take actions that we believe will be in the best interests of those stakeholders materially affected by our specific benefit purpose, even if those actions do not maximize our financial results. While we intend for this public benefit designation and obligation to provide an overall net benefit to us, our educator partners, and learners, it could instead cause us to make decisions and take actions without seeking to maximize the income generated from our business, and hence available for distribution to our stockholders. Our pursuit of longer-term or non-pecuniary benefits may not materialize within the timeframe we expect or at all and may have a negative effect on any amounts available for distribution to our stockholders. Accordingly, being a PBC and complying with our related obligations could harm our business, results of operations, and financial condition, which in turn could cause our stock price to decline.

Additionally, as a PBC, we may be less attractive as a takeover target than a traditional company and, therefore, your ability to realize your investment through an acquisition may be limited. PBCs may also not be attractive targets for activists or hedge fund investors because new directors would still have to consider and give appropriate weight to the public benefit along with stockholder value, and stockholders can enforce this through derivative suits. Further, by requiring the boards of directors of PBCs to consider additional constituencies other than maximizing stockholder value, Delaware PBC law could potentially make it easier for a board to reject a hostile bid, even where the takeover would provide the greatest short-term financial yield to investors.


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Our focus on the long-term best interests of our Company as a PBC and our consideration of all of our stakeholders, including our stockholders, learners, educator partners, employees, the communities in which we operate, and other stakeholders that we may identify from time to time, may conflict with short- or medium-term financial interests and business performance, which may negatively impact the value of our common stock.

We believe that focusing on the long-term best interests of our Company as a PBC and our consideration of all of our stakeholders, including our stockholders, learners, educator partners, employees, the communities in which we operate, and other stakeholders we may identify from time to time, is essential to the long-term success of our Company and to long-term stockholder value. Therefore, we have made, and may in the future, make decisions that we believe are in the long-term best interests of our Company and our stockholders, even if such decisions may negatively impact the short- or medium-term performance of our business, results of operations, and financial condition or the short- or medium-term performance of our common stock. Our commitment to pursuing long-term value for the Company and its stockholders, potentially at the expense of short- or medium-term performance, may have a material adverse effect on the trading price of our common stock, including making ownership of our common stock less appealing to investors who are focused on returns over a shorter time horizon. Our decisions and actions in pursuit of long-term success and long-term stockholder value, which may include changes to our platform to enhance the experience of our learners, educator partners, and the communities in which we operate, including by improving the trust and safety of our platform, changes in the manner in which we deliver community support, investing in our relationships with our learners, educator partners, and employees, investing in and introducing new offerings and services, investing in social impact initiatives consistent with our public benefit objectives, or changes in our approach to working with local or national jurisdictions on laws and regulations governing our business, may not result in the long-term benefits that we expect, in which case our business, results of operations, and financial condition, as well as the trading price of our common stock, could be materially adversely affected.

As a PBC, we may be subject to increased derivative litigation concerning our duty to balance stockholder and public benefit interests, the occurrence of which may have an adverse impact on our financial condition and results of operations.

If we cannot maintain our company culture and public benefit commitment, our business could be harmed.

We believe that our company culture has been critical to our success. In addition, we believe that our status as a PBC and our commitment to providing global access to flexible and affordable world-class learning that supports personal development, career advancement, and economic opportunity distinguish us from our competitors and promote a relationship among our educator partners, learners, and employees founded on trust. However, we face a number of challenges that may affect our ability to sustain our company culture, including:

•a need to identify, attract, reward, and retain people in leadership positions in our organization who share and further our culture, values, mission, and public benefit objectives;

•the increasing size and geographic diversity of our workforce, and our ability to promote an inclusive and consistent culture across all our offices and employees, including those in a remote work environment;

•the market perception about our public benefit objectives;

•competitive pressures that may divert us from our mission, vision, and values;

•the continued challenges of a rapidly evolving industry; and

•the increasing need to develop expertise in new areas of business that affect us.

If we are unable to maintain our company culture and demonstrate our commitment to our mission as a PBC, it could harm our business and reputation.


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Item 1B. Unresolved Staff Comments

None.

~~None.~~

Item 1C. Cybersecurity

We recognize the importance of assessing, identifying, and managing material risks associated with cybersecurity threats. To this end, we maintain an information security program designed to protect our information, intellectual property, and systems, including the data we host and maintain for our learners, customers, and partners in accordance with industry standards and best practices.

Our information security team is led by our Senior Vice President of Engineering and our Head of Information Security, who together have over 35 years of technology industry experience and expertise in information security, cybersecurity, and distributed systems. This team is responsible for our information security program and protocols, including managing and coordinating efforts to prevent, mitigate, detect, and remediate cybersecurity incidents, and escalating significant security risks or incidents to executive management.

We have data and cybersecurity protection and control policies to facilitate a secure environment for sensitive information and to ensure the availability of critical data and systems. The information security management system supporting our online learning platform has been independently certified to the International Organization for Standardization (“ISO”) / International Electrotechnical Commission 27001:2013 standard. This standard is designed to promote risk management, cyber-resilience, and operational excellence with respect to an information security management system. Our online learning platform undergoes regular internal security testing, and we engage third-party providers to perform penetration and vulnerability tests. We have annual independent third-party audits conducted on system security and availability, such as Systems and Organization Controls 2 Type 2 (“SOC 2”) audit reports and ISO 27001 certification. Certain highly sensitive information, such as personally identifiable information (“PII”) about our learners in our online learning platform, is encrypted at rest and in transit using industry standards. We also require employees and contractors to undergo information security awareness training. In addition, to mitigate the financial impact of cybersecurity incidents, we maintain insurance to help cover losses resulting from such potential incidents.

We maintain a risk-based approach to identify and oversee cybersecurity risks, including risks presented by authorized service providers who have access to our systems or information. We have processes in place to assess and manage associated cybersecurity risks, which include conducting due diligence on the cybersecurity profile of the third party provider and, in cases where PII is shared, ongoing cybersecurity and privacy obligations that are documented in data processing agreements. Our online learning platform is hosted by major cloud-hosting providers, and we require such providers and other third parties that have access to PII or certain other highly sensitive data to be independently SOC 2 attested and/or ISO 27001 certified to ensure that such service providers conform to our security standards.

Our board of directors (the “Board”) is responsible for monitoring and assessing strategic risk exposure, and our audit committee has been designated with the responsibility of overseeing our technology and information security, including cybersecurity, policies and practices, and the internal controls regarding information security. Our Senior Vice President of Engineering provides quarterly updates to the audit committee on these topics, as well as cybersecurity risk exposure and steps taken to monitor and mitigate such exposure. The Board receives reports from management on our information security and cybersecurity matters on an annual basis. In addition, our incident response process provides that our audit committee is notified in the event of a material cybersecurity incident.

Notwithstanding the foregoing efforts, there can be no assurance that the security measures we employ will prevent malicious or unauthorized access to our systems or information. Like many other businesses, we have experienced, and are continually subject to, cyberattacks. While these past cyberattacks have not materially affected us or, in our belief, are not reasonably likely to materially affect us, future cybersecurity incidents and threats may materially affect our business strategy, results of operations, or financial condition. For more information regarding our cybersecurity related risks, refer to our risk factors included in Part I, Item 1A of this Form 10-K.


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Item 2. Properties

Our headquarters are in Mountain View, California. All of our offices are leased, and we do not own any real property. We believe that our properties, which support all of our reportable segments, are in good operating condition and adequately serve our current business operations. We also anticipate that suitable additional or alternative space, including those under lease options, will be available at commercially reasonable terms for future expansion.

Item 3. Legal Proceedings

~~From time to time, we have been and will continue to be subject to~~

For information regarding legal proceedings, refer to Note 9, “Commitments and claims. We are not presently 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, results of operations, financial condition, or cash flows. We have received, and mayContingencies”, in the ~~future continue~~Notes to ~~receive, claims from third parties asserting, among other things, infringement~~Consolidated Financial Statements included in Part II, Item 8 of ~~their intellectual property rights. Future litigation may be necessary to defend ourselves, our partners, and our customers~~this Form 10-K, which is incorporated by determining the scope, enforceability, and validity of third-party proprietary rights, or to establish our proprietary rights. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

reference into this Part I, Item 3.

Item 4. Mine Safety Disclosures

None.

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PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

Market Price of Our Common Stock

Our common stock, $0.00001 par value ~~$0.00001~~ per share, is listed on the New York Stock Exchange, under the symbol “COUR” and began trading on March 31, 2021. Prior to that date, there was no public trading market for our common stock.

Holders of Record

As of February ~~24, 2022,~~15, 2024, there were ~~141 stockholders~~91 holders of record of our common stock. The actual number of holders of our common stock is greater than the number of record holders and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers or by other nominees. The number of holders of record presented here also does not include stockholders whose shares may be held in trust by other entities.

Dividend Policy

We have never declared or paid cash dividends on our common stock. We do not anticipate declaring or paying, in the foreseeable future, any cash dividends on our common stock. We currently intend to retain all available funds and any future earnings to support our operations and finance the growth and development of our business. Any future determination related to our dividend policy will be made at the discretion of our board of directors and will depend upon, among other factors, our results of operations, financial condition, capital requirements, contractual restrictions, business prospects, and other factors our board of directors may deem relevant.

Recent Sales of Unregistered Equity Securities

None.

Use of Proceeds

On April 5, 2021, we completed our initial public offering ~~("IPO")~~ of common stock, in which we sold 14,664,776 shares and certain selling stockholders sold 1,065,224 ~~shares.~~shares (the “IPO”). The shares were sold at a price to the public of $33.00 per share for net proceeds to us of $452.5 million after deducting underwriting discounts and commissions of $31.5 million. Net proceeds to the selling stockholders were $32.9 million after deducting underwriting discounts and commissions. We did not receive any of the proceeds from the sale of our common stock by the selling stockholders.

On April 19, 2021, the underwriters exercised in full the right to purchase 2,359,500 additional shares of common stock from us, resulting in additional net proceeds of $72.8 million after deducting underwriting discounts and commissions of $5.1 million.

All of the shares issued and sold in ~~our~~the IPO were registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-253932), which was declared effective by the ~~SEC~~United States Securities and Exchange Commission (“SEC”) on March 30, 2021. Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC acted as representatives of the underwriters for the offering. We incurred offering expenses of approximately $6.4 million. Upon completion of the sale of the shares of our common stock referenced in the preceding sentences, the IPO terminated.

There has been no material change in the planned use of proceeds from ~~our~~the IPO as described in our Prospectus for ~~our~~the IPO filed with the ~~Securities and Exchange Commission,~~SEC, pursuant to Rule 424(b)(4), on March 31, 2021.


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Issuer Purchases of Equity Securities

~~None.~~

On April 26, 2023, our board of directors approved a share repurchase program with authorization to purchase up to $95 million of our common stock with no expiration date (the “Repurchase Program”). We may repurchase shares of common stock from time to time through open market purchases, in privately negotiated transactions, or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions. The Repurchase Program may be suspended or discontinued at any time and does not obligate us to acquire any amount of common stock. We funded share repurchases under the Repurchase Program with our existing cash and cash equivalents. There were no share repurchases during the fourth quarter of 2023.

Stock Performance Graph

The graph below shows the cumulative total return to our stockholders since our IPO on March 31, 2021 through December 31, 2023, in comparison to the Nasdaq Composite Index and the S&P North American Technology Software Index, assuming an initial investment of $100 and reinvestment of dividends, if any.

The stockholder return shown on the graph below represents past performance and is not indicative of, nor intended to forecast, future performance of our common stock.


	3/31/2021	6/30/2021	9/30/2021	12/31/2021	3/31/2022	6/30/2022	9/30/2022	12/31/2022	3/31/2023	6/30/2023	9/30/2023	12/31/2023
Coursera	$100.00	$87.91	$70.33	$54.31	$51.20	$31.51	$23.96	$26.29	$25.60	$28.93	$41.53	$43.04
Nasdaq Composite Index	$100.00	$109.49	$109.07	$118.10	$107.35	$83.26	$79.83	$79.01	$92.26	$104.08	$99.79	$113.32
S&P North American Technology Software Index	$100.00	$114.75	$118.25	$119.57	$102.67	$80.24	$74.76	$76.27	$91.23	$104.08	$102.59	$121.37

This performance graph shall not be deemed “soliciting material” or to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference into any of our other filings under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.


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Item 6. [Reserved]

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Not applicable.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following ~~discussion and analysis of our~~section discusses the financial condition and results of operations of Coursera, Inc. and its subsidiaries (“Coursera,” the “Company,” “we,” “us,” or “our”) and should be read in conjunction with our ~~consolidated financial statements~~Consolidated Financial Statements and related notes appearing elsewhere in this Annual Report on Form ~~10-K.~~10-K (“Form 10-K”). This discussion, particularly information with respect to our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading ~~"Special~~“Special Note Regarding Forward-Looking ~~Statements"~~Statements” in this ~~Annual Report on~~ Form 10-K. You should review the disclosure under the heading "Risk Factors" under Part I, Item 1A in this ~~Annual Report on~~ Form 10-K for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements.

Organization of Information

Management’s ~~Discussion~~discussion and ~~Analysis~~analysis provides a narrative on our financial performance and condition that should be read in conjunction with the accompanying ~~financial statements.~~Consolidated Financial Statements. It includes the following sections:

•

~~Overview~~

•

~~Initial Public Offering~~

Overview

•Factors Affecting Our Performance

•Impact of Macroeconomic Conditions

•Components of Results of Operations

•Results of Operations

•Liquidity and Capital Resources

•Key Business Metrics and Non-GAAP Financial Measures

•Critical Accounting Estimates

•Recent Accounting Pronouncements

In this section of the Form 10-K, we discuss our financial condition and results of operations for the years ended December 31, 2023 and 2022. Our financial condition and results of operations for the years ended December 31, 2022 and 2021 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the United States (“U.S.”) Securities and Exchange Commission (“SEC”) on February 23, 2023.

Overview

Coursera is one of the largest online learning destinations in the world, connecting an ecosystem of learners, educators, organizations, and institutions with a platform of high-quality content and credentials, data, and technology.

As shifts to the digital economy are increasing the need for new skills, Coursera’s online learning offerings can meet this global demand and provide access to world-class education to learners, organizations, and institutions worldwide. We partner with over 325 leading global university and industry partners to create and distribute high-quality content that is modular, flexible, and affordable. As of December 31, 2023, approximately 142 million learners are registered on our platform to engage with a wide range of offerings from industry microcredentials, including entry-level Professional Certificates, to bachelor’s and master’s degree programs.

Coursera serves learners where and how they want to learn—in their homes, through their employers, through their colleges and universities, and through government-sponsored programs. We provide a broad range of learning content and credentials, including Clips, Guided Projects, Specializations, courses, and certificates that can build towards a broader course of study such as a degree or postgraduate diploma. Our go-to-market strategy centers on efficiently attracting learners to our platform through content and credentials from world-class brands, while promoting personalized pathways to jobs and degree programs. Additionally, our data-driven learner experience identifies potential Enterprise prospects, complemented by our direct sales team, which finds and engages with potential business, academic, government, and other institutional customers.


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For the years ended December 31, 2023 and 2022, we generated a net loss of $116.6 million and $175.4 million, which included stock-based compensation expense of $109.6 million and $110.8 million, and a net loss margin of 18% and 33%.

Factors Affecting Our Performance

•

~~Impact of COVID-19~~

•

~~Components of Results of Operations~~

•

~~Results of Operations~~

•

~~Liquidity and Capital Resources~~

•

~~Key Business Metrics and Non-GAAP Financial Measures~~

•

~~Off-Balance Sheet Arrangements~~

•

~~Critical Accounting Estimates~~

•

~~Recent Accounting Pronouncements~~

•

~~JOBS Act Transition Period~~

In this Item 7, we discuss our financial condition and results of operations for the years ended December 31, 2020 and 2021. Our financial condition and results of operations for the years ended December 31, 2019 and 2020 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the final prospectus for our initial public offering filed with the Securities and Exchange Commission, pursuant to Rule 424(b)(4) on March 31, 2021 (the "Prospectus").

~~Overview~~

As shifts to the digital economy are increasing the need for new skills, Coursera’s online learning offerings can meet this global demand and provide access to world-class learning to learners, organizations, and institutions worldwide. We partner with over 250 leading global university and industry partners to create and distribute content that is modular, stackable, flexible, and affordable. As of December 31, 2021, approximately 97 million learners are registered on our platform to engage with a wide range of offerings from Guided Projects to bachelor’s and master’s degree programs.

Coursera is a platform that enables a global ecosystem of educators, learners, organizations, and institutions. Coursera serves learners in their homes, through their employers, through their colleges and universities, and through government-sponsored programs. We provide a broad range of learning offerings: Guided Projects, courses, Specializations, certificates, postgraduate diplomas and degrees. Our go-to-market strategy centers on efficiently attracting learners to our platform and connecting them to content and degree programs tailored to them, after which our data-driven learner experience identifies potential Enterprise prospects, complemented by our direct sales team which finds and engages with potential business, academic, and government customers.

For the years ended December 31, 2020 and 2021, we generated a net loss of $66.8 million and $145.2 million, respectively, which included $16.8 million and $91.2 million, respectively, of stock-based compensation expense, and a net loss margin as a percentage of revenue for the years ended December 31, 2020 and 2021 of (23)% and (35)%, respectively.

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~~Initial Public Offering~~

On April 5, 2021, we completed our IPO of common stock, in which we sold 14,664,776 shares and certain selling stockholders sold 1,065,224 shares. The shares were sold at a price to the public of $33.00 per share for net proceeds of $452.5 million to us after deducting underwriting discounts and commissions of $31.5 million. Additionally, offering costs incurred by us were approximately $6.4 million. Net proceeds to the selling stockholders were $32.9 million after deducting underwriting discounts and commissions. We did not receive any of the proceeds from the sale of our common stock by the selling stockholders. Upon the closing of our IPO, all outstanding shares of our redeemable convertible preferred stock automatically converted into 75,305,400 shares of common stock on a one-for-one basis.

~~Factors Affecting Our Performance~~

We believe that the growth of our business and our future success are dependent upon many factors. While each of these factors present significant opportunities for us, these factors also pose challenges that we must successfully address in order to sustain the growth of our business and enhance our results of operations.

Ability to attract and engage new learners, Enterprise customers, and Degrees ~~students~~students.

In order to grow our business, we must attract new learners, Enterprise customers, and Degrees students efficiently and increase engagement on our platform over time. Our Consumer learners are the most important source of our overall learner base, as they contribute to both our Enterprise and Degrees ~~revenue.~~revenue in addition to the Consumer revenue they may provide.

Ability to source in-demand content from our educator ~~partners~~partners.

We believe that learners and enterprises are attracted to Coursera largely because of the high quality and wide selection of content provided by our educator ~~partners offer, and that continuing~~partners. Continuing to source in-demand content and credentials from our educator partners—from courses to ~~Degrees—will be an~~degrees—is important ~~factor in attracting free~~to attract learners and ~~paid customers and increasing~~increase our revenue over time.

We believe that our reach, scale, and reputation provide an attractive value proposition for leading organizations and institutions to partner with Coursera to develop and distribute content and credentials. To be the platform of choice for educator partners, we continue to invest in increasing the size and engagement of our learner base, developing a suite of academic integrity features (e.g., identity verification and anti-plagiarism detection), improving recommendation and personalization features, developing marketing capabilities that drive higher conversion into paid offerings, and improving the analytics tools available for learners, educators, organizations, and institutions.

Impact of mix shift over ~~time~~time.

~~Our~~The mix of our business amongst our Consumer, Enterprise, and Degrees ~~channels is shifting,~~segments shifts from time to time, and ~~this shift~~these shifts have and will continue to affect our financial performance. We typically incur content costs in the form of a fee paid to our ~~university and industry~~educator partners, determined as a percentage of total revenue generated from their content. We do not incur noany content costs for our Degrees offerings, since our university partners ~~pay~~compensate us with a percentage of learner tuition. ~~If either our Degrees or Enterprise revenue grow faster than our Consumer revenue, which we presently expect, our overall margins will benefit from this shift in revenue mix.~~

Ability to convert free learners to paid ~~learners~~learners.

New learners ~~to our platform~~ typically begin to engage with our free courses on our platform, which ~~serve~~serves as a funnel to grow our total learner base and drive referrals to our other offerings, including our paid offerings. Through both our on-platform and off-platform marketing efforts, we engage our free learners by highlighting key features that encourage conversion to our paid ~~offerings.~~offerings, including paid subscriptions. These efforts include campaigns targeting existing learners, personalized recommendations, and performance marketing ~~across leading social media platforms.~~on the internet.

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Ability to expand our international ~~footprint~~footprint.

We see a significant opportunity to expand our offerings into other regions, particularly in regions with large, underserved adult learning populations. We have invested, and plan to continue to invest, in personnel and marketing efforts to support our international growth ~~and expand our international operations~~ as part of our strategy to grow our customer and learner ~~base, particularly among our Enterprise customers.~~base.

Ability to retain and expand our Enterprise customer ~~relationships~~relationships.

Our efforts to grow our Enterprise segment are focused primarily on business, academic, government, and ~~government~~other institutional customers. We believe a significant opportunity exists ~~for us~~ to expand our ~~existing~~ customers’ use of our platform by identifying new use cases ~~in additional departments and divisions and increasing~~that increase the size of deployments. Our business and results of operations will depend in part on our ability to retain and expand usage of our platform within our existing customer base.

Our measured investment in ~~growth~~growth.

We are actively ~~investing in~~managing our ~~business. In order~~investments to support ~~our~~the future growth of our business using a measured approach. We focus our investments in select markets, offerings, and ~~expanding set of offerings,~~technologies that we ~~expect this investment to continue. We anticipate that our operating expenses~~believe will ~~increase as we continue to build our sales and marketing efforts, expand our employee base, and invest in our technology development. The investments we make in our platform are designed~~provide the best opportunity to grow our revenue ~~opportunity~~ and to improve our operating results in the long term.


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Impact of ~~COVID-19~~

~~The COVID-19 pandemic has resulted,~~Macroeconomic Factors

Our business and ~~is likely to~~financial conditions have been, and may continue to ~~result,~~be, impacted by adverse macroeconomic factors, including inflation, higher interest rates, and volatility in ~~significant global, social,~~foreign currency rates. Global and ~~business disruption. As of the date of this filing, significant uncertainty continues~~regional, macroeconomic, and geopolitical conditions have impacted overall student engagement and may continue to ~~exist concerning the magnitude of the impact and duration of the COVID-19 pandemic. While some restrictions on travel and activities~~ have ~~been lifted, the rise in cases due to~~ a variant of the virus resulted in restrictions being reinstated. While the impact of the ongoing COVID-19 pandemic is severe, widespread, and continues to evolve, it has accelerated the need for online-delivered education. Individuals, organizations, and institutions have relied and are continuing to rely on online learning to navigate change and disruption. As a result, our revenue significantly increased due primarily to an increase in the number of enrollments during the COVID-19 pandemic. Likewise, we have experienced a significant increase in our operating costs associated with our services, primarily driven by our freemium offerings and marketing efforts. As the pandemic made remote work and online learning more widespread, it is uncertain what impact the tapering of the COVID-19 pandemic could have on our operating results. Once COVID-19 wanes, our growth rates may increase or decrease. The full extent of the impact of the COVID-19 pandemic and its aftermath on our operations, key metrics, and financial performance in the United States and worldwide depends on future developments that are uncertain and unpredictable, including the duration and spread of the pandemic, the impact of new strains or variants of the virus, the effectiveness and availability of vaccines and boosters, future and ongoing actions that may or may not be taken by governmental authorities, thenegative impact on the businesses of our customers and partners, the impact on capital and financial markets, and any new information that may emerge concerning the virus or vaccines or other efforts to control the virus. We will continue to actively monitor the situation, including progress made through vaccinations, and we will make further changes to our business operations as may be required by federal, state, or local authorities or that we determine are in the best interests of our employees, customers, partners, suppliers, and stockholders.

total student enrollments.

Components of Results of Operations

Revenue

We ~~derive~~generate revenue from contracts with customers for access to the ~~learning~~educational content hosted on our platform and related services. We ~~derive our~~generate revenue from our three ~~sources:~~reportable segments: Consumer, Enterprise, and Degrees.

Both Consumer and Enterprise revenue ~~both~~primarily consist ~~primarily~~ of subscriptions with terms varying from 30 days for certain Consumer subscriptions to one to three years for Enterprise license ~~subscription contracts.~~subscriptions. Consumer subscriptions are paid in advance, ~~generally after a 7-day free trial period.~~while Enterprise subscriptions are ~~generally~~usually invoiced in ~~quarterly~~advance in annual or ~~annual~~quarterly installments. Access to our platform represents a series of distinct services, as we continually provide access ~~to,~~ and fulfill our obligation to ~~the customer~~our customers over the contract term. As a result, revenue is recognized ratably over the contract term.

We are typically the principal with respect to revenue generated from sales to Consumer and Enterprise customers as we control the performance obligation and are ~~the primary obligor with respect to~~responsible for delivering access to content.

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Degrees revenue is generated from contracts with university partners ~~for the delivery of~~to host and deliver their online bachelor’s and master’s degrees or postgraduate ~~diplomas awarded by the university.~~diplomas. We earn a ~~Degrees~~ service fee that is determined as a percentage of the total tuition collected from Degrees students, net of refunds. University partners ~~generally~~typically collect the tuition from Degrees ~~students, however in the case of some MasterTrack Certificate offerings this obligation can be our responsibility.~~students. We have a ~~stand ready~~stand-ready obligation to ~~perform degree~~provide services ~~continually~~ throughout the period that the degree content is hosted on our platform. ~~Degrees revenue is received and~~Service fees are paid by the university partner for each university term. As a result, revenue generated from each term is recognized ratably from the ~~start~~beginning of a term through the start of the following term.

There is no direct contractual revenue arrangement between Coursera and Degrees students, who contract directly with ~~the~~our university partners. University partners typically have additional performance obligations to the Degrees students in the form of designing the curriculum, setting admission criteria, real-time teaching, making admissions and financial aid decisions, independently awarding credits, certificates, or degrees, and academic or career counseling. Although some MasterTrack Certificate learners are required to accept our terms and conditions prior to tuition payment, our core performance obligations remain similar to the services provided to university partners for their online bachelor’s and master’s degrees or postgraduate diplomas. For these reasons, the university partners control the delivery of degrees, and postgraduate diplomas ~~and MasterTrack Certificates~~ hosted on our platform. ~~As a result, we recognize Degrees revenue as the service fee we earn from our contracts with university partners.~~

Cost of Revenue

Cost of revenue consists of content costs in the form of fees paid to educator partners and expenses associated with the operation and maintenance of our platform. These expenses include the cost of servicing both paid learner and educator partner support requests, content translation and captioning, hosting and bandwidth costs, amortization of acquired technology, internal-use software and content assets, customer payment processing fees, ~~and allocated~~ depreciation, and facilities costs.

Content costs only apply to Consumer and Enterprise offerings; there isare no content ~~cost~~costs attributable to our Degrees offering. Content costs as a percentage of revenue ~~are lower~~ for ~~our Enterprise offerings, due to a lower effective percentage payable to educator partners compared with sales to Consumer customers.~~ ~~We expect~~ Enterprise and ~~Degrees to become a larger portion~~Consumer vary based on the content mix of ~~the overall business, and to the extent our mix changes as we expect, content costs will decrease as a percentage of total revenue.~~

each segment.

Operating Expenses

Operating expenses consist of research and development, sales and marketing, and general and administrative expenses. Personnel costs are the most significant component of our operating expenses and consist of salaries, ~~benefits, bonuses,~~ stock-based compensation expense, payroll taxes, commissions, bonus, and ~~payroll taxes.~~benefits. Our operating expenses also include ~~allocated costs of facilities, information technology,~~marketing and advertising expenses, consulting and services expenses, office expenses, depreciation and ~~amortization. Although our operating expenses may fluctuate from period to period, we currently expect our operating expenses to increase in absolute dollars over time.~~

amortization, and facilities costs.


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Research and ~~development~~development.. Our research and development expenses primarily consist ~~primarily~~ of personnel and personnel-related costs, including stock-based compensation expense, and costs related to the ongoing management, maintenance, and expansion of content, features, and services offered on our platform. We believe that continued investment in our platform is important to our future growth and to maintain and attract partners and learners to our platform. As a result, we expect research and development expenses to increase in absolute dollars. In addition, we expect research and development expenses as a percentage of revenue to vary from period to period but generally decrease over the long term.

Sales and marketing. Our sales and marketing expenses primarily consist ~~primarily~~ of personnel and personnel-related costs, including stock-based compensation ~~and~~expense, as well as costs related to ~~learner~~acquiring learners, customers, and ~~partner acquisition,~~educator partners, support efforts, and ~~brand~~ marketing. Sales and marketing expenses also ~~consist of~~include hosting and bandwidth ~~costs and support costs related to the provisioning of services to free learners.~~costs. We expect sales and marketing expenses to increase in absolute dollars as our business grows. In addition, we expect sales and marketing expenses as a percentage of revenue to vary from period to period but generally decrease over the long term.

General and administrative. Our general and administrative expenses primarily consist ~~primarily~~ of personnel and personnel-related costs, including stock-based compensation ~~and costs related to our legal, finance, and human resources departments,~~expense as well as certain indirect taxes, professional fees, and other corporate expenses.

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Since our IPO on April 5, 2021, we have incurred ~~and expect to continue to incur~~ additional expenses ~~as a result of operating~~ as a public company, including costs to comply with the rules and regulations applicable to companies listed on a national securities exchange, costs related to compliance and reporting obligations, and increased expenses for insurance and professional services. We expect general and administrative expenses to increase in absolute dollars as our business grows. In addition, we expect general and administrative expenses as a percentage of revenue to vary from period to period but generally decrease over the long term.

Restructuring related charges. Our restructuring related charges primarily consist of personnel expenses, such as employee severance and benefits costs, and stock-based compensation expense related to the reduction of our global workforce initiated in November 2022.

Interest Income,

Net

Interest income, net primarily consists ~~primarily~~ of interest income earned on our cash, cash equivalents, and marketable securities. It also includes amortization of premiums and accretion of discounts related to our marketable securities. Interest income varies each reporting period based on our average balance of cash, cash equivalents, and marketable securities during the period ~~and~~as well as market interest rates.

Other ~~Income (Expense),~~Expense, Net

Other ~~income (expense),~~expense, net primarily consists ~~primarily~~ of foreign exchange gains (losses).

Income Tax Expense

~~Our income~~

Income tax ~~provision~~expense primarily consists ~~primarily~~ of income taxes in ~~certain~~ foreign jurisdictions in which we conduct business. We have a full valuation allowance against our U.S. federal and state deferred tax assets as the realization of the full amount of these deferred tax assets is uncertain, including net operating loss carryforwards and tax credits primarily related ~~primarily~~ to research and development. We expect to maintain this full valuation allowance until it becomes more likely than not that the deferred tax assets will be realized.


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Results of Operations

The following table summarizes our results of operations, ~~for the periods presented. The results below~~which are not necessarily indicative of results to be expected for future periods.


	Year Ended December 31,
	2023		2022		2021
	(in thousands)
Revenue	$	635,764	$	523,756	$	415,287
Cost of revenue(1)	305,993		192,277		165,818
Gross profit	329,771		331,479		249,469
Operating expenses:
Research and development(1)	160,077		165,134		135,410
Sales and marketing(1)	222,771		227,676		179,337
General and administrative(1)	98,325		105,900		77,785
Restructuring related charges(1)	(5,806)		10,149		—
Total operating expenses	475,367		508,859		392,532
Loss from operations	(145,596)		(177,380)		(143,063)
Other income (expense):
Interest income, net	34,432		9,144		320
Other expense, net	(19)		(2,401)		(346)
Loss before income taxes	(111,183)		(170,637)		(143,089)
Income tax expense	5,371		4,720		2,126
Net loss	$	(116,554)	$	(175,357)	$	(145,215)

(1)

Year Ended December 31,

2019

2020

2021

(in thousands)

Revenue

$
184,411

$
293,511

$
415,287

Cost of revenue(1)

89,589

138,846

165,818

Gross profit

94,822

154,665

249,469

Operating expenses:

Research and development(1)

56,364

76,784

135,410

Sales and marketing(1)

57,042

107,249

179,337

General and administrative(1)

29,810

37,215

77,785

Total operating expenses

143,216

221,248

392,532

Loss from operations

(48,394
)

(66,583
)

(143,063
)
Other income (expense):

Interest income

3,282

1,175

320

Interest expense

(625
)

(12
)

—

Other income (expense), net

(264
)

120

(346
)
Loss before income taxes

(46,001
)

(65,300
)

(143,089
)
Income tax expense

718

1,515

2,126

Net loss

$
(46,719
)

$
(66,815
)

$
(145,215
)

~~(1)~~ Includes stock-based compensation expense as follows:

Year Ended December 31,

2019

2020

2021

(in thousands)

Cost of revenue

$
491

$
516

$
2,092

Research and development

7,038

6,960

42,783

Sales and marketing

3,189

4,097

25,992

General and administrative

5,599

5,234

20,316

Total stock-based compensation expense

$
16,317

$
16,807

$
91,183


	Year Ended December 31,
	2023		2022		2021
	(in thousands)
Cost of revenue	$	2,593	$	3,089	$	2,092
Research and development	49,931		48,779		42,783
Sales and marketing	31,299		30,092		25,992
General and administrative	31,352		28,703		20,316
Restructuring related charges	(5,605)		122		—
Total stock-based compensation expense	$	109,570	$	110,785	$	91,183

~~Table of Contents~~


Table of Contents

The following table summarizes our results of operations as a percentage of ~~revenue for each of the periods indicated:~~

Year ended December 31,

2019

2020

2021

Revenue

100
%

100
%

100
%
Cost of revenue

49

47

40

Gross profit

51

53

60

Operating expenses:

Research and development

30

26

32

Sales and marketing

31

37

43

General and administrative

16

13

19

Total operating expenses

77

76

94

Loss from operations

(26
)

(23
)

(34
)
Other income (expense):

Interest income

2

1

—

Interest expense

(1
)

—

—

Other income (expense), net

—

—

—

Loss before income taxes

(25
)

(22
)

(34
)
Income tax expense

—

1

1

Net loss

(25
)%

(23
)%

(35
)%

revenue:


	Year Ended December 31,
	2023		2022		2021
Revenue	100	%	100	%	100	%
Cost of revenue	48		37		40
Gross profit	52		63		60
Operating expenses:
Research and development	25		32		32
Sales and marketing	35		43		43
General and administrative	16		20		19
Restructuring related charges	(1)		2		—
Total operating expenses	75		97		94
Loss from operations	(23)		(34)		(34)
Other income (expense):
Interest income, net	6		2		—
Other expense, net	—		—		—
Loss before income taxes	(17)		(32)		(34)
Income tax expense	1		1		1
Net loss	(18)	%	(33)	%	(35)	%

Comparison of the Years Ended December 31, ~~2020~~2023 and ~~2021~~

2022

Revenue

Year Ended December 31,

Change

2020

2021

$

%

(dollars in thousands)

Revenue:

Consumer

$
192,909

$
246,187

$
53,278

28
%
Enterprise

70,784

120,429

49,645

70
%
Degrees

29,818

48,671

18,853

63
%
Total revenue

$
293,511

$
415,287

$
121,776

41
%


	Year Ended December 31,				Change
	2023		2022		$		%
	(in thousands, except percentages)
Revenue:
Consumer	$	365,221	$	295,583	$	69,638	24	%
Enterprise	219,542		181,284		38,258		21	%
Degrees	51,001		46,889		4,112		9	%
Total revenue	$	635,764	$	523,756	$	112,008	21	%

Revenue for the year ended December 31, ~~2020~~2023 was ~~$293.5~~$635.8 million, compared to ~~$415.3~~$523.8 million for the year ended December 31, ~~2021. Revenue~~2022. Revenue increased by ~~$121.8~~$112.0 million, or ~~41%~~21%, compared to the year ended December 31, 2020. For the year ended December 31, 2020, Consumer, Enterprise, and Degrees revenue were $192.9 million, $70.8 million, and $29.8 million, or approximately 66%, 24%, and 10% of total revenue, respectively, compared to $246.2 million, $120.4 million, and $48.7 million, or approximately 59%, 29%, and 12% of total revenue, respectively, for the year ended December 31, 2021.2022. The increase ~~in revenue~~ was primarily driven by a ~~26%~~20% increase in the average total number of registered learners ~~which resulted~~resulting in anmore paid learners, a 19% increase in ~~paying Consumer customers,~~ the ~~addition~~average total number of ~~416~~ Paid Enterprise Customers, and ana 22% increase in the number of Degrees students. ~~These trends accelerated in 2020 in part due to the effects of the COVID-19 pandemic and its impact continued into 2021.~~

For the year ended December 31, ~~2021,~~2023, total Consumer revenue increased by ~~$53.3~~$69.6 million, or ~~28%~~24%, compared to the year ended December 31, ~~2020. The new~~2022. New learners that registered after December 31, ~~2020 added $84.0~~2022 contributed $112.2 million ~~in revenue~~ to ~~the~~ total Consumer revenue of ~~$246.2~~$365.2 million for the year ended December 31, ~~2021.~~2023. The remaining Consumer revenue in the year ended December 31, ~~2021~~2023 of ~~$162.2~~$253.0 million is attributable to learners that were registered inon our platform as of December 31, ~~2020,~~2022, thus retaining ~~84%~~86% of the revenue from those registered learners.

For the year ended December 31, ~~2021,~~2023, total Enterprise revenue increased by ~~$49.6~~$38.3 million, or ~~70%~~21%, compared to the year ended December 31, ~~2020. Approximately $25.9~~2022. Acquisitions of new customers drove $34.5 million of the increase, ~~in revenue was attributable to new customers,~~ and the remaining increase of ~~$23.7~~$3.8 million was attributable to growth from existing customers.


Table of Contents

For the year ended December 31, ~~2021~~2023, total Degrees revenue increased by ~~$18.9~~$4.1 million, or ~~63%~~9%, compared to the year ended December 31, ~~2020.~~2022. The $4.1 million increase in revenue was primarily attributable to $6.6 million in revenue from an increase in the number of Degrees students, ~~added $16.8~~partially offset by a decrease of $2.5 million ~~in revenue, and the remaining increase of $2.1 million was attributable~~due to ~~an increase in~~lower revenue per ~~student.~~

~~Table of Contents~~

student resulting from student growth in lower priced regions.

Cost of Revenue, Gross Profit, and Gross Margin

Year Ended December 31,

Change

2020

2021

$

%

(dollars in thousands)

Cost of revenue

$
138,846

$
165,818

$
26,972

19
%
Gross profit

$
154,665

$
249,469

$
94,804

61
%
Gross margin

53
%

60
%


	Year Ended December 31,						Change
	2023			2022			$		%
	(in thousands, except percentages)
Cost of revenue	$	305,993		$	192,277		$	113,716	59	%
Gross profit	$	329,771		$	331,479		$	(1,708)	(1)	%
Gross margin	52		%	63		%

Cost of revenue for the year ended December 31, ~~2020~~2023 was ~~$138.8~~$306.0 million, compared to ~~$165.8~~$192.3 million for the year ended December 31, ~~2021.~~2022. The primary drivers for the increase inwere revenue growth combined with higher content costs as a percentage of revenue that resulted in an increase of ~~$15.6~~$105.4 million in costs related to educator partner ~~fees.~~ fees, as explained in more detail below. The remaining increase was largely driven by an increase in paid learner usage on our platform, resulting in a $2.3 million cost increase in support services and credit card processing fees, an increase in amortization expense, primarily from internal-use software of $4.2 million, as well as a $2.1 million increase in content translations.

Content costs for the Consumer ~~and Enterprise segments~~segment were ~~$86.4~~$172.2 million and ~~$21.8~~$81.3 million for the ~~year~~years ended December 31, ~~2020, respectively, compared to $84.7~~2023 and 2022, with content costs as a percentage of revenue of 47% and 27% for the same periods. Content costs for the Enterprise segment were $69.2 million and ~~$39.2~~$54.7 million for the ~~year~~years ended December 31, ~~2021, respectively.~~2023 and 2022, with content costs as a percentage of revenue of 32% and 30% for the same periods. Content costs as a percentage of revenue were higher mainly due to the extension of a multi-year agreement with our largest educator partner. During the year ended December 31, 2023, our largest educator partner started earning typical content fees, whereas we had historically supported their program primarily through marketing and content production efforts. Overall, the change in this agreement's structure resulted in a shift of expenses from operating expenses to cost of revenue of approximately 12% of revenue for ~~Consumer and~~the year ending December 31, 2023. The increase in content costs as a percentage of revenue for the Enterprise ~~segments were 45% and 31%~~segment was partially offset by a one-time benefit associated with a contract amendment with one of our educator partners.

Gross margin was 52% for the year ended December 31, ~~2020, respectively,~~2023, compared to ~~34% and 33%~~63% for the year ended December 31, 2021, respectively. We experienced an increase in usage by paid learners on our platform which resulted in a $6.8 million cost increase from support services, hosting costs, and credit card processing. Additionally, there was an increase of $4.6 million in amortization expense.

~~Gross margin was 53% for the year ended December 31, 2020, compared to 60% for the year ended December 31, 2021.~~2022. The ~~increase~~decrease in gross margin was ~~due to~~driven by a ~~shift in mix of revenue toward Enterprise and Degrees and a lower~~higher revenue content cost rate ~~for~~in both our Consumer ~~segment revenue.~~

and Enterprise segments for the reason described above.

Operating Expenses

Year Ended December 31,

Change

2020

2021

$

%

(dollars in thousands)

Operating expenses:

Research and development

$
76,784

$
135,410

$
58,626

76
%
Sales and marketing

107,249

179,337

72,088

67
%
General and administrative

37,215

77,785

40,570

109
%
Total operating expenses

$
221,248

$
392,532

$
171,284

77
%


	Year Ended December 31,				Change
	2023		2022		$		%
	(in thousands, except percentages)
Operating expenses:
Research and development	$	160,077	$	165,134	$	(5,057)	(3)	%
Sales and marketing	222,771		227,676		(4,905)		(2)	%
General and administrative	98,325		105,900		(7,575)		(7)	%
Restructuring related charges	(5,806)		10,149		(15,955)		nm
Total operating expenses	$	475,367	$	508,859	$	(33,492)	(7)	%

Total operating expenses for the year ended December 31, ~~2020~~2023 were ~~$221.2~~$475.4 million, compared to ~~$392.5~~$508.9 million for the year ended December 31, ~~2021.~~

2022.

Research and development expenses for the year ended December 31, ~~2020~~2023 were ~~$76.8~~$160.1 million, compared to ~~$135.4~~$165.1 million for the year ended December 31, ~~2021.~~2022. The ~~increase~~decrease was primarily due to ~~higher personnel-related~~lower consulting and services expenses of ~~$51.5~~$4.0 million ~~driven~~and other employee expenses of $2.2 million, partially offset by ~~additional headcount, and additional~~higher stock-based compensation expense of ~~$35.8~~$1.2 million. ~~Consulting and services expenses increased by $3.7 million. Other research and development expenses including facilities allocation, office expenses, and recruiting fees increased by $3.4 million.~~


Table of Contents

Sales and marketing expenses for the year ended December 31, ~~2020~~2023 were ~~$107.2~~$222.8 million, compared to ~~$179.3~~$227.7 million for the year ended December 31, ~~2021.~~2022. The ~~increase in sales and marketing expenses~~decrease was primarily due to ~~higher personnel-related~~lower marketing and advertising expenses of ~~$47.2~~$4.8 million ~~driven~~and decreases in consulting and services expenses, other employee expenses, and commission expense totaling $3.9 million. This decrease was partially offset by ~~additional headcount, and additional~~higher stock-based compensation expense of ~~$21.9 million. Marketing and advertising expenses increased by $15.5 million, consulting and services expenses increased by $4.7~~$1.2 million and ~~software subscription fees increased by $1.9 million. Other sales and marketing expenses including general overhead expenses, office expenses and recruiting fees increased by $2.8 million.~~

an impairment charge of $2.0 million associated with Degrees content development grants.

General and administrative expenses for the year ended December 31, ~~2020~~2023 were ~~$37.2~~$98.3 million, compared to ~~$77.8~~$105.9 million for the year ended December 31, ~~2021.~~2022. The ~~increase in general and administrative expenses~~decrease was primarily due to prior year non-recurring impairment charges of $3.8 million, relating to deferred partner fees that we do not expect to recover associated with content from Russian educator partners whose content we removed from our platform and to a partial sublease of our office space. Additionally, there were decreases in consulting and services expenses of $2.5 million, offices, facilities, and indirect taxes totaling $6.4 million, as well as other employee expenses of $1.4 million. These decreases were partially offset by an increase in software expenses of $1.3 million and higher personnel-related expenses of ~~$22.4~~$4.9 million, ~~mainly driven by additional headcount, and additional~~including stock-based compensation expense of ~~$15.1~~$2.7 million. ~~There was also an increase of $7.6 million in consulting and professional services, $6.6 million in office expenses which included directors and officers insurance, and $3.5 million~~

Restructuring related ~~to indirect taxes. Other general and administrative expenses, which included facility expenses and recruiting fees increased by $0.5 million.~~

~~Table of Contents~~

~~Other Income (Expense)~~

Year Ended December 31,

Change

2020

2021

$

%

(dollars in thousands)

Interest income

$
1,175

$
320

$
(855
)

(73
)%
Interest expense

(12
)

—

12

(100
)%
Other income (expense), net

120

(346
)

(466
)

(388
)%
Total other income (expense)

$
1,283

$
(26
)

$
(1,309
)

(102
)%

~~Total other income~~charges for the year ended December 31, ~~2020 was $1.3~~2023 were $(5.8) million primarily relating to the reversal of stock-based compensation expense for the forfeitures of RSUs and ~~was immaterial~~stock options resulting from our global workforce reduction initiated in November 2022, compared to $10.1 million for the year ended December 31, ~~2021.~~2022 mainly consisting of personnel expenses, such as employee severance and benefits costs, related to this global workforce reduction. Refer to Note 15, “Restructuring Related Charges”, in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for further information.

Other Income, Net


	Year Ended December 31,				Change
	2023		2022		$		%
	(in thousands, except percentages)
Interest income, net	$	34,432	$	9,144	$	25,288	277	%
Other expense, net	(19)		(2,401)		2,382		(99)	%
Total other income, net	$	34,413	$	6,743	$	27,670	nm

Total other income, net for the year ended December 31, ~~2020~~2023 primarily reflected interest income earned on ~~invested~~ cash, ~~balances. Total other expense for the year ended December 31, 2021 primarily reflected foreign exchange losses, offset by interest income earned on invested~~ cash ~~balances.~~equivalents, and marketable securities. Interest income, net was ~~lower~~higher during the year ended December 31, ~~2021~~2023 compared to the year ended December 31, ~~2020~~2022 due to ~~lower~~a rise in interest rates and our average rate of return on investments in U.S. Treasury securities. The fluctuations in other expense, net primarily reflect changes in unrealized foreign exchange losses and gains for the periods presented. Our operating expenses are typically denominated in the local currencies of the countries in which our operations are located and are subject to fluctuations due to changes in foreign currency exchange rates.

We also maintain foreign-currency cash and cash equivalents in our foreign entities to support their ongoing operations.

Income Tax Expense

Year Ended December 31,

Change

2020

2021

$

%

(dollars in thousands)

Income tax expense

$
1,515

$
2,126

$
611

40
%


	Year Ended December 31,				Change
	2023		2022		$		%
	(in thousands, except percentages)
Income tax expense	$	5,371	$	4,720	$	651	14	%

For the year ended December 31, ~~2020,~~2023, we recognized income tax expense of ~~$1.5~~$5.4 million, compared to ~~$2.1~~$4.7 million for the year ended December 31, ~~2021.~~2022. Income tax expense for the years ended December 31, ~~2020~~2023 and ~~2021~~2022 was primarily related to our foreign ~~taxes.~~

operations.


Table of Contents

Liquidity and Capital Resources

Overview

~~Since our inception, we have financed our operations primarily through proceeds from our redeemable convertible preferred stock issuances, as well as from cash generated from our business operations.~~ ~~In April 2021, we received cash proceeds of $525.3 million from our IPO net of underwriting discounts and commissions but before deducting other offering expenses.~~

As of December 31, ~~2021,~~2023, our principal sources of liquidity were cash, cash equivalents, and marketable securities totaling ~~$821.8~~$722.1 million. Our investments consist of U.S. ~~government treasury bills.~~

Treasury securities.

Since our inception, we have financed our operations primarily through proceeds from issuance of redeemable convertible preferred stock, our IPO, and cash generated from business operations. Our principal uses of cash in recent periods ~~have been~~include the funding of our business operations, ~~and investing~~investments in our ~~capital expenditures.~~ internal-use software, purchases of content assets, and repurchases of our common stock, as discussed below.

We believe that our existing cash, ~~and~~ cash equivalents, and marketable securities and our expected cash flows from operations will be sufficient to meet our cash needs for at least the next 12 months. Over the longer term, our future capital requirements will depend on many factors, including our growth rate, the timing and extent of our sales and marketing and research and development expenditures, the continuing market acceptance of our offerings, and any investments or acquisitions we may choose to pursue in the future. In the event that we need to borrow funds or issue additional equity, we cannot assure you that any such additional financing will be available on terms acceptable to us, if at all. In addition, any future borrowings may result in additional restrictions on our business and any issuance of additional equity would result in dilution to investors. If we are unable to raise additional capital when desired and on terms acceptable to us, our business, results of operations, and financial condition could be materially and adversely affected.

Contractual Obligations and Commitments

Our estimated future obligations as of December 31, ~~2021~~2023 include both current and ~~long term~~long-term obligations. Under our operating leases, as ~~noted~~described in Note ~~10, Leases,~~6, “Leases”, to the ~~consolidated financials~~Consolidated Financial Statements included in Part II, Item 8 ~~"Financial Statements and Supplementary Data",~~of this Form 10-K, we have a current obligation of ~~$8.0~~$6.6 million and aan immaterial long-term ~~obligation of $11.9 million.~~

obligation.

Our operating ~~leases~~lease obligations as of December 31, ~~2021~~2023 were approximately ~~$21.7~~$6.8 million, which consist of facility lease payments ~~related to lease facilities under operating lease~~remaining on those agreements ~~expiring~~ through ~~2024.~~their staggered expiration concluding in 2025. We have office facility operating leases in the ~~United States,~~U.S., Canada, the United Kingdom, India, Bulgaria, ~~and~~the United Arab ~~Emirates.~~

~~Table~~Emirates, and the Kingdom of ~~Contents~~

Saudi Arabia.

Our purchase obligations as of December 31, ~~2021~~2023 were approximately ~~$47.6~~$23.1 million, which primarily consisted of our commitments ~~related~~ to purchase ofcertain services. As ~~noted~~described in Note ~~11, Commitments~~9, “Commitments and ~~Contingencies,~~Contingencies”, to the ~~consolidated financials~~Consolidated Financial Statements included in Part II, Item 8 ~~"Financial Statements and Supplementary Data",~~of this Form 10-K, we have a current obligation of ~~$9.5~~$9.9 million and a long-term obligation of ~~$38.1~~$13.2 million. ~~In situations where we~~For services that have ~~received delivery of the services~~been delivered under these arrangements as of December 31, ~~2021 under the purchase obligations outstanding as of the same date, such amounts are reflected in the consolidated balance sheet as~~2023, we record related liabilities within other accounts payable and accrued expenses ~~and~~in the Consolidated Balance Sheets, which are excluded from the ~~$47.6 million.~~

~~In March 2021,~~purchase obligation amount.

Share Repurchase Program

On April 26, 2023, our board of directors approved a share repurchase program with authorization to purchase up to $95 million of our common stock, excluding commissions and fees (the “Repurchase Program”). We may repurchase shares of common stock from time to time through open market purchases, in privately negotiated transactions, or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions. The number of shares to be repurchased and the timing of the repurchases will depend on several factors, including, without limitation, business, economic, and market conditions, corporate, legal, and regulatory requirements, prevailing stock prices, trading volume, and other considerations. The Repurchase Program may be suspended or discontinued at any time and does not obligate us to acquire any amount of common stock.

We funded share repurchases under the Repurchase Program with our existing cash and cash equivalents. During the year ended December 31, 2023, we ~~entered into a five-year agreement with a cloud hosting provider~~repurchased an aggregate of 4,829,803 shares of our common stock for $58.5 million pursuant to a Rule 10b5-1 trading plan. As of December 31, 2023, we had $36.6 million, excluding commissions, remaining under the Repurchase Program, which ~~we committed to spend $7.5 million in each of the next five years.~~

has no expiration date and will continue unless otherwise suspended or discontinued.


Table of Contents

Capital ~~expenditures~~

Expenditures

Our capital expenditures primarily ~~reflected our~~include investments in property, equipment, and software, ~~and~~ capitalized internal-use software ~~costs.~~costs, and purchases of content assets. We currently expect our ~~capital expenditures for the year ending 2022~~purchases of content assets during 2024 to ~~be consistent with the year ended 2021.~~

increase relative to 2023.

Cash Flows

The following table summarizes our cash ~~flows for the periods indicated:~~

Year Ended December 31,

2019

2020

2021

(in thousands)

Net cash provided by (used in) operating activities

$
(21,334
)

$
(14,991
)

$
1,746

Net cash used in investing activities

(64,886
)

(101,442
)

(51,609
)
Net cash provided by financing activities

113,381

139,014

550,156

Net increase in cash, cash equivalents, and restricted cash

$
27,161

$
22,581

$
500,293

flows:


	Year Ended December 31,
	2023		2022		2021
	(in thousands)
Net cash provided by (used in) operating activities	$	29,639	$	(38,051)	$	1,746
Net cash provided by (used in) investing activities	384,798		(234,024)		(51,609)
Net cash (used in) provided by financing activities	(79,229)		12,234		550,156
Net increase (decrease) in cash, cash equivalents, and restricted cash	$	335,208	$	(259,841)	$	500,293

Operating Activities

Cash provided by (used in) operating activities mainly consists of our net loss adjusted for certain non-cash items, including stock-based compensation expense and depreciation and amortization, as well as the effect of changes in operating assets and liabilities during each period.

Our main source of operating cash is payments received from our customers. Our primary use of cash from operating activities is for personnel-related expenses, partner fees, marketing and advertising expenses, indirect taxes, and third-party cloud infrastructure expenses.

For the year ended December 31, ~~2020,~~ 2023, net cash provided by operating activities was $29.6 million, primarily resulting from (i) a one-time benefit arising from the timing of content fee payments associated with the extension of our multi-year agreement with our largest educator partner, (ii) revenue growth paired with the results of our expense reduction initiative resulting in improved operational leverage, (iii) an increase in cash collections, (iv) a decrease in professional services fees, offset by (v) an increase in our paid marketing spend.

For the year ended December 31, 2022, net cash used in operating activities was ~~$15.0~~$38.1 million, primarily consisting of our net loss of $66.8 million, adjusted for non-cash charges of $26.5 million and net cash inflows of $25.3 million provided by changes in our operating assets and liabilities. The main drivers of the changes in operating assets and liabilities were a $39.0 millionresulting from (i) an increase in ~~deferred revenue, resulting primarily from our~~personnel related expenses driven by headcount growth, (ii) an increase in content costs due to Enterprise segment growth, ~~a $25.7 million~~(iii) an increase in ~~accounts payable~~our marketing and ~~accrued expenses due to the growth of our business, partially offset by a $24.1 million~~advertising spending, and (iv) an increase in ~~accounts receivable and a $18.3 million increase in prepaids and other assets.~~

~~For the year ended December 31, 2021, net cash provided by operating activities was $1.7 million, primarily consisting of~~ our net loss of $145.2 million, adjusted for non-cash charges of $106.0 million and net cash inflows of $41.0 million provided by changes in our operating assets and liabilities. The main drivers of the changes in operating assets and liabilities were a $17.8 million increase in deferred revenue, resulting primarily from our Enterprise segment growth, a $16.3 million increase in accounts payable and accrued expenses and a $7.7 million increase in accrued compensation and other liabilities mainly due to our business growth, and a $5.9 million decrease in accounts receivable due to timing of billings, partially offset by a $5.7 million increase in prepaids and other assets primarily due to increase in deferred commissions.

content creation costs.

Cash provided by operating activities increased by ~~$16.7~~$67.7 million during the year ended December 31, ~~2021,~~2023, compared to the year ended December 31, ~~2020,~~2022, primarily due to the timing of (i) content fees payable to our ~~business growth.~~

~~Table~~largest educator partner resulting from the extension of ~~Contents~~

our multi-year agreement with them and (ii) customer invoicing and collections.

Investing Activities

For the year ended December 31, ~~2020,~~2023, net cash provided by investing activities was $384.8 million primarily resulting from proceeds from maturities of marketable securities, partially offset by purchases of marketable securities, capitalized internal-use software costs, purchases of property, equipment and software, and purchases of content assets.

For the year ended December 31, 2022, net cash used in investing activities was ~~$101.4~~$234.0 million, primarily ~~as a result of net~~resulting from purchases of marketable securities, ~~capital expenditures~~capitalized internal-use software costs, purchases of property, equipment and software, and ~~capitalized internal-use software costs, and purchase~~purchases of ~~investment in a private company.~~

content assets, partially offset by proceeds from maturities of marketable securities.

Financing Activities

For the year ended December 31, ~~2021,~~2023, net cash used in ~~investing~~financing activities was ~~$51.6~~$79.2 million, primarily ~~as a result~~resulting from payments for repurchases of ~~net purchases~~common stock and payments for tax withholding on vesting of ~~marketable securities, capital expenditures~~RSUs, partially offset by proceeds from exercise of ~~property, equipment~~stock options and ~~software, capitalized internal-use software costs, and purchases of content assets.~~

~~Financing Activities~~

proceeds from employee stock purchase plan.


Table of Contents

For the year ended December 31, ~~2020,~~2022, net cash provided by financing activities was ~~$139.0~~$12.2 million, primarily ~~as a result of net proceeds for issuance of redeemable convertible preferred stock, and~~resulting from proceeds from ~~issuance~~exercise of ~~common~~ stock ~~following employee stock option exercises,~~ ~~partially offset by payment of holdback consideration related to an asset acquisition.~~

For the year ended December 31, 2021, net cash provided by financing activities was $550.2 million, primarily as a result of net proceeds from our IPO, proceeds from issuance of common stock following employee stock option exercisesoptions and proceeds from employee stock purchase plan, offset by payments for tax withholding on vesting of RSUs and payment of deferred offering ~~costs and employee payroll taxes paid for vesting of restricted stock units.~~

costs.

Key Business Metrics and Non-GAAP Financial Measures

We monitor the key business metrics and non-GAAP financial measures set forth below to help us evaluate our business and growth trends, establish budgets, measure the effectiveness of our sales and marketing efforts, and assess operational efficiencies. These key business metrics and non-GAAP financial measures are presented for supplemental informational purposes only, should not be considered a substitute for financial information presented in accordance with GAAP, and may differ from similarly titled metrics or measures presented by other companies. A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure is provided in “Non-GAAP Financial ~~Measures"~~Measures” below.

Key Business Metrics

Registered Learners

We count the total number of registered learners at the end of each period. For purposes of determining our registered learner count, we treat each customer account that registers with a unique email as a registered learner and adjust for any spam, test accounts, and cancellations. Our registered learner count is not intended as a measure of active engagement. New registered learners are individuals that register in a particular period. We believe that the number of registered learners is an important ~~indicator of~~factor in the growth of our business and future revenue trends.

Year Ended December 31,

2019

2020

2021

( in millions, except percentages)

New Registered Learners

9.2

30.6

20.8

Total Registered Learners

46.4

76.6

96.9

Total Registered Learners YoY Growth

65
%

26
%


	Year Ended December 31,
	2023		2022		2021
	(in millions, except percentages)
New Registered Learners	23.7		21.5		20.8
Total Registered Learners	141.9		118.1		96.9
Total Registered Learners year-over-year ("YoY") growth	20	%	22	%

Number of Degrees Students

We count the total number of Degrees students for each period. For purposes of determining our Degrees student count, we include all the students that are matriculated in a ~~bachelor's, or master's~~ degree ~~or postgraduate diploma~~program and who are enrolled in one or more courses in such a degree program during the period. If a degree term spans across multiple quarters, the ~~said~~ student is counted as active in all quarters of the degree term. For purposes of determining our Degrees student count, we do not include students who are matriculated in the degree but are not enrolled in a course in that period. We believe that the number of Degrees students is an important indicator of the growth of our Degrees ~~segment~~business and future Degrees ~~Segment Revenue~~segment revenue trends.

~~Table of Contents~~

The Degrees student count is affected by the seasonality of the school class cycles, combined with the underlying growth interacting with those trends. ~~The~~For quarter-over-quarter fluctuations, the number of Degrees students fluctuates in part because the academic terms for each degree program often begins and/or ends within different calendar quarters, and the frequency with which each degree program is offered within a given year varies.

2020

2021

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Number of Degrees Students

7,184

8,079

11,504

11,900

13,493

14,630

16,068

16,204

YoY Growth

88
%

81
%

40
%

36
%


	2023								2022
	Q1		Q2		Q3		Q4		Q1	Q2	Q3	Q4
Number of Degrees Students	18,095		19,068		20,432		22,025		16,481	17,460	17,723	18,103
YoY growth	10	%	9	%	15	%	22	%


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Paid Enterprise Customers

We count the total number of Paid Enterprise Customers ~~that are active on our platform~~ at the end of each period. For purposes of determining our customer count, we treat each customer account that has a corresponding contract as a unique customer, and a single organization with multiple divisions, segments, or subsidiaries may be counted as multiple customers. We define a “Paid Enterprise Customer” as a customer who purchases Coursera via our direct sales force. For purposes of determining our Paid Enterprise Customer count, we exclude our Enterprise customers who do not purchase Coursera via our direct sales force, which include organizations engaging on our platform through our Coursera for Teams offering or through our channel partners. For the year ended December 31, ~~2021,~~2023, approximately ~~85%~~94% of our total Enterprise ~~Segment Revenue~~segment revenue was generated from our Paid Enterprise Customers. We believe that the number of Paid Enterprise Customers and our ability to increase this number is an important indicator of the growth of our Enterprise ~~segment~~business and future Enterprise ~~Segment Revenue~~segment revenue trends.

As of December 31,

2020

2021

Paid Enterprise Customers

387

803

YoY Growth

107
%


	December 31,
	2023		2022
Paid Enterprise Customers	1,369		1,149
YoY growth	19	%

Net Retention Rate for Paid Enterprise Customers

We disclose Net Retention Rate for Paid Enterprise Customers as a supplemental measure of our Enterprise revenue growth. We believe Net Retention Rate for Paid Enterprise Customers is an important metric that provides insight into the long-term value of our subscription agreements and our ability to retain and grow revenue from our Paid Enterprise Customers.

We calculate annual recurring revenue (“ARR”) by annualizing each customer’s monthly recurring revenue (“MRR”) for the most recent month at period end. We calculate “Net Retention Rate” as of a period end by starting with the ARR from all Paid Enterprise Customers as of the ~~twelve~~12 months prior to such period end or (“Prior Period ~~ARR.~~ARR”). We then calculate the ARR from these same Paid Enterprise Customers as of the current period end or (“Current Period ~~ARR.~~ARR”). Current Period ARR includes expansion within Paid Enterprise Customers and is net of contraction or attrition over the trailing ~~twelve~~12 months but excludes revenue from new Paid Enterprise Customers in the current period. We then divide the total Current Period ARR by the total Prior Period ARR to arrive at our Net Retention Rate for Paid Enterprise Customers. ~~Our Net Retention Rate for Paid Enterprise Customers decreased from 114% as of December 31, 2020 to 110% as of December 31, 2021.~~ Our Net Retention Rate for Paid Enterprise Customers is expected to fluctuate in future periods due to a number of factors, including the growth of our revenue base, the penetration within our Paid Enterprise Customer base, expansion of products and features, and our ability to retain our Paid Enterprise Customers.


	Year Ended December 31,
	2023		2022
Net Retention Rate for Paid Enterprise Customers	98	%	108	%
YoY change	(9)	%

~~Table of Contents~~


Table of Contents

Segment Revenue

~~Our~~

We generate revenue ~~is generated~~ from our three ~~sources:~~reportable segments: Consumer, Enterprise, and ~~Degrees, each of which is an individual segment of our business. “Segment Revenue” represents the revenue recognized from each of these three sources.~~

Year Ended December 31,

2019

2020

2021

(in thousands, except percentages)

Consumer Revenue

$
121,011

$
192,909

$
246,187

YoY Growth

59
%

28
%
Enterprise Revenue

$
48,262

$
70,784

$
120,429

YoY Growth

47
%

70
%
Degrees Revenue

$
15,138

$
29,818

$
48,671

YoY Growth

97
%

63
%
Total Revenue

$
184,411

$
293,511

$
415,287

YoY Growth

59
%

41
%

Degrees.


	Year Ended December 31,
	2023			2022			2021
	(in thousands, except percentages)
Consumer revenue	$	365,221		$	295,583		$	246,187
YoY growth	24		%	20		%
Enterprise revenue	$	219,542		$	181,284		$	120,429
YoY growth	21		%	51		%
Degrees revenue	$	51,001		$	46,889		$	48,671
YoY growth	9		%	(4)		%
Total revenue	$	635,764		$	523,756		$	415,287
YoY growth	21		%	26		%

Segment Gross Profit

We monitor ~~Segment Gross Profit~~segment gross profit as a key metric to help us evaluate the financial performance of our individual segments. ~~“Segment Gross Profit” is defined as~~ Segment ~~Revenue~~gross profit represents segment revenue less content costs paid to educator partners; ~~“Segment Gross Margin”~~segment gross margin is the quotient of ~~Segment Gross Profit and Segment Revenue.~~segment gross profit divided by segment revenue. Content costs only apply to the Consumer and Enterprise segments as there is no content cost attributable to the Degrees segment. Instead, in the Degrees segment, we earn a Degrees service fee based on a percentage of the total online student tuition collected by the university partner. Given that content costs are the largest individual cost of our revenue, and that these costs contractually vary as a percentage of revenue between our Consumer and Enterprise offerings ~~and the fact that~~while there are no content costs ~~are payable in~~attributable to our Degrees ~~offerings,~~offering, mix shifts ~~in mix~~ between our three segments is expected to be a significant driver of our overall gross margin, financial performance, and profitability.

Year Ended December 31,

2019

2020

2021

(in thousands, except percentages)

Consumer Gross Profit

$
64,645

$
106,509

$
161,510

Segment Gross Margin %

55
%

66
%
Enterprise Gross Profit

$
34,184

$
48,972

$
81,253

Segment Gross Margin %

69
%

67
%
Degrees Gross Profit

$
15,138

$
29,818

$
48,671

Segment Gross Margin %

100
%

100
%


	Year Ended December 31,
	2023			2022			2021
	(in thousands, except percentages)
Consumer gross profit	$	193,001		$	214,305		$	161,510
Consumer segment gross margin %	53		%	73		%
Enterprise gross profit	$	150,384		$	126,573		$	81,253
Enterprise segment gross margin %	68		%	70		%
Degrees gross profit	$	51,001		$	46,889		$	48,671
Degrees segment gross margin %	100		%	100		%

Consumer ~~Segment Gross Margin increased from 55%~~segment gross margin decreased to 53% in the year ended December 31, ~~2020 to 66%~~2023 from 73% in the year ended December 31, ~~2021~~2022. Content costs were higher mainly due to the extension of a ~~greater proportion of Consumer Revenue generated~~multi-year agreement with our largest educator partner. During the three months ended March 31, 2023, our largest educator partner started earning typical content fees, whereas we had historically supported their program primarily through marketing and content production efforts.

Enterprise segment gross margin decreased to 68% from ~~sales of subscriptions with no associated content cost. Conversely, Enterprise Segment Gross Margin decreased from 69% to 67%~~70% when comparing ~~the~~those same periods due to ~~a lower proportion of Enterprise Revenue generated from subscription licenses where learners enrolled~~an increase in content costs from the extension of the multi-year agreement with ~~no associated content cost.~~

our largest educator partner described above.


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Non-GAAP Financial Measures

In addition to our results determined in accordance with GAAP, we have included non-GAAP gross profit, non-GAAP net ~~loss,~~income (loss), non-GAAP net income (loss) per share, Adjusted EBITDA, Adjusted EBITDA Margin, and Free Cash Flow, which are non-GAAP financial measures, because they are key measures used by our management to help us analyze our financial results, establish budgets and operational goals for managing our business, evaluate our performance, and make strategic decisions. ~~Accordingly, we believe that these non-GAAP~~Non-GAAP financial measures ~~provide useful information~~are not meant to ~~investors~~be considered in isolation or as a substitute for, or superior to, comparable GAAP financial measures and ~~others~~should be read only in ~~understanding and evaluating~~conjunction with our ~~operating results~~Consolidated Financial Statements prepared in ~~the same manner as our management and board of directors. In addition, we believe these measures are useful for period-to-period comparisons of our business. We also believe that the~~accordance with GAAP. Our presentation of these non-GAAP financial measures provides an additional tool for investors to use in comparing our core business and results of operations over multiple periods with other companies in our industry, many of which present similar non-GAAP financial measures to investors, and to analyze our cash performance. However, the non-GAAP financial measures may not be comparable to ~~similarly titled~~similar measures ~~reported~~used by other ~~companies due~~companies. We encourage investors to ~~differences in~~carefully consider our results under GAAP, as well as our supplemental non-GAAP information and the ~~way that these measures are calculated.~~

~~Table~~reconciliations of ~~Contents~~

~~Limitations of Non-GAAP Measures~~

~~These~~GAAP to non-GAAP financial measures ~~are not prepared in accordance with GAAP, are supplemental in nature, and are not intended, and should not be construed, as the sole measure of~~to more fully understand our performance, and should not be considered in isolation from or as a substitute for comparable financial measures prepared in accordance with GAAP. There are a number of limitations related to non-GAAP gross profit, non-GAAP net loss, Adjusted EBITDA, Adjusted EBITDA Margin, and Free Cash Flow, including the following:


	•		Adjusted EBITDA and Adjusted EBITDA Margin exclude certain recurring, non-cash charges, such as depreciation of property and equipment and/or amortization of intangible assets. While these are non-cash charges, we may need to replace the assets being depreciated and amortized in the future and Adjusted EBITDA and Adjusted EBITDA Margin do not reflect cash requirements for these replacements or new capital expenditure requirements.


	•		Adjusted EBITDA and Adjusted EBITDA Margin do not reflect interest income, net, which consists of interest income earned on our cash, cash equivalents, and marketable securities and amortization of premiums and accretion of discounts related to our marketable securities, offset by interest expense.


	•		Non-GAAP gross profit, non-GAAP net loss, Adjusted EBITDA and Adjusted EBITDA Margin exclude stock-based compensation and payroll tax expense related to stock-based activities, which have been significant recurring expenses and will continue to constitute significant recurring expenses for the foreseeable future, as equity awards are expected to continue to be an important component of our compensation strategy.


	•		~~Free Cash Flow does not reflect our future contractual commitments, and it does not represent the total increase or decrease in our cash balance for a given period.~~

Because of these limitations, you should consider non-GAAP gross profit, non-GAAP net loss, Adjusted EBITDA, Adjusted EBITDA Margin, and Free Cash Flow alongside other financial performance measures, including gross margin, net loss, and our other GAAP results.

business.

Non-GAAP Gross Profit, Non-GAAP Net Income (Loss), and Non-GAAP Net ~~Loss~~

Income (Loss) Per Share

We ~~define~~define non-GAAP gross profit and non-GAAP net ~~loss~~income (loss) as GAAP gross profit and GAAP net loss excluding the impact of stock-based compensation ~~and~~expense, amortization of stock-based compensation capitalized as internal-use software costs, payroll tax expense related to stock-based ~~activities.~~compensation, and restructuring related charges. Non-GAAP net income (loss) per share is calculated by dividing non-GAAP net income (loss) by the diluted weighted average shares of common stock outstanding. We believe the presentation of these adjusted operating results ~~that exclude these non-cash items~~ provides useful supplemental information to investors and facilitates the analysis ~~of our operating results~~ and comparison of our operating results across reporting periods.

~~Table of Contents~~

The following tables provide a reconciliation of GAAP gross profit and GAAP net loss, the most directly comparable GAAP financial measure, to non-GAAP gross profit and non-GAAP net income (loss):


	Year Ended December 31,
	2023		2022		2021
	(in thousands)
Gross profit	$	329,771	$	331,479	$	249,469
Stock-based compensation expense	2,593		3,089		2,092
Amortization of stock-based compensation capitalized as internal-use software costs	5,039		3,134		1,113
Payroll tax expense related to stock-based compensation	115		28		64
Non-GAAP gross profit	$	337,518	$	337,730	$	252,738


	Year Ended December 31,
	2023		2022		2021
	(in thousands)
Net loss	$	(116,554)	$	(175,357)	$	(145,215)
Stock-based compensation expense	115,175		110,663		91,183
Amortization of stock-based compensation capitalized as internal-use software costs	5,039		3,134		1,113
Payroll tax expense related to stock-based compensation	3,957		1,120		1,643
Restructuring related charges	(5,806)		10,149		—
Non-GAAP net income (loss)	$	1,811	$	(50,291)	$	(51,276)
Weighted-average shares used in computing net loss per share—basic	150,957,814		145,263,726		113,587,523
Effect of dilutive securities(1)	15,626,795		—		—
Weighted-average shares used in computing non-GAAP net income (loss) per share—diluted	166,584,609		145,263,726		113,587,523
Net loss per share—basic and diluted	$	(0.77)	$	(1.21)	$	(1.28)
Non-GAAP net income (loss) per share—diluted	$	0.01	$	(0.35)	$	(0.45)

(1) For periods presented with a non-GAAP net loss, ~~(in thousands, except number~~we have excluded the effect of ~~shares and per share amounts):~~

Year Ended December 31, 2019

GAAP

Stock-based compensation

Payroll tax expense related to stock-based activities

Non-GAAP

Revenue
$
184,411

$
—

$
—

$
184,411

Cost of revenue

89,589

(491
)

—

89,098

Gross profit

94,822

491

—

95,313

Operating expenses:

Research and development

56,364

(7,038
)

(23
)

49,303

Sales and marketing

57,042

(3,189
)

(34
)

53,819

General and administrative

29,810

(5,599
)

(73
)

24,138

Total operating expenses

143,216

(15,826
)

(130
)

127,260

Loss from operations

(48,394
)

16,317

130

(31,947
)

Interest income

3,282

—

—

3,282

Interest expense

(625
)

—

—

(625
)

Other income (expense), net

(264
)

—

—

(264
)

Loss before income taxes

(46,001
)

16,317

130

(29,554
)

Income tax expense

718

—

—

718

Net loss
$
(46,719
)
$
16,317

$
130

$
(30,272
)

Net loss per share attributable to common stockholders—basic and diluted
$
(1.45
)

$
(0.94
)

Weighted-average shares used in computing net loss per share attributable to common stockholders—basic and diluted

32,276,258

32,276,258

Year Ended December 31, 2020

GAAP

Stock-based compensation

Payroll tax expense related to stock-based activities

Non-GAAP

Revenue
$
293,511

$
—

$
—

$
293,511

Cost of revenue

138,846

(516
)

—

138,330

Gross profit

154,665

516

—

155,181

Operating expenses:

Research and development

76,784

(6,960
)

(31
)

69,793

Sales and marketing

107,249

(4,097
)

(22
)

103,130

General and administrative

37,215

(5,234
)

(205
)

31,776

Total operating expenses

221,248

(16,291
)

(258
)

204,699

Loss from operations

(66,583
)

16,807

258

(49,518
)

Interest income

1,175

—

—

1,175

Interest expense

(12
)

—

(12
)

Other income (expense), net

120

—

—

120

Loss before income taxes

(65,300
)

16,807

258

(48,235
)

Income tax expense

1,515

—

—

1,515

Net loss
$
(66,815
)
$
16,807

$
258

$
(49,750
)

Net loss per share attributable to common stockholders—basic and diluted
$
(1.80
)

$
(1.34
)

Weighted-average shares used in computing net loss per share attributable to common stockholders—basic and diluted

37,207,492

37,207,492

potentially dilutive securities as their inclusion would be anti-dilutive.

~~Table of Contents~~

Year Ended December 31, 2021

GAAP

Stock-based compensation

Payroll tax expense related to stock-based activities

Non-GAAP

Revenue
$
415,287

$
—

$
—

$
415,287

Cost of revenue

165,818

(2,092
)

(64
)

163,662

Gross profit

249,469

2,092

64

251,625

Operating expenses:

Research and development

135,410

(42,783
)

(755
)

91,872

Sales and marketing

179,337

(25,992
)

(248
)

153,097

General and administrative

77,785

(20,316
)

(576
)

56,893

Total operating expenses

392,532

(89,091
)

(1,579
)

301,862

Loss from operations

(143,063
)

91,183

1,643

(50,237
)
Interest income

320

—

—

320

Other income (expense), net

(346
)

—

—

(346
)
Loss before income taxes

(143,089
)

91,183

1,643

(50,263
)
Income tax expense

2,126

—

—

2,126

Net loss
$
(145,215
)
$
91,183

$
1,643

$
(52,389
)
Net loss per share attributable to common stockholders—basic and diluted
$
(1.28
)

$
(0.46
)
Weighted-average shares used in computing net loss per share attributable to common stockholders—basic and diluted

113,587,523

113,587,523


Table of Contents

Adjusted EBITDA and Adjusted EBITDA Margin

“

Adjusted ~~EBITDA”~~EBITDA and ~~“Adjusted~~Adjusted EBITDA ~~Margin”, which are non-GAAP financial measures,~~Margin are key measures used by our management to help us analyze our financial results, establish ~~budget~~budgets and operational goals for managing our business, evaluate our performance, and make strategic decisions.

We define Adjusted EBITDA as our net loss excluding: ~~(1)~~(i) depreciation and amortization; ~~(2)~~(ii) interest income, net; ~~(3) stock-based compensation; (4)~~(iii) income tax expense; ~~and (5)~~(iv) other expense, net; (v) stock-based compensation expense; (vi) payroll tax expense related to stock-based ~~activities.~~compensation; and (vii) restructuring related charges. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue.

The following table provides a reconciliation of net loss, the most directly comparable GAAP financial measure, to Adjusted ~~EBITDA.~~

Year Ended December 31,

2019

2020

2021

(in thousands, except percentages)

Net loss

$
(46,719
)

$
(66,815
)

$
(145,215
)
      Depreciation and amortization

5,282

9,585

14,757

      Interest income, net

(2,657
)

(1,163
)

(320
)
      Stock-based compensation

16,317

16,807

91,183

      Income tax expense

718

1,515

2,126

      Payroll tax expense related to stock-based activities

130

258

1,643

Adjusted EBITDA

$
(26,929
)

$
(39,813
)

$
(35,826
)
Adjusted EBITDA Margin

(15
)%

(14
)%

(9
)%

EBITDA:


	Year Ended December 31,
	2023		2022		2021
	(in thousands, except percentages)
Net loss	$	(116,554)	$	(175,357)	$	(145,215)
Depreciation and amortization	22,270		18,503		14,757
Interest income, net	(34,432)		(9,144)		(320)
Income tax expense	5,371		4,720		2,126
Other expense, net	19		2,401		346
Stock-based compensation expense	115,175		110,663		91,183
Payroll tax expense related to stock-based compensation	3,957		1,120		1,643
Restructuring related charges	(5,806)		10,149		—
Adjusted EBITDA	$	(10,000)	$	(36,945)	$	(35,480)


Net loss margin	(18)	%	(33)	%	(35)	%
Adjusted EBITDA Margin	(2)	%	(7)	%	(9)	%

Free Cash Flow

“

Free Cash ~~Flow”~~Flow is ~~a non-GAAP financial measure that we calculate~~calculated as net cash provided by (used in) ~~provided by~~ operating activities, less cash used for purchases of property, equipment, and software, ~~and capitalized internal-use software costs. We exclude purchases of property, equipment and software, and~~ capitalized internal-use software costs, and purchases of content assets as we consider these capital expenditures necessary to ~~be a necessary component of~~support our ongoing operations.

~~Table~~ Current and prior period Free Cash Flow amounts reported herein reflect the change to our definition of ~~Contents~~

Free Cash Flow to include purchases of content assets.

We consider Free Cash Flow to be a liquidity measure that provides useful information to management and investors in understanding and evaluating our liquidity and future ability to generate cash that can be used for strategic opportunities, including investing in our business and strengthening our balance sheet, but it is not intended to represent the residual cash flow available for discretionary expenditures.


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The following table provides a reconciliation of net cash provided by (used in) operating activities, the most directly comparable GAAP financial measure, to Free Cash ~~Flow.~~

Year Ended December 31,

2019

2020

2021

(in thousands)

Net cash provided by (used in) operating activities

$
(21,334
)

$
(14,991
)

$
1,746

Less: purchases of property, equipment and software

(4,410
)

(3,099
)

(1,554
)
Less: capitalized internal-use software costs

(5,522
)

(8,819
)

(12,090
)
Free Cash Flow

$
(31,266
)

$
(26,909
)

$
(11,898
)
Net cash used in investing activities

$
(64,886
)

$
(101,442
)

$
(51,609
)
Net cash provided by financing activities

$
113,381

$
139,014

$
550,156

Flow:


	Year Ended December 31,
	2023		2022		2021
	(in thousands)
Net cash provided by (used in) operating activities	$	29,639	$	(38,051)	$	1,746
Less: purchases of property, equipment, and software	(1,147)		(1,578)		(1,554)
Less: capitalized internal-use software costs	(15,254)		(12,299)		(12,090)
Previously reported Free Cash Flow			$	(51,928)	$	(11,898)
Less: purchases of content assets	(5,344)		(1,377)		(1,188)
Free Cash Flow	$	7,894	$	(53,305)	$	(13,086)

Critical Accounting Estimates

Our ~~consolidated financial statements~~Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the ~~United States~~U.S. (“GAAP”). The preparation of these ~~consolidated financial statements~~Consolidated Financial Statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Actual results may differ from these estimates. To the extent ~~that~~ there are material differences between these estimates and our actual results, our ~~future~~ financial ~~statements~~position and results of operations will be affected.

~~The~~

We believe that of our significant accounting policies described in Note 2, “Significant Accounting Policies”, in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K, the critical accounting ~~policies requiring~~ estimates, assumptions, and judgments that ~~we believe~~ have the most significant impact on our ~~consolidated financial statements~~Consolidated Financial Statements are described below. ~~See Note 2 to the consolidated financials included in Part II, Item 8, "Financial Statements and Supplementary Data", for a description of our other significant accounting policies.~~

Revenue Recognition

We derive revenue from contracts with customers for access to the learning content hosted on our platform and related services. We derive our revenue from three sources: Consumer, Enterprise, and Degrees.

~~Consumer Revenue~~—We generate revenue from the sale of access to course content to consumers. Consumer offerings include certifications for single courses, Specializations, and catalog-wide subscriptions. Access to single courses are generally purchased at a fixed price for a set period of time, typically six months. Specializations are a series of related courses offered by the same educator partner where learners are provided access to these courses on a month-to-month subscription basis. Coursera Plus is our catalog-wide consumer subscription offering and it is sold in the form of a monthly or annual subscription. All contracts with Consumer customers are billed in advance, generally after a 7-day free trial period. We recognize revenue ratably over the contracted period, after access has been granted to the consumer, as learners have unlimited access to the course content during the contracted period. Consumer learners are entitled to a full refund up to two weeks after payment is received. We estimate and establish a refund reserve based on historical refund rates.

~~Enterprise Revenue~~—We sell subscription licenses to business, government, and university customers that provide users the ability to enroll in courses and Specializations and receive certifications upon completion. Enterprise contracts are typically between one and three years in length and can consist of either a fixed quantity of seat licenses, each of which allows for unlimited course enrollments by one learner for each year, or the purchase of a quantity of course enrollments. In either contract type, we recognize revenue ratably over the contracted period, after access has been granted to the Enterprise customer, as learners have unlimited access to the course content during the contracted period.

We are the principal with respect to revenue generated from sales to Consumer and Enterprise customers as we control the performance obligation and are the primary obligor with respect to delivering access to course content. Additionally, we have inventory risk through recoupable advances sometimes paid to educator partners.

~~Table of Contents~~

~~Degrees Revenue~~—University partners contract with us for the delivery of bachelor’s and master’s degrees or postgraduate diplomas awarded by the university. Our Degrees revenue contracts involve the performance of a number of promises, including but not limited to hosting the content on our learning platform, providing content authoring tools, course production support, and marketing and platform technical support services. As a result, the university partner is our customer with respect to Degrees revenue. We earn a Degrees service fee that is determined based as a percentage of total tuition collected from Degrees students, net of refunds, by the university partner. Degrees revenue is earned and paid by the university partner for each university term. As a result, revenue generated from each term is recognized ratably from the start of a term through the start of the following term.

The Degrees learning experience is delivered on the same proprietary learning platform used by Consumer and Enterprise learners. There is no direct contractual revenue arrangement between us and Degrees students, who contract directly with the university partners. University partners typically have additional performance obligations to the Degrees students in the form of designing the curriculum, setting admission criteria, real-time teaching, making admission and financial aid decisions, independently awarding credits, certificates or degrees, and academic or career counseling. Although some MasterTrack Certificate learners are required to accept the terms and conditions prior to tuition payment, the Company's core performance obligations remain similar to the services provided to university partners for their online bachelor’s and master’s degrees or postgraduate diplomas. For these reasons, the university partners control the delivery of degrees hosted on our platform. As a result, we recognize Degrees revenue as the service fee we receive from the university partner.

~~For all customers, revenue from contracts is recognized when control of promised services is transferred. The amount of revenue~~

recognized reflects the consideration that we expect to be entitled to receive in exchange for these services. We determine revenue recognition in accordance with Accounting Standards Codification (“ASC”) 606 through the following five steps:

~~1) Identify the contract with a customer~~

We determine a contract with a customer to exist when the contract is approved, each party’s rights regarding the services to be transferred can be identified, the payment terms for the services can be identified, the customer has the ability and intent to pay, and the contract has commercial substance. At contract inception, we evaluate whether two or more contracts should be combined and accounted for as a single contract and whether the combined or single contract includes more than one performance obligation. We apply judgment in determining the customer’s ability and intent to pay, which is based on a variety of factors, including the customer’s historical payment experience or, in the case of a new customer, credit and financial information pertaining to the customer. Consumer customers are required to pay in advance either prior to our providing access to course content or prior to the expiration of a 7-day free trial.

~~2) Identify the performance obligations in the contract~~

Performance obligations committed in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the services and the products is separately identifiable from other promises in the contract. Customers do not have the ability to take possession of the software supporting the platform and, as a result, contracts are accounted for as service arrangements.

For sales to Consumer and Enterprise customers, our performance obligation generally consists of providing access to our platform and related support services, which is considered one performance obligation. Access to our platform represents a series of distinct services, as we continually provide access to, and fulfill our obligation to, the customer over the contract term.

Degrees services involve the performance of a number of promises that include hosting the degree content on our platform, degree program management, marketing, and platform technical support services, each of which are a series of distinct services that are substantially the same, and satisfied over time using the same measure of progress and as a result are considered one performance obligation to stand ready to perform an online degree hosting service for the duration of the degree.

~~3) Determine the transaction price~~

The transaction price is determined based on the consideration to which we expect to be entitled in exchange for transferring services to the customer. Variable consideration is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue recognized under the contract will not occur. None of our contracts contain a significant financing component. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental entities (e.g., sales and other indirect taxes).

~~4) Allocate the transaction price to performance obligations in the contract~~

As noted above, for Consumer and Enterprise customers, access to our platform and related support services are considered one performance obligation in the context of the contract and accordingly, the transaction price is allocated to this single performance obligation. Similarly, Degrees services are considered one performance obligation and the transaction price is allocated to this single performance obligation.

~~Table of Contents~~

~~5) Recognize revenue when or as performance obligations are satisfied~~

Revenue is recognized at the time the related performance obligation is satisfied by transferring the control of the promised service to a customer. Revenue is recognized in an amount that reflects the consideration that we expect to receive in exchange for those services. Fees for access to our platform and related support services by Consumer and Enterprise customers are considered one performance obligation, and the related revenue is recognized on a straight-line basis over the contract term as we satisfy our performance obligation.

We have a stand ready obligation to perform Degrees services continually throughout the period that the degree content is hosted on our platform. Degrees revenue is received and paid by the university partner for each university term. As a result, revenue generated from each term is recognized ratably from the start of a term through the start of the following term.

~~Historically, and with the exceptions noted below, no significant judgment has generally been required in determining the amount and timing of revenue from our contracts with customers.~~

•

Determining whether we are the principal or agent in our revenue transactions requires significant judgment. ~~In reaching the conclusion, we considered~~We consider a range of indicators, including, but not limited to, who is primarily responsible for fulfilling the service, who has economic risk as a result of investing resources in advance of a sale transaction (“inventory risk”), and who has pricing discretion. As we control the performance obligation and are the primary obligor with respect to delivering access to course content for Consumer and Enterprise contracts and have inventory risk through recoupable advances paid to educator partners, we are the principal in such transactions. Conversely, asfor Degrees, the university partner controls the delivery of their degrees hosted on our platform, and we ~~recognize Degrees revenue as~~are the agent in these transactions recognizing only the service fee we receive from the university partner.

•

Our Degrees services revenue is determined based on a fee percentage applied to the total tuition collected from Degrees students, net of refunds, by the university partner. As a result, the revenue earned by us is dependent upon the number of learners enrolled and the tuition charged by the university partner. This is a form of variable consideration. We estimate ~~the amount of~~ revenue using an expected value method, ~~that~~which is based on what we expect to ~~be entitled to~~earn in return for our performance of the Degrees services, ~~subject to assessment~~reduced by the amount, if any, considered probable of ~~the significant~~reversing in a future ~~reversal constraint discussed above.~~period. These estimates are continually evaluated until such time as the uncertainties are resolved, generally at the time the final term enrollment report is provided by the university partner.

~~Common Stock Valuations~~

~~Subsequent~~

Recent Accounting Pronouncements

Refer to ~~our IPO in March 2021, the fair value of common stock was determined on the grant date using the closing price of the Company's common stock.~~

~~Prior to our IPO,~~ the fair value of the common stock underlying our stock-based awards had historically been determined by our board of directors, with input from management and corroboration from contemporaneous third-party valuations. We believed that our board of directors had the relevant experience and expertise to determine the fair value of our common stock. Given the absence of a public trading market of our common stock, and in accordance with the American Institute of Certified Public Accountants Practice Aid, ~~Valuation of Privately-Held Company Equity Securities Issued as Compensation~~Note 2, “Significant Accounting Policies”, our board of directors exercised reasonable judgment and considered numerous objective and subjective factors to determine the best estimate of the fair value of our common stock at each pre-IPO grant date. These factors include:


	•		~~contemporaneous valuations of our common stock performed by independent third-party specialists;~~


	•		~~the prices, rights, preferences, and privileges of our redeemable convertible preferred stock relative to those of our common stock;~~


	•		~~the prices paid for redeemable convertible preferred stock sold to third-party investors by us and prices paid in secondary transactions of common stock, including any tender offers;~~


	•		~~the lack of marketability inherent in our common stock;~~


	•		~~our actual operating and financial performance;~~


	•		~~our current business conditions and projections;~~


	•		~~the hiring of key personnel and the experience of our management;~~


	•		~~the history of the company and the introduction of new offerings;~~

~~Table of Contents~~


	•		~~our stage of development;~~


	•		~~the likelihood of achieving a liquidity event, such as an initial public offering (“IPO”), a merger, or acquisition of our company given prevailing market conditions;~~


	•		~~the operational and financial performance of comparable publicly traded companies; and~~


	•		~~the U.S. and global capital market conditions and overall economic conditions.~~

In valuing our common stock, the fair value of our business was determined using the income approach. The income approach estimates value based on the expectation of future cash flows that a company will generate. These future cash flows are discounted to their present values using a discount rate that is derived from an analysis of the cost of capital of comparable publicly traded companies in our industry or similar business operations as of each valuation date and is adjusted to reflect the risks inherent in our cash flows.

For each valuation, the fair value of our business determined by the income approach was then allocated to the common stock using either the option-pricing method (“OPM”), or the probability-weighted expected return method (“PWERM”). Our valuations prior to June 30, 2020 were allocated based on the OPM. Beginning June 30, 2020, our valuations were allocated based on the PWERM.

In addition, we considered any secondary transactions involving our capital stock. In our evaluation of those transactions, we considered the facts and circumstances of each transaction to determine the extent to which they represented a fair value exchange and assigned the transactions an appropriate weighting in the ~~valuation of our common stock. Factors considered include the number of different buyers and sellers, transaction volume, timing relative~~Notes to ~~the valuation date, whether the transactions occurred between willing and unrelated parties, and whether the transactions involved investors with access to our financial information.~~

Application of these approaches and methodologies involves the use of estimates, judgments, and assumptions that are highly complex and subjective, such as those regarding our expected future revenue, expenses, and future cash flows, discount rates, market multiples, the selection of comparable public companies, and the probability of and timing associated with possible future events.

~~Stock-Based Compensation~~

We measure and recognize compensation expense for all stock-based awards granted, primarily including stock options, and restricted stock units, or RSUs based on the estimated fair value on the date of the grant. The fair value of each option award is estimated on the grant date using the Black-Scholes option-pricing model. The fair value of each restricted stock unit is based on the fair value of our common stock on the date of grant. We estimate the fair value of the shares to be issued under our employee stock purchase plan, or ESPP using the Black-Scholes model at the commencement of an offering period. We recognize forfeitures as they occur.

The Black-Scholes option-pricing model is dependent upon several variables, such as the expected term, expected volatility of our stock price over the expected term, expected risk-free interest rate over the expected option term, and expected dividend yield rate over the expected term. These amounts are estimates and, thus, may not be reflective of actual future results, nor amounts ultimately realized by recipients of these grants. We recognize compensation expense on a straight-line basis over the requisite vesting period for each award.

~~The assumptions above are estimated as follows. Each of these assumptions is subjective and generally requires significant judgment to determine.~~

~~Fair Value of Common Stock~~—Prior to our IPO, the fair value was determined by our board of directors or a committee thereof. The board of directors or committee considers numerous objective and subjective factors to determine the fair value of our common stock each time awards are approved. Subsequent to our IPO, the fair value of our common stock is determined by the closing price, on the date of grant, of our common stock, which is traded on the New York Stock Exchange.

~~Expected Term~~—The expected term represents the period that our stock-based awards are expected to be outstanding. For option grants considered to be “plain vanilla,” we determined the expected term using the simplified method. The simplified method deems the term to be the average of the time to vesting and the contractual life of the options. For ESPP, the expected term represents the term from the first day of the offering period to the purchase date.

~~Risk-Free Interest Rate~~—The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for zero-coupon U.S. Treasury notes with maturities approximately equal to the expected term of the option or ESPP share.

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~~Expected Volatility~~—Since we do not have a trading history of our common stock, the expected volatility is derived from the average historical stock volatilities of several unrelated public companies within our industry that we consider to be comparable to our business over a period equivalent to the expected term of the stock option grants or ESPP shares.

~~Dividend Rate—The expected dividend was assumed to be zero as we have never paid dividends and have no current plans to do so.~~

We will continue to use judgment in evaluating the assumptions related to our stock-based compensation on a prospective basis. As we continue to accumulate additional data related to our common stock, we may refine our estimates, which could materially impact our future stock-based compensation expense.

~~Income Taxes~~

We are subject to income taxes in the United States and numerous foreign jurisdictions. Significant judgment is required in determining our income tax expense and deferred tax assets and liabilities, including evaluating uncertainties in the application of accounting principles and complex tax laws.

We record a provision for income taxes using the asset and liability method under which deferred tax assets and liabilities arise from the temporary differences between the tax basis of an asset or liability and our reported amount in the consolidated financial statements, as well as from net operating loss and tax credit carryforwards. Deferred tax amounts are determined by using the tax rates expected to be in effect when the taxes will actually be paid or refunds received, as provided for under currently enacted tax law. A valuation allowance is established if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. We consider all available evidence, both positive and negative, including historical levels of income, expectations, and risks associated with estimates of future taxable income in assessing the need for a valuation allowance.

We recognize tax benefits from uncertain tax positions based upon our estimate only if it is more likely than not that the tax position will be sustained upon examination by the taxing authority. We recognize interest and penalties related to income tax matters as income tax expense.

~~Recent Accounting Pronouncements~~

~~See Note 2 to our consolidated financial statements~~Consolidated Financial Statements included in Part II, Item 8 ~~"Financial Statements and Supplementary Data",~~of this Form 10-K for a discussion of recent accounting pronouncements.

~~JOBS Act Transition Period~~

We are an emerging growth company as defined in the JOBS Act. 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 elected to use the extended transition period under the JOBS Act for the adoption of certain accounting standards until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.


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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

We have operations both within the ~~United States~~U.S. and internationally, and we are exposed to market risks in the ordinary course of our business, including the effects of interest rate changes and foreign currency fluctuations. Information relating to quantitative and qualitative disclosures about these market risks is described below.

Interest Rate ~~Sensitivity~~

~~As of December 31, 2020,~~Risk

Our exposure to interest rate changes relates primarily to our investment portfolio. Although we ~~had $285.3 million of~~are exposed to global interest rate fluctuations, U.S. interest rate fluctuations tend to affect our interest income the most, impacting the interest earned on our cash, cash equivalents, and marketable securities ~~which consist~~as well as the fair value of ~~corporate debt, commercial paper~~those securities.

Our investment policy and strategy are focused on preserving capital and supporting our liquidity requirements. We use a combination of internal and external management to execute our investment strategy and achieve our investment objectives. We typically invest in highly-rated securities, such as U.S. Treasury securities, with original maturities between three months and ~~U.S. government Treasury bills. In addition,~~one year. Our primary objective is to minimize the potential risk of principal loss.

Based on our investment positions as of December 31, 2023 and 2022, a hypothetical 100 basis point increase in interest rates across all maturities would have resulted in a $0.5 million and $2.4 million incremental decline in the fair value of the portfolio. However, such losses would only be realized if we ~~had approximately $2.5 million~~sold the investments prior to their maturities.

Based on the balance of ~~restricted~~our cash, ~~primarily due to outstanding letters~~cash equivalents, and marketable securities as of ~~credit related to the operating lease agreement for our corporate headquarters. A~~December 31, 2023 and 2022, a hypothetical 100 basis point increase or decrease in interest rates would ~~not~~ have resulted in a ~~material impact on our consolidated financial statements.~~

~~Table of Contents~~

~~As of December 31, 2021, we had $821.8~~$7.2 million ~~of cash, cash equivalents,~~ and ~~marketable securities which consist of U.S. government Treasury bills. In addition, we had approximately $2.1~~$7.8 million of restricted cash due to outstanding letters of credit related to the operating lease agreement for our corporate headquarters. Our cash, cash equivalents, and marketable securities are held for working capital purposes. A hypothetical 100 basis point increase ~~and~~or decrease in our interest ~~rates would have resulted in decrease of $2.0 million and immaterial increase, respectively, in the market value of our cash equivalents and marketable securities as of December 31, 2021.~~

income on an annualized basis.

Foreign Currency Risk

Our reporting currency and the functional currency of our wholly owned foreign subsidiaries is the U.S. dollar. ~~The~~As the majority of our sales are denominated in U.S. ~~dollars; therefore,~~dollars, our revenue is not ~~currently subject~~typically exposed to significant foreign currency risk. ~~Our~~Conversely, our operating expenses are typically denominated in the local currencies of the countries in which our operations are ~~located and may~~located. These can be subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the ~~Pound Sterling,~~British pound sterling, Canadian ~~Dollar,~~dollar, and Indian ~~Rupee.~~rupee.

We also maintain foreign-currency denominated cash and cash equivalents in our foreign entities to support their ongoing operations. Fluctuations in foreign currency exchange rates may cause us to recognize transaction gains and losses in our ~~consolidated statement~~Consolidated Statements of ~~operations.~~Operations. To date, we have not entered into any hedging arrangements with respect to foreign currency risk or other derivative financial instruments, although we may choose to do so in the future. A 10% increase or decrease in current exchange rates would have resulted in an impact of $3.4 million and ~~$6.6~~$5.6 million on our ~~consolidated financial statements~~Consolidated Financial Statements for the years ended December 31, ~~2020~~2023 and ~~2021, respectively.~~

2022.

~~Table of Contents~~


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Item 8. Financial Statements and Supplementary Data

Index to Consolidated Financial Statements


~~Report~~Reports of Independent Registered Public Accounting Firm (PCAOB ID No. 34))			7884
Consolidated Balance Sheets			7987
Consolidated Statements of Operations			8088
Consolidated Statements of Comprehensive Loss			8189
Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)			8290
Consolidated Statements of Cash Flows			8391
Notes to Consolidated Financial Statements			8492

~~Table of Contents~~


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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of Coursera, Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Coursera, Inc. and subsidiaries (the “Company”) as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013)

issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in

Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023, of the Company and our report dated February 22, 2024, expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ DELOITTE & TOUCHE LLP

San Jose, California

February 22, 2024


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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of Coursera, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Coursera, Inc. and subsidiaries (the ~~"Company"~~“Company”) as of December 31, ~~2020~~2023 and ~~2021,~~2022, the related consolidated statements of operations, comprehensive loss, redeemable convertible preferred stock and ~~stockholders'~~stockholders’ equity (deficit), and cash flows, for each of the three years in the period ended December 31, ~~2021,~~2023, and the related notes (collectively referred to as the ~~"financial statements"~~“financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2020~~2023 and ~~2021,~~2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2021,~~2023, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in

Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 22, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the ~~Company's~~Company’s management. Our responsibility is to express an opinion on the ~~Company's~~Company’s financial statements based on our audits. We are a public accounting firm registered with the ~~Public Company Accounting Oversight Board (United States) (PCAOB)~~PCAOB and are required to be independent with respect to the Company in accordance with the USU.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the ~~audits~~audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition - Refer to Notes 2 and 3 to the financial statements

Critical Audit Matter Description

The Company recognizes revenue from contracts with customers for access to the learning content hosted on its platform and related services. The Company’s Enterprise revenue is generated through the sale of subscription licenses to businesses, organizations, governments, and educational institutions that provide their learners with the ability to enroll in courses and Specializations and receive certifications upon completion. Enterprise contracts consist of selling a fixed quantity of catalog licenses that grant each learner access to the Company’s learning platform and unlimited course enrollments over the license term. For higher value Enterprise contracts, management applies judgment in identifying and evaluating the terms and conditions of such contracts that impact revenue recognition.


Table of Contents

Given the complexity of the Company’s higher value Enterprise contracts, together with the judgments involved in identifying and evaluating the terms and conditions impacting revenue recognition, auditing management’s identification and evaluation of the terms and conditions within such contracts and the resulting impact on revenue recognition required a high degree of auditor judgment and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to management’s identification and evaluation of the terms and conditions within higher value Enterprise contracts and the resulting impact on revenue recognition included the following, among others:

•

We tested the operating effectiveness of internal controls over revenue recognition, including those over the identification and evaluation of terms and conditions and the resulting impact on revenue recognition.

•We selected a sample of higher value Enterprise revenue contracts and performed the following:

◦Obtained the related contract, including master agreements, amendments, and purchase and sales order agreements, and evaluated whether management properly documented the terms of the contract in accordance with the Company’s accounting policies.

◦Assessed management’s identification and evaluation of the terms and conditions that impact revenue recognition by independently evaluating the terms and conditions of the contract and the resulting impact on revenue recognition.

/s/ DELOITTE & TOUCHE LLP

San Jose, California

~~March 3, 2022~~

February 22, 2024

We have served as the Company's auditor since 2013.

~~Table of Contents~~


Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

COURSERA, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

December 31,
2020

December 31,
2021

Assets

Current assets:

Cash and cash equivalents

$
79,878

$
580,658

Marketable securities

205,402

241,117

Accounts receivable, net of allowance for doubtful accounts of $48 and $105 as of December 31, 2020 and 2021, respectively

40,721

34,396

Deferred costs

14,077

19,666

Prepaid expenses and other current assets

14,993

16,494

Total current assets

355,071

892,331

Property, equipment and software, net

18,644

24,725

Operating lease right-of-use assets

21,622

16,321

Intangible assets, net

10,570

10,091

Restricted cash

2,548

2,061

Other assets

9,169

13,381

Total assets

$
417,624

$
958,910

Liabilities, Redeemable Convertible Preferred Stock, and Stockholders’ Equity (Deficit)

Current liabilities:

Educator partners payable

$
39,005

$
49,206

Other accounts payable and accrued expenses

12,897

23,257

Accrued compensation and benefits

12,997

18,353

Operating lease liabilities, current

7,926

8,031

Deferred revenue, current

76,080

94,637

Other current liabilities

4,739

7,639

Total current liabilities

153,644

201,123

Operating lease liabilities, non-current

18,305

11,864

Other liabilities

644

559

Deferred revenue, non-current

4,562

3,851

Total liabilities

177,155

217,397

Commitments and contingencies (Note 11)

Redeemable convertible preferred stock:

$0.00001 par value— 76,420,805 and 0 shares authorized as of December 31, 2020 and 2021, respectively; 75,305,400 and 0 shares issued and outstanding as of December 31, 2020 and 2021, respectively; and aggregate liquidation preference, $464,036 and 0 as of December 31, 2020 and 2021, respectively

462,293

0

Stockholders’ equity (deficit):

Preferred stock, $0.00001 par value— 0 and 10,000,000 shares authorized as of December 31, 2020 and 2021, respectively; 0 shares issued and outstanding as of December 31, 2020 and 2021

0

0

Common stock, $0.00001 par value— 162,000,000 and 300,000,000 shares authorized as of December 31, 2020 and 2021, respectively; 40,301,290 and 141,906,041 shares issued and outstanding as of December 31, 2020 and 2021, respectively

0

1

Additional paid-in capital

126,408

1,235,231

Treasury stock— at cost, 2,747,938 shares as of December 31, 2020 and 2021

(4,701
)

(4,701
)
Accumulated other comprehensive income (loss)

20

(252
)
Accumulated deficit

(343,551
)

(488,766
)
Total stockholders’ equity (deficit)

(221,824
)

741,513

Total liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit)

$
417,624

$
958,910


	December 31, 2023		December 31, 2022

Assets
Current assets:
Cash and cash equivalents	$	656,321	$	320,817
Marketable securities	65,746		459,654
Accounts receivable, net of allowance for credit losses of $133 and $495 as of December 31, 2023 and December 31, 2022	67,418		53,734
Deferred costs, net	26,387		24,147
Prepaid expenses and other current assets	16,614		17,636
Total current assets	832,486		875,988
Property, equipment, and software, net	30,408		27,096
Operating lease right-of-use assets	4,739		9,605
Intangible assets, net	11,720		8,553
Other assets	41,180		26,355
Total assets	$	920,533	$	947,597

Liabilities and Stockholders’ Equity
Current liabilities:
Educator partners payable	$	101,041	$	66,375
Other accounts payable and accrued expenses	23,456		23,342
Accrued compensation and benefits	22,281		21,163
Operating lease liabilities, current	6,557		8,658
Deferred revenue, current	137,229		115,701
Other current liabilities	7,696		7,202
Total current liabilities	298,260		242,441
Operating lease liabilities, non-current	39		5,791
Deferred revenue, non-current	2,861		3,076
Other liabilities	3,179		1,714
Total liabilities	304,339		253,022
Commitments and contingencies (Note 9)
Stockholders’ equity:
Preferred stock, $0.00001 par value—10,000,000 shares authorized as of December 31, 2023 and December 31, 2022; no shares issued and outstanding as of December 31, 2023 and December 31, 2022	—		—
Common stock, $0.00001 par value—300,000,000 shares authorized as of December 31, 2023 and December 31, 2022; 162,898,279 shares issued and 155,320,538 shares outstanding as of December 31, 2023, and 150,683,607 shares issued and 147,935,669 shares outstanding as of December 31, 2022	2		1
Additional paid-in capital	1,459,964		1,364,116
Treasury stock, at cost—7,577,741 and 2,747,938 shares as of December 31, 2023 and December 31, 2022	(63,154)		(4,701)
Accumulated other comprehensive income (loss)	59		(718)
Accumulated deficit	(780,677)		(664,123)
Total stockholders’ equity	616,194		694,575
Total liabilities and stockholders’ equity	$	920,533	$	947,597

See notes to ~~consolidated financial statements.~~

Consolidated Financial Statements.

~~Table of Contents~~


Table of Contents

COURSERA, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(In thousands, except share and per share data)

Year Ended December 31,

2019

2020

2021

Revenue

$
184,411

$
293,511

$
415,287

Cost of revenue

89,589

138,846

165,818

Gross profit

94,822

154,665

249,469

Operating expenses:

Research and development

56,364

76,784

135,410

Sales and marketing

57,042

107,249

179,337

General and administrative

29,810

37,215

77,785

Total operating expenses

143,216

221,248

392,532

Loss from operations

(48,394
)

(66,583
)

(143,063
)
Interest income

3,282

1,175

320

Interest expense

(625
)

(12
)

0

Other income (expense), net

(264
)

120

(346
)
Loss before income taxes

(46,001
)

(65,300
)

(143,089
)
Income tax expense

718

1,515

2,126

Net loss

$
(46,719
)

$
(66,815
)

$
(145,215
)
Net loss per share attributable to common stockholders—basic and diluted

$
(1.45
)

$
(1.80
)

$
(1.28
)
Weighted-average shares used in computing net loss per share attributable to common stockholders—basic and diluted

32,276,258

37,207,492

113,587,523


	Year Ended December 31,
	2023		2022		2021
Revenue	$	635,764	$	523,756	$	415,287
Cost of revenue	305,993		192,277		165,818
Gross profit	329,771		331,479		249,469
Operating expenses:
Research and development	160,077		165,134		135,410
Sales and marketing	222,771		227,676		179,337
General and administrative	98,325		105,900		77,785
Restructuring related charges	(5,806)		10,149		—
Total operating expenses	475,367		508,859		392,532
Loss from operations	(145,596)		(177,380)		(143,063)
Interest income, net	34,432		9,144		320
Other expense, net	(19)		(2,401)		(346)
Loss before income taxes	(111,183)		(170,637)		(143,089)
Income tax expense	5,371		4,720		2,126
Net loss	$	(116,554)	$	(175,357)	$	(145,215)
Net loss per share—basic and diluted	$	(0.77)	$	(1.21)	$	(1.28)
Weighted average shares used in computing net loss per share—basic and diluted	150,957,814		145,263,726		113,587,523

See notes to ~~consolidated financial statements.~~

Consolidated Financial Statements.

~~Table of Contents~~


Table of Contents

COURSERA, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Loss

(In thousands)

Year Ended December 31,

2019

2020

2021

Net loss

$
(46,719
)

$
(66,815
)

$
(145,215
)
Change in unrealized gain (loss) on marketable securities, net of tax

88

(54
)

(272
)
Comprehensive loss

$
(46,631
)

$
(66,869
)

$
(145,487
)


	Year Ended December 31,
	2023		2022		2021
Net loss	$	(116,554)	$	(175,357)	$	(145,215)
Change in unrealized gain (loss) on marketable securities, net of tax	777		(466)		(272)
Comprehensive loss	$	(115,777)	$	(175,823)	$	(145,487)

See notes to ~~consolidated financial statements.~~

Consolidated Financial Statements.

~~Table of Contents~~


Table of Contents

COURSERA, INC. AND SUBSIDIARIES

Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(In thousands, except share and per share amounts)

Redeemable

Accumulated

Convertible

Additional

Other

Total

Preferred Stock

Common Stock

Paid-In

Treasury

Comprehensive

Accumulated

Stockholders’

Shares

Amount

Shares

Amount

Capital

Stock

Income (Loss)

Deficit

Equity (Deficit)

Balances— January 1, 2019

58,864,178

$
227,861

29,464,090

$
—

$
56,997

$
(4,701
)

$
(14
)

$
(230,017
)

$
(177,735
)
Issuance of Series E redeemable convertible preferred stock

8,794,164

105,530

—

—

—

—

—

—

—

Issuance costs of Series E redeemable convertible preferred stock

—

(710
)

—

—

—

—

—

—

—

Issuance of common stock upon exercise of options

—

—

4,211,484

—

8,293

—

—

—

8,293

Issuance of common stock in connection with settlement liability

—

—

1,346,610

—

7,622

—

—

—

7,622

Issuance of common stock in connection with asset acquisition

—

—

610,556

—

3,846

—

—

—

3,846

Issuance of restricted stock awards

—

—

50,000

—

—

—

—

—

—

Vesting of early exercise stock options

—

—

—

—

927

—

—

—

927

Stock-based compensation expense

—

—

—

—

16,679

—

—

—

16,679

Change in unrealized gain on marketable securities

—

—

—

—

—

—

88

—

88

Net loss

—

—

—

—

—

—

—

(46,719
)

(46,719
)
Balances—December 31, 2019

67,658,342

$
332,681

35,682,740

$
—

$
94,364

$
(4,701
)

$
74

$
(276,736
)

$
(186,999
)
Issuance of Series F redeemable convertible preferred stock

7,647,058

130,000

—

—

—

—

—

—

—

Issuance costs of Series F redeemable convertible preferred stock

—

(388
)

—

—

—

—

—

—

—

Issuance of common stock upon exercise of options

—

—

4,204,065

—

10,081

—

—

—

10,081

Issuance of restricted stock awards

—

—

36,250

—

—

—

—

—

—

Issuance of common stock upon exercise of warrants

—

—

190,930

—

38

—

—

—

38

Vesting of early exercise stock options

—

—

—

—

196

—

—

—

196

Issuance of common stock in connection with content asset

—

—

187,305

—

3,956

—

—

—

3,956

Stock-based compensation expense

—

—

—

—

17,773

—

—

—

17,773

Change in unrealized loss on marketable securities

—

—

—

—

—

—

(54
)

—

(54
)
Net loss

—

—

—

—

—

—

—

(66,815
)

(66,815
)
Balances—December 31, 2020

75,305,400

$
462,293

40,301,290

$
—

$
126,408

$
(4,701
)

$
20

$
(343,551
)

$
(221,824
)
Conversion of redeemable convertible preferred stock to common stock upon initial public offering

(75,305,400
)

(462,293
)

75,305,400

1

462,292

—

—

—

462,293

Issuance of common stock upon initial public offering, net of offering costs

—

—

17,024,276

—

518,869

—

—

—

518,869

Issuance of common stock upon exercise of options

—

—

8,731,889

—

32,287

—

—

—

32,287

Issuance of common stock related to employee stock purchase plan

—

—

228,048

—

6,397

—

—

—

6,397

Issuance of restricted stock awards

—

—

4,722

—

—

—

—

—

—

Vesting of restricted stock units

—

—

502,135

—

—

—

—

—

—

Tax withholding on vesting of restricted stock units

—

—

(191,719
)

—

(7,172
)

—

—

—

(7,172
)
Vesting of early exercise stock options

—

—

—

—

77

—

—

—

77

Stock-based compensation expense

—

—

—

—

96,073

—

—

—

96,073

Change in unrealized loss on marketable securities

—

—

—

—

—

—

(272
)

—

(272
)
Net loss

—

—

—

—

—

—

—

(145,215
)

(145,215
)
Balances—December 31, 2021

—

$
—

141,906,041

$
1

$
1,235,231

$
(4,701
)

$
(252
)

$
(488,766
)

$
741,513


	Redeemable Convertible Preferred Stock			Common Stock			Additional Paid-In Capital		Treasury Stock			Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity (Deficit)
	Shares	Amount		Shares	Amount				Shares	Amount

Balance—December 31, 2020	75,305,400	$	462,293	43,049,228	$	—	$	126,408	(2,747,938)	$	(4,701)	$	20	$	(343,551)	$	(221,824)
Conversion of redeemable convertible preferred stock to common stock upon initial public offering	(75,305,400)	(462,293)		75,305,400	1		462,292		—	—		—		—		462,293
Issuance of common stock upon initial public offering, net of offering costs	—	—		17,024,276	—		518,869		—	—		—		—		518,869
Issuance of common stock upon exercise of options	—	—		8,731,889	—		32,287		—	—		—		—		32,287
Issuance of common stock related to employee stock purchase plan	—	—		228,048	—		6,397		—	—		—		—		6,397
Issuance of restricted stock awards	—	—		4,722	—		—		—	—		—		—		—
Vesting of restricted stock units	—	—		502,135	—		—		—	—		—		—		—
Tax withholding on vesting of restricted stock units	—	—		(191,719)	—		(7,172)		—	—		—		—		(7,172)
Vesting of early exercise stock options	—	—		—	—		77		—	—		—		—		77
Stock-based compensation	—	—		—	—		96,073		—	—		—		—		96,073
Change in unrealized loss on marketable securities	—	—		—	—		—		—	—		(272)		—		(272)
Net loss	—	—		—	—		—		—	—		—		(145,215)		(145,215)
Balance—December 31, 2021	—	$	—	144,653,979	$	1	$	1,235,231	(2,747,938)	$	(4,701)	$	(252)	$	(488,766)	$	741,513
Issuance of common stock upon exercise of options	—	—		4,310,630	—		17,750		—	—		—		—		17,750
Vesting of restricted stock units	—	—		1,940,200	—		—		—	—		—		—		—
Tax withholding on vesting of restricted stock units	—	—		(774,054)	—		(11,886)		—	—		—		—		(11,886)
Issuance of restricted stock awards	—	—		5,518	—		—		—	—		—		—		—
Issuance of common stock related to employee stock purchase plan	—	—		547,334	—		6,829		—	—		—		—		6,829
Stock-based compensation	—	—		—	—		116,192		—	—		—		—		116,192
Change in unrealized loss on marketable securities	—	—		—	—		—		—	—		(466)		—		(466)
Net loss	—	—		—	—		—		—	—		—		(175,357)		(175,357)
Balance—December 31, 2022	—	$	—	150,683,607	$	1	$	1,364,116	(2,747,938)	$	(4,701)	$	(718)	$	(664,123)	$	694,575
Issuance of common stock upon exercise of options	—	—		6,621,448	1		27,314		—	—		—		—		27,315
Vesting of restricted stock units	—	—		8,449,866	—		—		—	—		—		—		—
Tax withholding on vesting of restricted stock units	—	—		(3,485,308)	—		(54,122)		—	—		—		—		(54,122)
Repurchases of common stock	—	—		—	—		—		(4,829,803)	(58,453)		—		—		(58,453)
Issuance of restricted stock awards	—	—		13,516	—		—		—	—		—		—		—
Issuance of common stock related to employee stock purchase plan	—	—		615,150	—		6,031		—	—		—		—		6,031
Stock-based compensation	—	—		—	—		116,625		—	—		—		—		116,625
Change in unrealized gain on marketable securities	—	—		—	—		—		—	—		777		—		777
Net loss	—	—		—	—		—		—	—		—		(116,554)		(116,554)
Balance—December 31, 2023	—	$	—	162,898,279	$	2	$	1,459,964	(7,577,741)	$	(63,154)	$	59	$	(780,677)	$	616,194

See notes to ~~consolidated financial statements.~~

Consolidated Financial Statements.

~~Table of Contents~~


Table of Contents

COURSERA, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands)

Year Ended December 31,

2019

2020

2021

Cash flows from operating activities:

Net loss

$
(46,719
)

$
(66,815
)

$
(145,215
)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Depreciation and amortization

5,282

9,585

14,757

Stock-based compensation

16,317

16,807

91,183

Amortization or accretion of marketable securities

(1,121
)

(1
)

501

Other

38

86

(448
)
Changes in operating assets and liabilities:

Accounts receivable, net

(6,155
)

(24,138
)

5,863

Prepaid expenses and other assets

(6,622
)

(18,254
)

(5,697
)
Operating lease right-of-use assets

0

5,165

5,301

Accounts payable and accrued expenses

6,620

25,652

16,322

Accrued compensation and other liabilities

(815
)

3,718

7,670

Operating lease liabilities

0

(5,831
)

(6,336
)
Deferred revenue

11,841

39,035

17,845

Net cash provided by (used in) operating activities

(21,334
)

(14,991
)

1,746

Cash flows from investing activities:

Purchases of marketable securities

(166,926
)

(218,458
)

(241,758
)
Proceeds from maturities of marketable securities

115,317

129,934

204,981

Asset acquisition

(3,345
)

0

0

Purchases of property, equipment and software

(4,410
)

(3,099
)

(1,554
)
Capitalized internal-use software costs

(5,522
)

(8,819
)

(12,090
)
Purchase of investment in private company

0

(1,000
)

0

Purchases of content assets

0

0

(1,188
)
Net cash used in investing activities

(64,886
)

(101,442
)

(51,609
)
Cash flows from financing activities:

Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs

104,820

129,613

0

Proceeds from exercise of stock options and warrants

8,293

10,118

31,766

Proceeds from employee stock purchase plan

0

0

6,397

Proceeds from exercise of unvested options, net of repurchases

499

84

0

Repayment of debt associated with asset acquisition

(231
)

—

—

Payment of holdback consideration related to asset acquisition

0

(769
)

0

Proceeds from initial public offering, net of offering costs

0

0

525,284

Payment of deferred offering costs

0

(32
)

(6,119
)
Payment of tax withholding on vesting of restricted stock units

0

0

(7,172
)
Net cash provided by financing activities

113,381

139,014

550,156

Net increase in cash, cash equivalents, and restricted cash

27,161

22,581

500,293

Cash, cash equivalents, and restricted cash—Beginning of period

32,684

59,845

82,426

Cash, cash equivalents, and restricted cash—End of period

$
59,845

$
82,426

$
582,719

Reconciliation of cash, cash equivalents, and restricted cash:

Cash and cash equivalents

$
55,986

$
79,878

$
580,658

Restricted cash

3,090

2,548

2,061

Restricted cash in prepaid expenses and other current assets

769

0

0

Total cash, cash equivalents, and restricted cash

$
59,845

$
82,426

$
582,719

Supplemental disclosures of cash flow information:

Cash paid for interest

$
197

$
550

$
0

Cash paid for income taxes

$
523

$
1,155

$
2,837

Supplemental disclosures of noncash investing and financing activities:

Vesting of early exercised stock options

$
927

$
196

$
77

Stock-based compensation capitalized as internal-use software costs

$
362

$
966

$
4,890

Issuance of common stock in connection with settlement liability

$
7,622

$
0

$
0

Issuance of common stock in connection with asset acquisition

$
3,846

$
0

$
0

Unpaid proceeds from exercise of stock options

$
0

$
0

$
521

Unpaid purchases of content assets

$
0

$
0

$
577

Issuance of common stock in connection with content asset

$
0

$
3,956

$
0

Unpaid deferred offering costs

$
0

$
1,297

$
295


	Year Ended December 31,
	2023		2022		2021
Cash flows from operating activities:
Net loss	$	(116,554)	$	(175,357)	$	(145,215)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	22,270		18,503		14,757
Stock-based compensation expense	109,570		110,785		91,183
(Accretion) amortization of marketable securities	(13,811)		(895)		501
Impairment of long-lived assets	3,062		6,124		—
Other	1,496		1,088		(448)
Changes in operating assets and liabilities:
Accounts receivable, net	(14,763)		(20,598)		5,863
Prepaid expenses and other assets	(17,003)		(18,290)		(5,697)
Operating lease right-of-use assets	4,868		4,839		5,301
Accounts payable and accrued expenses	33,971		17,893		16,322
Accrued compensation and other liabilities	3,073		3,409		7,670
Operating lease liabilities	(7,853)		(5,841)		(6,336)
Deferred revenue	21,313		20,289		17,845
Net cash provided by (used in) operating activities	29,639		(38,051)		1,746
Cash flows from investing activities:
Purchases of marketable securities	(121,756)		(593,770)		(241,758)
Proceeds from maturities of marketable securities	530,000		375,000		204,981
Purchases of property, equipment, and software	(1,147)		(1,578)		(1,554)
Capitalized internal-use software costs	(15,254)		(12,299)		(12,090)
Purchase of minority interest	(1,701)		—		—
Purchases of content assets	(5,344)		(1,377)		(1,188)
Net cash provided by (used in) investing activities	384,798		(234,024)		(51,609)
Cash flows from financing activities:
Proceeds from exercise of stock options	27,315		17,586		31,766
Proceeds from employee stock purchase plan	6,031		6,829		6,397
Proceeds from initial public offering, net of offering costs	—		—		525,284
Payments for repurchases of common stock	(58,453)		—		—
Payment of tax withholding on vesting of restricted stock units	(54,122)		(11,886)		(7,172)
Payment of deferred offering costs	—		(295)		(6,119)
Net cash (used in) provided by financing activities	(79,229)		12,234		550,156
Net increase (decrease) in cash, cash equivalents, and restricted cash	335,208		(259,841)		500,293
Cash, cash equivalents, and restricted cash—Beginning of period	322,878		582,719		82,426
Cash, cash equivalents, and restricted cash—End of period	$	658,086	$	322,878	$	582,719

Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	6,383	$	4,064	$	2,837
Supplemental disclosure of noncash investing and financing activities:
Stock-based compensation capitalized as internal-use software costs	$	7,055	$	5,407	$	4,890
Unpaid deferred offering costs	$	—	$	—	$	295

See notes to ~~consolidated financial statements.~~Consolidated Financial Statements.

~~Table of Contents~~


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COURSERA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

~~ORGANIZATION~~ BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS

~~Description~~

Basis of ~~Business~~

Presentation

The accompanying Consolidated Financial Statements of Coursera, Inc., a Delaware public benefit corporation, ~~(the~~and its subsidiaries (“Coursera”, the “Company”, “we”, “us”, or “our”), have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).

Description of Business

Coursera is an online learning platform that connects learners, educators, and institutions with the goal of providing world-class educational content that is affordable, accessible, and relevant. ~~The Company combines~~We combine content, data, and technology into a platform that is customizable and extensible to both individual learners and institutions. ~~The Company partners~~We partner with ~~leading~~ university and industry partners ~~(“educator~~(collectively, “educator partners”) to bring quality higher education to a broad range of individuals, businesses, organizations, and governments. ~~The Company~~We also ~~sells~~sell directly to institutions, including employers, colleges and universities, organizations, and governments, to enable their employees, students, and citizens to gain critical skills aligned to ~~the~~ job ~~markets of today and tomorrow. The Company’s~~markets. Our corporate headquarters ~~are~~is located in Mountain View, California.

Reporting Segments

We conduct our operations through three reporting segments: Consumer, Enterprise, and Degrees. Refer to Note 14 for additional information.

Initial Public Offering

On April 5, 2021, ~~the Company~~Coursera, Inc. completed its initial public offering ~~("IPO")~~ of common stock, in which it14,664,776 shares were sold ~~14,664,776~~ ~~shares.~~(the “IPO”). The shares were sold at a price to the public of $~~33.00~~$33.00 per share for net proceeds of $~~452,482~~,$452,482, after deducting underwriting discounts and commissions of $~~31,456~~.$31,456. Upon completion of the IPO, $~~6,449~~$6,449 of deferred offering costs were reclassified into additional paid-in capital as a reduction of the net proceeds received from the IPO. Upon the closing of the IPO, all outstanding shares of redeemable convertible preferred stock automatically converted into 75,305,400 shares of common stock on a 1~~-for-one~~one-for-one basis.

On April 19, 2021, the underwriters exercised in full the right to purchase 2,359,500 additional shares of common stock from the Company, resulting in additional net proceeds of $~~72,802~~$72,802, after deducting underwriting discounts and commissions of $~~5,061~~.

$5,061.

2.~~BASIS OF PRESENTATION AND SUMMARY OF~~ SIGNIFICANT ACCOUNTING POLICIES

~~Basis of Presentation—The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).~~

Principles of Consolidation—

The ~~consolidated financial statements~~Consolidated Financial Statements include the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

~~Segment Information~~—The Company defines its segments as those operations the chief operating decision maker (“CODM”), determined to be the Chief Executive Officer of the Company, regularly reviews to allocate resources and assess performance. For the years ended December 31, 2019, 2020 and 2021, the Company operated under 3 ~~segments: Consumer, Enterprise, and Degrees. The Company continually monitors and reviews its segment reporting structure in accordance with Accounting Standards Codification (“ASC”)~~ ~~Topic 280, Segment Reporting~~, to determine whether any changes have occurred that would impact its reportable segments. For further information on the Company’s segment reporting, see Note 14 “Segment and Geographic Information.”

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Use of Estimates—

The preparation of ~~consolidated financial statements~~Consolidated Financial Statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and related disclosures atas of the date of the ~~consolidated financial statements and~~Consolidated Financial Statements, as well as the reported amounts of revenue and expenses during the reporting period. ~~Actual results could differ from those estimates. On an ongoing basis,~~We base our estimates on historical experience, current conditions, and various other factors that we believe to be reasonable under the ~~Company evaluates its~~circumstances. Significant items subject to such estimates, ~~including~~judgements, and assumptions include, but are not limited to, those related to ~~fair value~~the determination of ~~common stock~~principal versus agent and variable consideration in our revenue contracts; stock-based ~~awards;~~compensation expense; period of benefit for capitalized commissions; internal-use software costs; useful lives of long-lived assets; the carrying value of operating lease right-of-use assets; the valuation of intangible assets and income tax expense, including the valuation of deferred tax assets and liabilities, among others.

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The World Health Organization declared in March 2020 that the outbreak of the coronavirus disease (“COVID-19") constitutes a pandemic. Since early 2020, the world has been, and continues to be impacted by COVID-19 and its variants. The COVID-19 pandemic has caused general business disruption worldwide beginning in January 2020. The global impact of COVID-19 continues to rapidly evolve, and the Company will continue to actively monitor the situation, including progress made through vaccinations, and the effects on its business and operations. The Company does not yet know the full extent of potential impacts on its business or operations or on the global economy as a whole, particularly if the COVID-19 pandemic continues and persists for an extended period of time. Given the uncertainty, the Company cannot reasonably estimate the impact on its future results of operations, cash flows, or financial condition. As of the date of issuance of the consolidated financial statements, the Company is not aware of any specific event or circumstance that would require it to update its estimates, judgments, or the carrying value of its assets or liabilities. These estimates may change as new events occur and additional information is obtained and are recognized in the consolidated statements as soon as they become known. Actual results could differ from those estimates, and any such differences ~~may~~could be material to ~~the Company’s consolidated financial statements.~~

our Consolidated Financial Statements.

~~Summary of Significant Accounting Policies~~

Cash, ~~and~~ Cash Equivalents,~~—The Company considers~~ and Restricted Cash

We consider all highly liquid investments with an original maturity of three months or less at the date of purchase ~~of three months or less~~ to be cash equivalents.

Our cash and cash equivalents consist of cash and money market funds at financial institutions, and are stated at cost, which approximates fair value because of their immediate or short-term maturities. Our restricted cash primarily consists of a letter of credit required to fulfill our corporate headquarters’ operating lease agreement. Restricted cash, current is included in prepaid expenses and other current assets, and restricted cash, non-current is included in other assets, both in the Consolidated Balance Sheets.

Marketable Securities—

Marketable securities consist of ~~corporate debt, commercial paper~~U.S. Treasury securities, ~~and U.S. government Treasury bills,~~ with an original maturity ~~greater than~~between three months and one year at the date of purchase, and are classified as available-for-sale (“AFS”) debt securities. ~~As the Company views~~We view these securities as available to support current operations ~~it has~~and have classified all ~~available-for-sale~~AFS debt securities as current assets. ~~Available-for-sale~~AFS debt securities are initially recorded at cost and periodically adjusted to fair value with unrealized gains and losses reported as a component of accumulated other comprehensive income (loss) in ~~stockholders’ equity (deficit), while realized~~the Consolidated Balance Sheets. We evaluate our AFS debt securities with an unamortized cost basis in excess of estimated fair value to determine what amount of that difference, if any, is caused by expected credit losses. Realized gains and losses as well as credit-related impairment losses are ~~reported within~~included in other ~~income (expense),~~expense, net ~~as a component of net loss. An impairment charge is recorded~~ in the ~~consolidated statements~~Consolidated Statements of ~~operations for declines~~Operations. Any remaining impairment is included in fair value below the cost of an individual investment that are deemed to be other-than-temporary. The Company did not identify any marketable securities as other-than-temporarily impaired during the years ended December 31, 2019, 2020 and 2021.

accumulated other comprehensive income (loss).

~~Restricted Cash—As of December 31, 2020 and 2021, the Company had letters of credit of $2,548~~ ~~and $2,061, respectively, related to its corporate headquarters’ operating lease agreement.~~

Accounts Receivable,— Net

Accounts receivable, net includes trade accounts receivable, both billed and unbilled, ~~receivable,~~ net of ~~allowances~~an allowance for ~~doubtful accounts.~~ credit losses. Billed receivables are recorded at the invoiced amount in the period that our right to consideration is unconditional. Payment terms on invoiced amounts are typically 30 to 60 days. Unbilled receivables, or contract assets, are recorded when revenue is recognized prior to our unconditional right to consideration. A contract asset is a right to consideration that is conditional upon factors other than the passage of time.

An allowance for ~~doubtful accounts~~credit losses is established based on ~~the Company’s~~our assessment of the collectibility of ~~accounts. Management regularly reviews the adequacy of the allowance for doubtful~~ accounts receivable by considering various factors, including the age of each outstanding ~~invoice;~~invoice, each customer’s expected ability to ~~pay; and~~pay, the collection history with each customer, current economic conditions, and reasonable and supportable forecasts of future economic conditions over the life of the receivable, when applicable, to determine whether a specific allowance is appropriate. Accounts receivable deemed uncollectible are charged against the allowance for ~~doubtful accounts~~credit losses when identified. The allowance for ~~doubtful accounts~~credit losses and related activities were not material for the years ended December 31, ~~2019, 2020~~2023, 2022, and 2021.

Property, Equipment, and Software, Net

—Property, equipment, and software, ~~are~~net is stated at cost, less accumulated depreciation and amortization. Depreciation isand software amortization are recorded using the straight-line method over the estimated useful lives of the assets, generally two to five ~~years~~.years. Leasehold improvements are amortized over the shorter of the estimated useful lives of the improvements or the remaining lease term.


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Deferred Offering Costs—

Deferred offering costs consist primarily of direct and incremental legal, accounting, and other fees related to the ~~Company’s~~ IPO. Prior to the IPO, all deferred offering costs were capitalized in ~~prepaids~~prepaid expenses and other current assets on the ~~consolidated balance sheets.~~Consolidated Balance Sheets. Upon completion of the IPO, $~~6,449~~$6,449 of the deferred offering costs were reclassified into ~~stockholder's~~stockholders’ equity (deficit) as a reduction of the IPO proceeds.

~~Leases~~—Educator Partner Costs

We have various agreements with educator partners that grant us the right to host their intellectual property on our platform. In return, educator partners earn a fee that we recognize as a content cost in the same period in which the related revenue is recognized and is classified as a cost of revenue in the Consolidated Statements of Operations. One such agreement has stipulated that certain fees earned by the educator partner are to be allocated to a development fund to be held and spent by Coursera on activities such as developing, marketing, and advertising the educator partner's content, according to a mutually agreed upon plan. We recognized the liability and related expenses associated with this development fund consistent with the timing of when we recognized educator partner content costs given our liability is established in the same period the revenue is recognized. The ~~Company determines~~expenses have been classified in the Consolidated Statements of Operations based on the nature of the underlying spend. The liability associated with the development fund is recorded within other accounts payable and accrued expenses in the Consolidated Balance Sheets. During the first quarter of 2023, we entered into an amendment with this educator partner who started earning typical content fees, which are recorded within cost of revenue in the Consolidated Statements of Operations.

Leases

We determine if an arrangement is a lease and the classification of that lease, if applicable, at inception ~~based on: (1) whether~~by evaluating various factors, including if the contract ~~involves~~conveys the right to control the use of ~~a distinct~~an identified asset ~~(2) whether the Company obtains the~~for a period of time in exchange for consideration and other facts and circumstances. Right-of-use (“ROU”) assets represent our right to ~~substantially all~~use an underlying asset for the ~~economic benefits from the use of the asset throughout the period,~~lease term and (3) whether the Company has a right to direct the use of the asset. For leases that commenced before the Company's adoption date of Accounting Standards Update No. 2016-02, Leases, (“ASC 842”), the Company elected the practical expedients to carryforward its historical lease classification, its assessment on whether a contract was or contains a lease, and its initial direct costs. The Company also elected to not separate lease and non-lease components and to not recognizeare included in operating lease ~~right-of-use~~ROU assets, on our Consolidated Balance Sheets. Lease liabilities represent our obligation to make lease payments according to the arrangement and are included in operating lease liabilities, ~~that arise from short-term leases (i.e., leases with a term of 12 months or less).~~

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~~The Company applies ASC 842 to individual leases of assets. Right-of-use (“ROU”)~~current and non-current, on our Consolidated Balance Sheets. We do not have any finance leases.

ROU assets and lease liabilities are recognized at the commencement date based on the present value of minimum remaining lease payments over the lease term. For this purpose, ~~the Company considers only~~we include payments that are fixed and determinable at the ~~time of commencement. As~~commencement date, including initial direct costs incurred and excluding lease incentives received. We use the ~~Company’s leases do not provide an~~ implicit rate ~~the Company uses its~~when it is readily determinable. Otherwise, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of future lease payments. ~~The Company’s~~Our lease terms may include options to extend or terminate the lease when it is reasonably certain that ~~the Company~~we will exercise such options. ~~When determining the probability of exercising such options, the Company considers contract-based, asset-based, entity-based, and market-based factors. The Company’s~~Our lease agreements may contain variable costs such as common area maintenance, insurance, real estate taxes, or other costs. Variable lease costs are expensed as incurred in the ~~consolidated statements~~Consolidated Statements of ~~operations.~~

ROU assets are initially measured at amounts that represents the present value of the lease payments over the lease, plus any initial direct costs incurred and less any lease incentives received. Annually, all ROU assets are reviewed for impairment. The Company’s lease agreements generally do not contain any residual value guarantees or restrictive covenants.

~~Operating leases are included in operating lease ROU assets, and current and non-current operating lease liabilities on the Company’s consolidated balance sheets.~~Operations. Operating lease ~~costs for operating lease payments are~~expense is recognized on a straight-line basis over the lease term. ~~The Company does~~

We do not ~~have any finance leases.~~separate lease and non-lease components and do not recognize ROU assets and operating lease liabilities that arise from leases with an initial lease term of 12 months or less.

In addition, impairment of an ROU asset and other lease related assets, including leasehold improvements, furniture and fixtures, and computer equipment, that results from entering into a sublease arrangement is recognized in the Consolidated Statements of Operations in the period the sublease agreement is executed. We recognize sublease income as a reduction to our operating lease expense on a straight-line basis over the sublease term. Refer to Note 6 for additional information.


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Internal-Use Software and Website Development Costs

~~—The Company capitalizes~~We capitalize certain costs associated with ~~developing its~~our internal-use software and website development during the application development stage when management with the relevant authority authorizes and commits to the funding of the project, it is probable that the project will be completed, and the software will be used as intended. These costs include personnel and related employee benefits expenses for employees who are directly associated with and who devote time to software and website development projects. Such costs are amortized on a straight-line basis over the estimated useful life of the related asset, which is approximately two ~~years.~~ to five years, and are recorded within cost of revenue in the Consolidated Statements of Operations. Costs incurred prior to meeting these criteria, together with costs incurred for training and maintenance, are expensed as incurred ~~and recorded in~~within research and development ~~expenses~~ in the ~~consolidated statements~~Consolidated Statements of ~~operations.~~Operations.

~~The Company capitalized internal-use software costs of $5,884, $9,785~~ ~~and $16,980~~ ~~for the years ended December 31, 2019, 2020 and 2021.~~

Intangible Assets, Net

—Intangible assets, ~~with finite lives are~~net is stated at cost, net of accumulated amortization. ~~The Company amortizes its~~We amortize our finite-lived intangible assets on a straight-line basis over an estimated useful life of two~~three~~ to six ~~years~~years. Amortization of content assets and developed technology is included in cost of revenue, and assembled workforce is included in research and development, both in the Consolidated Statements of Operations..

Impairment of Long-Lived Assets~~—The Company continually monitors~~

We monitor events and changes in circumstances that could indicate ~~that~~the carrying amounts of ~~its~~our long-lived assets, including deferred partner fees, property, equipment, software, intangible assets, and ~~finite-lived intangible~~operating lease ROU assets, may not be recoverable. When such events or changes in circumstances occur, ~~the Company assesses~~we assess the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through their undiscounted expected future cash flows. If the future undiscounted cash flows are less than the carrying amount of these assets, ~~the Company recognizes~~we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets. During the year ended December 31, 2023, we recognized an impairment loss of $861 related to capitalized internal-use software and website development costs. During the year ended December 31, 2022, we recognized an impairment loss related to deferred partner fees of $2,915, related to our operating lease ROU asset of $2,304, and related property and equipment of $904. There were 0no impairments of long-lived assets during the ~~years~~year ended December 31, ~~2019, 2020 and 2021~~

2021.

Revenue ~~Recognition—The Company derives~~

We recognize revenue from contracts with customers for access to the learning content hosted on ~~its~~our platform and related services. Revenue is recognized when control of promised services is transferred to our customer. The ~~Company derives its~~amount of revenue recognized reflects the consideration that we expect to be entitled to receive in exchange for these services. We apply judgment in determining our customer’s ability and intent to pay, which is based on a variety of factors, including the customer’s historical payment experience, credit, or financial information. Consumer revenue customers are required to pay in advance.

At contract inception, we assess the performance obligations, or deliverables, we have agreed to provide in the contract and determine if they are individually distinct or if they should be combined with other performance obligations. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on each performance obligation’s relative standalone selling price. We combine performance obligations when an individual performance obligation does not have standalone value to our customer. For example, our customers do not have the ability to take possession of the software supporting our platform and, as a result, our contracts are typically accounted for as service arrangements with a single performance obligation.

We have a stand-ready obligation to provide learners continuous access to our learning platform and deliver related support services for a specified term. For this reason, these services are generally viewed as a stand-ready performance obligation consisting of a series of distinct daily services. We typically satisfy these performance obligations over time as the services are provided. A time-elapsed output method is used to measure progress because our efforts are expended evenly throughout the period given the nature of the promise is a stand-ready service. Fixed fees for these services are generally recognized ratably over the contract term.


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We include any fixed consideration within our contracts as part of the total transaction price. Generally, we include an estimate of the variable amount within the total transaction price and update our assumptions over the duration of the contract. None of our contracts contain a significant financing component. We do not include taxes collected from customers and remitted to governmental authorities within the total transaction price.

At times, we are party to multiple concurrent contracts or contracts that combine multiple services. These situations require judgment to determine if multiple contracts should be combined and accounted for as a single arrangement. In making this determination, we consider (i) the economics of each individual contract and whether or not it was negotiated on a standalone basis, and (ii) if multiple promises represent a single performance obligation.

Contract modifications require judgment to determine if the modification should be accounted for as (i) a separate contract, (ii) the termination of the original contract and creation of a new contract, or (iii) a cumulative catch-up adjustment to the original contract. When evaluating contract modifications, we must identify the performance obligations of the modified contract and determine both the allocation of revenues to the remaining performance obligations and the period of recognition for each identified performance obligation.

We generate revenue from our three ~~sources:~~reportable segments: Consumer, Enterprise, and Degrees. Refer to Note 14 ~~”Segment and Geographic Information"~~ for our disaggregation of revenue.

We are generally the principal with respect to Consumer ~~Revenue—The Company generates~~and Enterprise revenue ~~from~~as we control the ~~sale of~~performance obligation and are the primary obligor with respect to delivering access to course content. Additionally, we have inventory risk through recoupable advances sometimes paid to educator partners.

Consumer Revenue

We generate revenue from consumers by selling access to learning content ~~to consumers.~~hosted on our platform. Consumer products include certifications for single courses, ~~Specializations,~~professional certificates, and catalog-wide subscriptions. Access to single courses are generally purchased at a fixed price for a set period of time, typically six months. Specializations are a series of courses offered by the same educator partner, ~~where~~and learners are provided access to these courses on a month-to-month subscription basis. Coursera Plus is ~~the Company’s~~our catalog-wide consumer subscription product, ~~and it is~~ sold in ~~the form of a~~ monthly or annual ~~subscription.~~subscriptions. All ~~contracts with~~ Consumer ~~customers are billed~~learners pay in advance, ~~generally after a 7-day free trial period. The Company recognizes~~and revenue is recognized ratably over the ~~contracted period, after~~contract term once access has been granted to the ~~consumer,~~learner, as learners have unlimited access to the course content during the ~~contracted period.~~

contract term.

Consumer learners are entitled to a full refund up to two weeks after payment is received. ~~The Company estimates~~We estimate and ~~establishes a refund reserve~~establish an allowance for refunds based on historical refund ~~rates. The refund reserve~~rates, which was immaterial as of December 31, ~~2020~~2023 and ~~2021.~~

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2022.

Enterprise Revenue

~~—The Company sells~~We sell subscription licenses to ~~business, government,~~businesses, organizations, governments, and ~~university customers~~educational institutions that provide ~~users~~their learners with the ability to enroll in courses and Specializations and receive certifications upon completion. Enterprise contracts are typically between one and three years in length and ~~can~~ consist of ~~either the purchase of~~selling a fixed quantity of ~~seat~~catalog licenses that grant each ~~of which allows for~~learner access to our learning platform and unlimited course enrollments ~~by one learner for each year or~~over the ~~purchase of a quantity of course enrollments. In either contract type, the Company recognizes~~license term. We recognize revenue ratably over the ~~contracted period, after~~contract term once access has been granted to the Enterprise ~~customer, as learners have unlimited access to the course content during the contracted period.~~customer.

The Company is the principal with respect to revenue generated from sales to Consumer and Enterprise customers as the Company controls the performance obligation and is the primary obligor with respect to delivering access to course content. Additionally, the Company has inventory risk through recoupable advances sometimes paid to educator partners.

Degrees Revenue

~~—University partners~~Universities contract with ~~the Company for~~us to facilitate the delivery of their bachelor’s and master’s ~~degrees~~degree programs or postgraduate ~~diplomas awarded by the university. The Company’s~~diplomas. Degrees revenue contracts involve the performance of a number of promises, including but not limited to hosting the degree content on ~~its~~our learning platform, providing content authoring tools, course production support, ~~and~~ marketing, and platform technical support services. As a result, the university ~~partner~~ is ~~the Company’s~~our customer with respect to Degrees revenue. ~~The Company earns~~We earn a ~~Degrees~~ service fee ~~that is determined~~ based ason a percentage of total tuition collected by the university from Degrees students, net of ~~refunds,~~refunds. As a result, the revenue we earn is dependent upon the number of learners enrolled and the tuition charged by the ~~university partner. University partners~~university. This is a form of variable consideration, and we estimate the amount of revenue using an expected value method. These estimates are refined each reporting period until the consideration becomes known, generally ~~collect~~at the ~~tuition from Degrees students, however in~~time the ~~case of some MasterTrack Certificate offerings this obligation can be~~final term enrollment report is provided by the ~~Company's responsibility. The Company has~~university. We have a ~~stand ready~~stand-ready obligation to perform ~~degree~~ services ~~continually~~ throughout the ~~period that the~~contract term during which degree content is hosted on our platform. Degrees revenue is generally earned and paid by the university ~~partner~~ for each ~~university term. As a result, revenue generated from each~~academic term and is recognized ratably from the start of a term through the start of the following term.


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The Degrees learning experience is delivered on the same proprietary learning platform used by Consumer and Enterprise customers. There is no direct contractual revenue arrangement between ~~the Company~~Coursera and Degrees students, ~~who contract~~whose contractual arrangement is directly with ~~university partners. Further,~~ the ~~university partners typically have additional performance obligations~~universities. In addition to the ~~Degrees~~learning platform, the universities are obligated to provide their students ~~in the form of~~with additional services, such as designing the curriculum, setting admission criteria, ~~real-time teaching,~~ making admission and financial aid decisions, real-time teaching, independently awarding credits, certificates, or degrees, and providing academic orand career counseling. Although some MasterTrack Certificate learners are required to accept the terms and conditions prior to tuition payment, the Company's core performance obligations remain similar to the services provided to university partners for their online bachelor’s and master’s degrees or postgraduate diplomas. For these reasons, the ~~university partners~~universities control the delivery of degrees hosted on ~~its~~our platform. As a result, ~~the Company recognizes Degrees revenue as~~we recognize only the service fee ~~it receives~~we receive from the ~~university partner.~~

~~For all customers,~~universities as our Degrees revenue.

Deferred Revenue

Deferred revenue, from contracts is recognized when control of promised services is transferred. The amount of revenue recognized reflects the consideration that the Company expects to be entitled to receive in exchange for these services. To achieve this, the Company applies the following five steps:

~~1) Identify the~~or contract ~~with a customer~~

The Company determines a contract with a customer to exist when the contract is approved, each party’s rights regarding the services to be transferred can be identified, the payment terms for the services can be identified, the customer has the ability and intent to pay, and the contract has commercial substance. At contract inception, the Company evaluates whether two or more contracts should be combined and accounted for as a single contract and whether the combined or single contract includes more than one performance obligation. The Company applies judgment in determining the customer’s ability and intent to pay, which is based on a variety of factors, including the customer’s historical payment experience or, in the case of a new Enterprise or Degrees customer, credit and financial information pertaining to the customer. Consumer revenue customers are required to pay in advance either prior to the Company providing access to course content or prior to the expiration of a 7-day free trial.

~~2) Identify the performance obligations in the contract~~

Performance obligations committed in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services and the products is separately identifiable from other promises in the contract. Customers do not have the ability to take possession of the software supporting the platform and, as a result, contracts are accounted for as service arrangements.

~~For sales to Consumer and Enterprise customers, the Company’s performance obligation generally~~liabilities, consists of providing access to its platform and related support services, which is considered one performance obligation. Access to the Company’s platform represents a series of distinct services, as the Company continually provides access to, and fulfills its obligation to, the customer over the contract term.

~~Table of Contents~~

Degrees services involve the performance of a number of promises that include hosting the degree content on the Company’s platform, degree program management, marketing and platform technical support services, each of which are a series of distinct goods or services that are substantially the same, are satisfied over time using the same measure of progress and as a result are considered one performance obligation to stand ready to perform an online degree hosting service for the duration of the degree.

~~3) Determine the transaction price~~

~~The transaction price is determined based on the~~ consideration to which the Company expects to be entitled in exchange for transferring services to the customer. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue recognized under the contract will not occur. None of the Company’s contracts contain a significant financing component. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental entities (e.g., sales and other indirect taxes).

The Company’s Degrees services revenue is determined based on a fee percentage applied to the total tuition collected from Degrees students, net of refunds, by the university partner. As a result, the revenue earned by the Company is dependent upon the number of learners enrolled and the tuition charged by the university partner. This is a form of variable consideration. The Company estimates the amount of revenue, using an expected value method, that it expects to be entitled to in return for performance of the Degrees services, subject to assessment of the significant future reversal constraint discussed above. These estimates are continually evaluated until such time as the uncertainties are resolved, generally at the time the final term enrollment report is provided by the university partner.

~~4) Allocate the transaction price to performance obligations in the contract~~

Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on each performance obligation’s relative standalone selling price. As noted above, for Consumer and Enterprise customers, access to the Company’s platform and related support services are considered one performance obligation in the context of the contract and, accordingly, the transaction price is allocated to this single performance obligation. Similarly, Degrees services are considered one performance obligation and the transaction price is allocated to this single performance obligation.

~~5) Recognize revenue when or as performance obligations are satisfied~~

Revenue is recognized at the time the related performance obligation is satisfied by transferring the control of the promised service to a customer. Revenue is recognized in an amount that reflects the consideration that the Company expects to receive in exchange for those services. Fees for access to the Company’s platform and related support services by Consumer and Enterprise customers are considered one performance obligation, and the related revenue is recognized on a straight-line basis over the contract term as the Company satisfies its performance obligation.

The Company has a stand ready obligation to perform Degrees services continually throughout the period that the degree content is hosted on its platform. Degrees revenue is earned and paid by the university partner for each university term. As a result, revenue generated from each term is recognized ratably from the start of a term through the start of the following term.

~~Contract Assets and Liabilities—Accounts receivable are~~ recorded at the invoiced amount, net of an allowance for doubtful accounts in the period that the Company’s right to consideration is unconditional. Payment terms on invoiced amounts are typically 30-60 days. The timing of revenue recognition may differ from the timing of invoicing to customers. If revenue is recognized prior to the Company’s unconditional right to consideration, a contract asset is recorded. Deferred revenue consists of cash payments received in advance of performance obligations being delivered and is ~~recorded~~classified as current or ~~noncurrent~~non-current based on the related period in which services ~~will~~are expected to be provided.

Contract Acquisition and Fulfillment Costs—

Contract acquisition costs consist of sales commissions and related payroll taxes associated with obtaining contracts with Enterprise and Degrees customers.

Deferred Commissions~~—Customer~~

Contract acquisition costs are costs we incur that are directly related to securing a contract and are primarily related to sales commissions and related payroll taxes earned by ~~the Company’s~~our Enterprise and Degrees sales ~~force, which are incremental~~forces. These costs ~~to obtaining a contract. Sales commissions and related payroll taxes for new and upsell Enterprise contracts~~ are deferred and then amortized on a straight-line basis over the expected period of benefit, which is estimated to be three years. The Company determined the expected period of benefit by taking into consideration the length of terms in its Enterprise customer contracts, the life of the technology, and other factors. The Company amortizesbenefit. We amortize these costs over ~~three~~four years, since the commissions paid upon a contract renewal are not commensurate with the commissions paid on the initial contract, and as such, the sales contract ~~period~~term is not commensurate with the expected period of benefit. ~~Commissions~~Sales commissions and related payroll taxes primarily paid for Enterprise contract renewals are amortized over the renewal term, which is generally two years.

~~Table of Contents~~

Deferred commissions and related payroll taxes ~~that will amortize~~are recorded within ~~the succeeding 12-month period are classified as current and included in~~ deferred costs or other assets in the ~~consolidated balance sheets. The remaining balance~~Consolidated Balance Sheets, depending on the timing of the related amortization. They are amortized to sales and marketing in the Consolidated Statements of Operations.

On an annual basis, we assess the expected period of benefit by taking into consideration the average contract term length, the life of the underlying technology, and other factors. Based on our prior year assessment, we determined that the expected period of benefit should be increased from three years to four years. This change in accounting estimate was effective January 1, 2023 and is ~~classified as noncurrent~~accounted for prospectively in our Consolidated Financial Statements. For the year ended December 31, 2023, this change resulted in a $3,496 benefit to sales and ~~included~~marketing. There was no change in ~~other assets.~~the amortization period for contract renewals.

Deferred Partner Fees—

These fulfillment costs are paid to educator partners in advance of ~~the Company’s~~completing our performance ~~obligations being completed;~~obligations; are recorded within prepaid expenses and other current assets or other assets in the Consolidated Balance Sheets, depending on the timing of the related revenue recognition; and are amortized into cost of revenue ratably over the ~~term of the access being provided.~~

subscription term.

Cost of Revenue—

Cost of revenue consists of content costs, ~~in the form of a fee~~which are generally fees paid to educator partners, and expenses associated with the operation and maintenance of ~~the Company’s~~our platform. These expenses include the cost of servicing ~~both~~support requests from paid ~~learner~~learners and educator ~~partner support requests,~~partners; hosting and bandwidth ~~costs,~~costs; amortization of acquired technology and internal-use ~~software,~~software; customer payment processing ~~fees,~~fees; and ~~allocated~~attributed depreciation and facilities costs.


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Fair Value Measurements—

Fair value is defined as the price that would be received for an asset or the “exit price” that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between independent market participants on the measurement date. The fair value hierarchy requires an entity to maximize the use of observable inputs, where available. This hierarchy prioritizes the inputs into three broad levels as follows:

Level 1 ~~inputs~~— Inputs are unadjusted quoted prices ~~(unadjusted)~~ in active markets for identical assets or liabilities.

Level 2 ~~inputs~~— Inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the ~~asset~~assets or ~~liability,~~liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial ~~instrument.~~ instruments.

Level 3 ~~inputs~~— Inputs are unobservable inputs based on ~~the Company’s~~our own assumptions used to measure assets and liabilities at fair value. The inputs require significant management judgment or estimation.

The classification of a financial asset or liability within the hierarchy is determined based on the lowest-level input that is significant to the fair value measurement.~~The Company’s assets and liabilities that were measured at fair value by level within the fair value hierarchy as~~

Concentrations of ~~December 31, 2020 and 2021, are as follows:~~

As of December 31, 2020

Fair Value

Level 1

Level 2

Financial assets:

Cash equivalents—money market funds

$
58,997

$
58,997

$
—

Marketable securities:

Corporate debt securities

8,551

—

8,551

Commercial paper

26,469

—

26,469

U.S. government Treasury bills

170,382

170,382

—

Total financial assets

$
264,399

$
229,379

$
35,020

As of December 31, 2021

Fair Value

Level 1

Financial assets:

Cash equivalents—money market funds

$
539,091

$
539,091

Marketable securities:

U.S. government Treasury bills

241,117

241,117

Total financial assets

$
780,208

$
780,208

The Company remeasures certain assets, including intangible assets and its equity-method investment in a private company, at fair value on a nonrecurring basis when there are identifiable events or changes in circumstances that may have a significant adverse impact on the fair value of these assets. No such events or changes occurred during the years ended December 31, 2019, 2020 and 2021.

Risk

~~Concentration of Credit Risk~~—Financial instruments that potentially subject ~~the Company~~us to concentration of credit risk consist of cash, cash equivalents, and marketable securities. ~~The Company invests~~We only invest in high-credit-quality instruments and ~~maintains its~~maintain our cash equivalents and marketable securities in fixed-income securities. ~~The Company places its~~We place our cash primarily with domestic financial institutions that are federally insured within statutory limits.

For ~~purposes~~the purpose of assessing the concentration of credit risk with respect to accounts receivable and significant customers, we treat a group of customers under common control or customers that are affiliates of each other ~~are regarded~~ as a single customer. For the years ended December 31, ~~2019, 2020~~2023, 2022, and 2021, ~~the Company~~we did not have any customers that accounted for 10% or more ~~than~~ 10% of ~~the Company’s~~our revenue. As of December 31, ~~2020, the Company~~2023 we had 1one customer that accounted for 21%10% of ~~its~~our net accounts receivable balance that has since been collected within typical business terms.

Our business model relies on educational content and ascredentialing programs from educator partners. Our largest educator partner has global brand recognition and supplies a variety of ~~December 31, 2021,~~ 0 ~~customer accounted for more than~~ 10%in-demand content across multiple domains. The loss of ~~its net accounts receivable balance.~~

~~Table~~or significant reduction in this partnership or one of ~~Contents~~our other largest partners could have a material impact on our results of operations and cash flows.

Income Taxes~~—The Company is~~

We are treated as a corporation under applicable federal and state income tax laws and are subject to income taxes in the United States and numerous foreign jurisdictions. Significant judgment is required in determining ~~its~~our income tax expense and deferred tax assets and liabilities, including evaluating uncertainties in the application of accounting principles and complex tax laws.

~~The Company utilizes~~

We utilize the asset and liability method under which deferred tax assets and liabilities arise from the temporary differences between the tax basis of an asset or liability and its reported amount in the ~~consolidated financial statements,~~Consolidated Balance Sheets, as well as from net operating ~~loss~~losses (“NOLs”) and tax credit carryforwards. Deferred tax amounts are determined by using the tax rates expected to be in effect when the taxes will ~~actually~~ be paid or refunds received, as provided for under currently enacted tax law. The effect on deferred taxes of changes in tax rates and laws in future periods, if any, is reflected in the Consolidated Financial Statements in the period enacted. A valuation allowance is established if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. ~~The Company considers all~~We consider the available evidence, both positive and negative, including historical levels of income, expectations, and risks associated with estimates of future taxable income in assessing the need for a valuation allowance. ~~Net~~Certain of our earnings are indefinitely reinvested offshore and could be subject to additional income tax if repatriated. It is not practicable to determine the unrecognized deferred tax ~~assets as~~liability on a hypothetical distribution of ~~December 31, 2021 was included in other assets in the consolidated balance sheet.~~

~~The Company regularly reviews its~~those earnings.


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Determination of income tax ~~positions~~expense requires estimates and ~~benefits~~can involve complex issues that may require an extended period to ~~be realized. The Company recognizes~~resolve. We recognize estimated tax liabilities ~~based upon its estimate of whether and the extent to which additional taxes will be due~~ when such ~~estimates~~liabilities are more likely than not to be sustained upon examination by the taxing authority. ~~An uncertain~~Further, the estimated level of annual earnings before income tax ~~position will~~can cause the overall effective income tax rate to vary from period to period. Final determination of prior-year tax liabilities, either by settlement with tax authorities or expiration of statutes of limitations, could be ~~recognized only if it~~materially different than estimates reflected in assets and liabilities and historical income tax expense. The outcome of these final determinations could have a material effect on our income tax expense or cash flows in the period that determination is ~~more likely than not to be sustained. The Company recognizes~~made.

We recognize interest and penalties related to income tax matters as a component of income tax ~~expense.~~

expense in the Consolidated Statements of Operations.

Stock-Based Compensation~~—The Company measures~~ Expense

We measure and ~~recognizes~~recognize compensation expense for ~~stock options, restricted stock units and~~stock-based awards granted to employees, directors, and ~~service providers~~non-employees based on the estimated grant date fair ~~value on the date of the grant.~~ value. Stock-based awards include restricted stock units (“RSUs”), stock options, and restricted stock awards as well as stock purchase rights granted to employees under our employee stock purchase plan (“ESPP Rights”).

The fair value of ~~each option award is estimated on the grant date using the Black-Scholes option pricing model. The fair value of each~~RSUs and restricted stock ~~unit~~awards is based on the fair value of ~~the Company’s~~our common stock on the ~~date of grant. The Company~~ ~~estimates~~grant date. We estimate the fair value of ~~the shares to be issued under the employee~~ stock ~~purchase plan, or~~options and ESPP Rights using the Black-Scholes option-pricing model, which requires the use of the following assumptions:

Expected Term—The expected term represents the period that our stock-based awards are expected to be outstanding. For option ~~pricing model~~grants considered to be “plain vanilla,” we determine the expected term using the simplified method. The simplified method deems the term to be the average of the time to vesting and the contractual life of the options. For ESPP Rights, the expected term represents the term from the first day of the offering period to the purchase date.

Risk-Free Interest Rate—The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the ~~commencement~~time of ~~an offering period.~~grant for zero-coupon U.S. Treasury notes with maturities approximately equal to the expected term of the stock option or ESPP Rights.

Expected Volatility

—The expected volatility is derived from the average historical stock volatilities of several unrelated public companies within our industry that we consider to be comparable to our business, and to the extent available, our historical volatility over a period equivalent to the expected term of the stock option. The expected volatility is based on the historical volatility of our common stock over the estimated expected term of ESPP Rights.

Dividend Yield—The expected dividend was assumed to be zero as we have never paid dividends and have no current plans to do so.

Stock-based compensation is generally recognized on a straight-line basis over the requisite service period. The Company also grants certain awards that have performance-based vesting conditions. Stock-based compensation expense for such awards is recognized using an accelerated attribution method from the time it is deemed probable thatperiod, which usually matches the vesting ~~condition will be met through the time the service-based vesting condition has been achieved.~~ ~~The Company recognizes forfeitures~~period. Forfeitures are recognized as they occur.

Net Loss Per Share Attributable to Common Stockholders—

Basic and diluted net loss per share attributable to common stockholders is computed in conformity with the two-class method required for participating securities. ~~The Company considers~~Prior to our IPO, we treated all series of ~~its~~our redeemable convertible preferred stock ~~to be~~as participating securities, ~~as the holders of~~since such ~~stock have~~stockholders had the right to receive ~~nonforfeitable~~non-forfeitable dividends on a pari passu basis in the event that a dividend iswas paid on common stock. Under the two-class method, the net loss attributable to common stockholders iswas not allocated to the redeemable convertible preferred stock as the preferred stockholders dodid not have a contractual obligation to share in the Company’s losses.

Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potentially dilutive common stock equivalents to the extent they are dilutive. For purposes of this calculation, redeemable convertible preferred stock, common stock options, ~~restricted stock units,~~RSUs, and ESPP ~~early exercised common stock options, and common stock warrants~~Rights are considered to be common stock equivalents but have been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect is anti-dilutive for the ~~period~~periods presented.


Table of Contents

Comprehensive Loss—

Comprehensive loss ~~is composed of two components:~~includes net loss and other comprehensive income (loss)., net of tax. Other comprehensive income (loss), net of tax, refers to revenue, expenses, gains, and losses that under GAAP are recorded as an element of stockholders’ equity (deficit) but are excluded from net loss.

Research and Development—

Expenditures for research and development of ~~the Company’s~~our technology and non-refundable contributions to ~~the development of~~develop educator partner content are expensed when incurred unless they qualify as internal-use software development costs. Research and development costs consist principally of personnel costs, consulting services, content development contributions, and ~~allocated~~attributed facilities costs.

Advertising Costs—

Advertising costs are expensed as incurred and are included in sales and marketing ~~expense.~~in the Consolidated Statements of Operations. For the years ended December 31, ~~2019, 2020~~2023, 2022, and 2021, these costs were $~~11,566, $21,005~~$44,818, $39,940, and $~~28,740, respectively.~~

$28,740.

Foreign Currency—

The majority of ~~the Company’s~~our sales contracts are denominated in U.S. dollars. In addition, the functional currency of ~~the Company’s~~our international subsidiaries is U.S. dollars. Monetary assets and liabilities denominated in currencies other than the functional currency are remeasured to the functional currency at period-end exchange rates. Foreign currency transaction gains and losses ~~have not been material for any periods presented.~~

~~Table~~resulting from remeasurement are recognized within other expense, net in the Consolidated Statements of ~~Contents~~

Operations.

~~During the years ended December 31, 2019, 2020 and 2021, the Company capitalized~~ 0~~, $3,956~~ ~~and $1,765~~

A valuation allowance is provided for deferred tax assets where the recoverability of the assets is uncertain. The determination to provide a valuation allowance is dependent upon the assessment of whether it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company recorded the redeemable convertible preferred stock at fair value on the dates of issuance, net of issuance costs. The Company classified the redeemable convertible preferred stock outside of stockholders’ deficit because in the event of certain “liquidation events” that were not solely within its control (including merger, acquisition, or sale of all or substantially all of its assets), the shares would become redeemable at the option of the holders. The Company did not adjust the carrying values of the redeemable convertible preferred stock to the deemed liquidation values of such shares since a liquidation event was not probable at the consolidated balance sheet date.

~~The significant rights and preferences of the outstanding redeemable convertible preferred stock were as follows:~~

~~Dividends~~—Dividend holders of Series A, Series B, Series C, Series D, Series E and Series F redeemable convertible preferred stocks (“Series A,” “Series B,” “Series C,” “Series D,” “Series E,” and “Series F” and collectively, the “Preferred Stock”) were entitled to receive noncumulative dividends at an annual rate of $~~0.077, $0.3922, $0.4075, $0.60, $0.96~~ ~~and $1.36~~ per share, respectively. Such dividends would be payable when declared by the Company’s Board of Directors (the “Board of Directors”). No dividends would be payable on any common stock until dividends on Series A, Series B, Series C, Series D, Series E and Series F have been paid or declared by the Board of Directors. ~~NaN~~ ~~dividends were declared or paid.~~

~~Redemption~~—While the Preferred Stock was not mandatorily redeemable, it was contingently redeemable in the event of certain “liquidation events” that were not solely within its control (including merger, acquisition, or sale of all or substantially all of its assets).

~~Liquidation Preference—In the event of any liquidation, dissolution, or winding-up of the Company, holders of Series A were entitled to a liquidation preference of $0.9628~~ ~~per share, plus any declared but unpaid dividends prior to, and in preference to, any distributions to the holders of common stock. Holders of Series B were entitled to a liquidation preference of $4.9029~~ per share, plus any declared but unpaid dividends prior to, and in preference to, any distributions to the holders of Series A and common stock. Holders of Series C were entitled to a liquidation preference of $~~5.0935~~ per share, plus any declared but unpaid dividends prior to, and in preference to, any distributions to the holders of Series A, Series B, and common stock. Holders of Series D were entitled to a liquidation preference of $~~7.50~~ per share, plus any declared but unpaid dividends prior to, and in preference to, any distributions to the holders of Series A, Series B, Series C, and common stock. Holders of Series E were entitled to a liquidation preference of $~~12.00~~ per share, plus any declared but unpaid dividends prior to, and in preference to, any distributions to the holders of Series A, Series B, Series C, Series D, and common stock. Holders of Series F were entitled to a liquidation preference of $~~17.00~~ per share, plus any declared but unpaid dividends prior to, and in preference to, any distributions to the holders of Series A, Series B, Series C, Series D, Series E, and common stock. Any assets remaining following the distribution to the holders of Series A, Series B, Series C, Series D, Series E, and Series F would be distributed ratably among the holders of common stock.

~~Voting Rights~~—The holders of Series A, Series B, Series C, Series D, Series E and Series F were entitled to the number of votes equal to the number of shares of common stock into which such redeemable convertible preferred stock was convertible. ~~The holders of Preferred Stock, voting as a single class, would be entitled to elect two members of the Board of Directors at any election of directors.The holders of common stock, voting as a single class, would be entitled to elect one member of the Board of Directors at any election of directors.~~ The holders of the Preferred Stock and common stock, voting together as a single class on an as-converted basis, would be entitled to elect any remaining members of the Board of Directors at any election of directors.

~~Conversion~~—Each share of Series A, Series B, Series C, Series D, Series E, and Series F was convertible, at the option of the holder, into such number of fully paid nonassessable shares of common stock as was determined by dividing by the original issue price by the conversion price. The conversion price and resulting ratio was the same as the original issue price and ratio for each share of Series A, Series B, Series C, Series D, Series E and Series F. The conversion formula would be adjusted for such events as dilutive issuances, stock splits, or business combinations. Each share of Preferred Stock would automatically be converted into shares of common stock at the then-effective conversion price applicable to such share upon the earlier of (i) the date specified by written consent or agreement of holders of a majority of the shares of each series of Preferred Stock then outstanding (each voting separately as a series), or (ii) immediately upon the closing of the sale of the Company’s common stock in a firm commitment, underwritten public offering registered under the Securities Act of 1933, as amended (the “Securities Act”), other than a registration relating solely to a transaction under Rule 145 under the Securities Act (or any successor thereto) or to an employee benefit plan of the Company, the public offering price of which results in aggregate proceeds to the Company (before payment of any underwriters’ discounts and expenses relating to the issuance) of at least $~~50,000~~. Notwithstanding the foregoing, each share of any series of Preferred Stock would automatically be converted into shares of common stock at the then-effective conversion price applicable to such share upon the date specified by written consent or agreement of holders of a majority of the shares of such series of Preferred Stock.

~~Fair Value of Common Stock~~— Prior to the IPO, the fair value was determined by the Company’s Board of Directors. The Board of Directors considers numerous objective and subjective factors to determine the fair value of the Company’s common stock at each meeting in which awards are approved. The factors considered include, but are not limited to: (i) the results of contemporaneous independent third-party valuations of the Company’s common stock; (ii) the prices, rights, preferences, and privileges of the Company’s redeemable convertible preferred stock relative to those of its common stock; (iii) the lack of marketability of the Company’s common stock; (iv) actual operating and financial results; (v) current business conditions and projections; (vi) the likelihood of achieving a liquidity event, such as an initial public offering or sale of the Company, given prevailing market conditions; and (vii) precedent transactions involving the Company’s shares. Subsequent to the IPO, the fair value of the Company's common stock is determined by the closing price, on the date of grant, of its common stock, which is traded on the New York Stock Exchange.

~~Expected Term~~—The expected term represents the period that the Company’s stock-based awards are expected to be outstanding. For option grants considered to be “plain vanilla,” the Company determined the expected term using the simplified method. The simplified method deems the term to be the average of the time to vesting and the contractual life of the options. For ESPP, the expected term represents the term from the first day of the offering period to the purchase date.

~~Expected Volatility~~—Since the Company does not have a sufficient trading history of its common stock, the expected volatility was derived from the average historical stock volatilities of several unrelated public companies, within the Company’s industry, that it considers to be comparable to its business over a period equivalent to the expected term of the stock option grants or ESPP shares.

~~Dividend Rate—The expected dividend was assumed to be zero as the Company has never paid dividends and has no current plans to do so.~~

~~Each of these inputs above is subjective and generally requires significant judgment to determine.~~

~~During~~2022. No matching contributions were made during the year ended December 31, ~~2017, the Company entered into~~2021.


Delaware		45-3560292
~~Delaware~~		~~45-3560292~~
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
381 E. Evelyn Ave. Mountain View,, California		94041
(Address of principal executive offices)		(Zip Code)


					Page
						~~Page~~
Special Note Regarding Forward-Looking Statements

PART I
Item 1.			Business		4
Item 1A.			Risk Factors		18
~~PART I~~
~~Item 1.~~	~~Business~~	4
~~Item 1A.~~	~~Risk Factors~~	18
Item 1B.	Unresolved Staff Comments			5462
Item 2. 1C.			~~Properties~~C ybersec urity		5462
Item 3.2.			~~Legal Proceedings~~Properties		5463
Item 3.			Legal Proceedings		63
Item 4.			Mine Safety Disclosures		5463

PART II
Item 5.			Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities		5564
Item 6.			Reserved		5566
Item 7.			Management’s Discussion and Analysis of Financial Condition and Results of Operations		5666
Item 7A.			Quantitative and Qualitative Disclosures About Market Risk		7582
Item 8.			Financial Statements and Supplementary Data		7783
Item 9.			Changes in and Disagreements ~~With~~with Accountants on Accounting and Financial Disclosure		~~106~~116
Item 9A.			Controls and Procedures		~~106~~116
Item 9B.			Other Information		~~106~~117
Item 9C.			Disclosure Regarding Foreign Jurisdictions that Prevent Inspections		~~106~~117

PART III
Item 10.			Directors, Executive Officers, and Corporate Governance		~~107~~118
Item 11.			Executive Compensation		~~107~~118
Item 12.			Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		~~107~~118
Item 13.			Certain Relationships and Related Transactions, and Director Independence		~~107~~118
Item 14.			Principal Accounting Fees and Services		~~107~~118

PART IV
Item 15.			Exhibits and Financial Statement Schedules		~~108~~119
Item 16.			Form 10-K Summary		~~109~~120
Signatures


☒x			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Table of Contents ~~continue to improve our operational, financial, and management controls;~~


	Year Ended December 31,
	2019			2020			2021
	(in thousands)
Revenue	$	184,411		$	293,511		$	415,287
Cost of revenue(1)		89,589			138,846			165,818
Gross profit		94,822			154,665			249,469
Operating expenses:
Research and development(1)		56,364			76,784			135,410
Sales and marketing(1)		57,042			107,249			179,337
General and administrative(1)		29,810			37,215			77,785
Total operating expenses		143,216			221,248			392,532
Loss from operations		(48,394	)		(66,583	)		(143,063	)
Other income (expense):
Interest income		3,282			1,175			320
Interest expense		(625	)		(12	)		—
Other income (expense), net		(264	)		120			(346	)
Loss before income taxes		(46,001	)		(65,300	)		(143,089	)
Income tax expense		718			1,515			2,126
Net loss	$	(46,719	)	$	(66,815	)	$	(145,215	)


	As of December 31,
	2020		2021
Paid Enterprise Customers		387		803
YoY Growth				107	%


	Year Ended December 31, 2019
	GAAP			Stock-based compensation			Payroll tax expense related to stock-based activities			Non-GAAP
Revenue	$	184,411		$	—		$	—		$	184,411
Cost of revenue		89,589			(491	)		—			89,098
Gross profit		94,822			491			—			95,313
Operating expenses:
Research and development		56,364			(7,038	)		(23	)		49,303
Sales and marketing		57,042			(3,189	)		(34	)		53,819
General and administrative		29,810			(5,599	)		(73	)		24,138
Total operating expenses		143,216			(15,826	)		(130	)		127,260
Loss from operations		(48,394	)		16,317			130			(31,947	)
Interest income		3,282			—			—			3,282
Interest expense		(625	)		—			—			(625	)
Other income (expense), net		(264	)		—			—			(264	)
Loss before income taxes		(46,001	)		16,317			130			(29,554	)
Income tax expense		718			—			—			718
Net loss	$	(46,719	)	$	16,317		$	130		$	(30,272	)
Net loss per share attributable to common stockholders—basic and diluted	$	(1.45	)							$	(0.94	)
Weighted-average shares used in computing net loss per share attributable to common stockholders—basic and diluted		32,276,258									32,276,258


	Year Ended December 31, 2020
	GAAP			Stock-based compensation			Payroll tax expense related to stock-based activities			Non-GAAP
Revenue	$	293,511		$	—		$	—		$	293,511
Cost of revenue		138,846			(516	)		—			138,330
Gross profit		154,665			516			—			155,181
Operating expenses:
Research and development		76,784			(6,960	)		(31	)		69,793
Sales and marketing		107,249			(4,097	)		(22	)		103,130
General and administrative		37,215			(5,234	)		(205	)		31,776
Total operating expenses		221,248			(16,291	)		(258	)		204,699
Loss from operations		(66,583	)		16,807			258			(49,518	)
Interest income		1,175			—			—			1,175
Interest expense		(12	)		—						(12	)
Other income (expense), net		120			—			—			120
Loss before income taxes		(65,300	)		16,807			258			(48,235	)
Income tax expense		1,515			—			—			1,515
Net loss	$	(66,815	)	$	16,807		$	258		$	(49,750	)
Net loss per share attributable to common stockholders—basic and diluted	$	(1.80	)							$	(1.34	)
Weighted-average shares used in computing net loss per share attributable to common stockholders—basic and diluted		37,207,492									37,207,492


	Year Ended December 31, 2021
	GAAP			Stock-based compensation			Payroll tax expense related to stock-based activities			Non-GAAP
Revenue	$	415,287		$	—		$	—		$	415,287
Cost of revenue		165,818			(2,092	)		(64	)		163,662
Gross profit		249,469			2,092			64			251,625
Operating expenses:
Research and development		135,410			(42,783	)		(755	)		91,872
Sales and marketing		179,337			(25,992	)		(248	)		153,097
General and administrative		77,785			(20,316	)		(576	)		56,893
Total operating expenses		392,532			(89,091	)		(1,579	)		301,862
Loss from operations		(143,063	)		91,183			1,643			(50,237	)
Interest income		320			—			—			320
Other income (expense), net		(346	)		—			—			(346	)
Loss before income taxes		(143,089	)		91,183			1,643			(50,263	)
Income tax expense		2,126			—			—			2,126
Net loss	$	(145,215	)	$	91,183		$	1,643		$	(52,389	)
Net loss per share attributable to common stockholders—basic and diluted	$	(1.28	)							$	(0.46	)
Weighted-average shares used in computing net loss per share attributable to common stockholders—basic and diluted		113,587,523									113,587,523


	December 31, 2020			December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	79,878		$	580,658
Marketable securities		205,402			241,117
Accounts receivable, net of allowance for doubtful accounts of $48 and $105 as of December 31, 2020 and 2021, respectively		40,721			34,396
Deferred costs		14,077			19,666
Prepaid expenses and other current assets		14,993			16,494
Total current assets		355,071			892,331
Property, equipment and software, net		18,644			24,725
Operating lease right-of-use assets		21,622			16,321
Intangible assets, net		10,570			10,091
Restricted cash		2,548			2,061
Other assets		9,169			13,381
Total assets	$	417,624		$	958,910

Liabilities, Redeemable Convertible Preferred Stock, and Stockholders’ Equity (Deficit)
Current liabilities:
Educator partners payable	$	39,005		$	49,206
Other accounts payable and accrued expenses		12,897			23,257
Accrued compensation and benefits		12,997			18,353
Operating lease liabilities, current		7,926			8,031
Deferred revenue, current		76,080			94,637
Other current liabilities		4,739			7,639
Total current liabilities		153,644			201,123
Operating lease liabilities, non-current		18,305			11,864
Other liabilities		644			559
Deferred revenue, non-current		4,562			3,851
Total liabilities		177,155			217,397
Commitments and contingencies (Note 11)
Redeemable convertible preferred stock:
$0.00001 par value— 76,420,805 and 0 shares authorized as of December 31, 2020 and 2021, respectively; 75,305,400 and 0 shares issued and outstanding as of December 31, 2020 and 2021, respectively; and aggregate liquidation preference, $464,036 and 0 as of December 31, 2020 and 2021, respectively		462,293			0
Stockholders’ equity (deficit):
Preferred stock, $0.00001 par value— 0 and 10,000,000 shares authorized as of December 31, 2020 and 2021, respectively; 0 shares issued and outstanding as of December 31, 2020 and 2021		0			0
Common stock, $0.00001 par value— 162,000,000 and 300,000,000 shares authorized as of December 31, 2020 and 2021, respectively; 40,301,290 and 141,906,041 shares issued and outstanding as of December 31, 2020 and 2021, respectively		0			1
Additional paid-in capital		126,408			1,235,231
Treasury stock— at cost, 2,747,938 shares as of December 31, 2020 and 2021		(4,701	)		(4,701	)
Accumulated other comprehensive income (loss)		20			(252	)
Accumulated deficit		(343,551	)		(488,766	)
Total stockholders’ equity (deficit)		(221,824	)		741,513
Total liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit)	$	417,624		$	958,910


	Redeemable																	Accumulated
	Convertible											Additional						Other						Total
	Preferred Stock						Common Stock					Paid-In			Treasury			Comprehensive			Accumulated			Stockholders’
	Shares			Amount			Shares			Amount		Capital			Stock			Income (Loss)			Deficit			Equity (Deficit)
Balances— January 1, 2019		58,864,178		$	227,861			29,464,090		$	—	$	56,997		$	(4,701	)	$	(14	)	$	(230,017	)	$	(177,735	)
Issuance of Series E redeemable convertible preferred stock		8,794,164			105,530			—			—		—			—			—			—			—
Issuance costs of Series E redeemable convertible preferred stock		—			(710	)		—			—		—			—			—			—			—
Issuance of common stock upon exercise of options		—			—			4,211,484			—		8,293			—			—			—			8,293
Issuance of common stock in connection with settlement liability		—			—			1,346,610			—		7,622			—			—			—			7,622
Issuance of common stock in connection with asset acquisition		—			—			610,556			—		3,846			—			—			—			3,846
Issuance of restricted stock awards		—			—			50,000			—		—			—			—			—			—
Vesting of early exercise stock options		—			—			—			—		927			—			—			—			927
Stock-based compensation expense		—			—			—			—		16,679			—			—			—			16,679
Change in unrealized gain on marketable securities		—			—			—			—		—			—			88			—			88
Net loss		—			—			—			—		—			—			—			(46,719	)		(46,719	)
Balances—December 31, 2019		67,658,342		$	332,681			35,682,740		$	—	$	94,364		$	(4,701	)	$	74		$	(276,736	)	$	(186,999	)
Issuance of Series F redeemable convertible preferred stock		7,647,058			130,000			—			—		—			—			—			—			—
Issuance costs of Series F redeemable convertible preferred stock		—			(388	)		—			—		—			—			—			—			—
Issuance of common stock upon exercise of options		—			—			4,204,065			—		10,081			—			—			—			10,081
Issuance of restricted stock awards		—			—			36,250			—		—			—			—			—			—
Issuance of common stock upon exercise of warrants		—			—			190,930			—		38			—			—			—			38
Vesting of early exercise stock options		—			—			—			—		196			—			—			—			196
Issuance of common stock in connection with content asset		—			—			187,305			—		3,956			—			—			—			3,956
Stock-based compensation expense		—			—			—			—		17,773			—			—			—			17,773
Change in unrealized loss on marketable securities		—			—			—			—		—			—			(54	)		—			(54	)
Net loss		—			—			—			—		—			—			—			(66,815	)		(66,815	)
Balances—December 31, 2020		75,305,400		$	462,293			40,301,290		$	—	$	126,408		$	(4,701	)	$	20		$	(343,551	)	$	(221,824	)
Conversion of redeemable convertible preferred stock to common stock upon initial public offering		(75,305,400	)		(462,293	)		75,305,400			1		462,292			—			—			—			462,293
Issuance of common stock upon initial public offering, net of offering costs		—			—			17,024,276			—		518,869			—			—			—			518,869
Issuance of common stock upon exercise of options		—			—			8,731,889			—		32,287			—			—			—			32,287
Issuance of common stock related to employee stock purchase plan		—			—			228,048			—		6,397			—			—			—			6,397
Issuance of restricted stock awards		—			—			4,722			—		—			—			—			—			—
Vesting of restricted stock units		—			—			502,135			—		—			—			—			—			—
Tax withholding on vesting of restricted stock units		—			—			(191,719	)		—		(7,172	)		—			—			—			(7,172	)
Vesting of early exercise stock options		—			—			—			—		77			—			—			—			77
Stock-based compensation expense		—			—			—			—		96,073			—			—			—			96,073
Change in unrealized loss on marketable securities		—			—			—			—		—			—			(272	)		—			(272	)
Net loss		—			—			—			—		—			—			—			(145,215	)		(145,215	)
Balances—December 31, 2021		—		$	—			141,906,041		$	1	$	1,235,231		$	(4,701	)	$	(252	)	$	(488,766	)	$	741,513


	As of December 31, 2020
	Fair Value		Level 1		Level 2
Financial assets:
Cash equivalents—money market funds	$	58,997	$	58,997	$	—
Marketable securities:
Corporate debt securities		8,551		—		8,551
Commercial paper		26,469		—		26,469
U.S. government Treasury bills		170,382		170,382		—
Total financial assets	$	264,399	$	229,379	$	35,020


	As of December 31, 2021
	Fair Value		Level 1
Financial assets:
Cash equivalents—money market funds	$	539,091	$	539,091
Marketable securities:
U.S. government Treasury bills		241,117		241,117
Total financial assets	$	780,208	$	780,208


		January 1, 2020		December 31, 2020		December 31, 2021
	December 31, 2023							December 31, 2023	December 31, 2022	January 1, 2022
Contract assets:
Accounts receivable, net of allowance for doubtful accounts		$	16,592	$	39,976	$	22,286
Unbilled revenue			64		745		12,110
Billed accounts receivable, net of allowance for credit losses
Billed accounts receivable, net of allowance for credit losses
Billed accounts receivable, net of allowance for credit losses
Unbilled accounts receivable
Total contract assets		$	16,656	$	40,721	$	34,396

Contract liabilities:
Contract liabilities:
Contract liabilities:
Deferred revenue		$	41,607	$	80,642	$	98,488
Total contract liabilities		$	41,607	$	80,642	$	98,488


	Year Ended December 31,
Commissions and related payroll tax expenditures:	2023		2022		2021
Capitalization	$	17,094	$	17,766	$	14,217
Amortization	12,291		12,618		8,197


	As of December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Market Value
Corporate debt	$	8,547	$	4	$	—		$	8,551
Commercial paper		26,469		—		—			26,469
U.S. government Treasury bills		170,366		17		(1	)		170,382
Total marketable securities	$	205,382	$	21	$	(1	)	$	205,402


	December 31, 2020				December 31, 2021
	Amortized Cost		Estimated Fair Market Value		Amortized Cost		Estimated Fair Market Value
Due in one year or less	$	205,382	$	205,402	$	241,369	$	241,117


	December 31, 2023				December 31, 2022
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
U.S. Treasury securities	$	65,746	$	(19)	$	356,767	$	(744)


	Estimated Useful Lives	December 31, 2020			December 31, 2021
Internal-use software	2 years	$	21,582		$	35,508
Computer equipment and software	2 years		2,928			4,163
Leasehold improvements	Shorter of useful life or remaining lease term		7,057			7,119
Furniture and fixtures	5 years		2,973			3,051
Total property, equipment and software			34,540			49,841
Less accumulated depreciation and amortization			(15,896	)		(25,116	)
Property, equipment and software—net		$	18,644		$	24,725


	Estimated Useful Lives	December 31, 2023		December 31, 2022
Internal-use software and website development	2 - 5 years	$	73,881	$	53,215
Computer equipment and purchased software	2 years	4,405		4,662
Leasehold improvements	Shorter of useful life or remaining lease term	6,923		6,567
Furniture and fixtures	5 years	2,757		2,714
Total property, equipment, and software		87,966		67,158
Less accumulated depreciation and amortization		(57,558)		(40,062)
Property, equipment, and software, net		$	30,408	$	27,096


		December 31, 2020							December 31, 2021
	Estimated Useful Lives	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Gross Carrying Value		Accumulated Amortization			Net Carrying Value
		December 31, 2023																December 31, 2023			December 31, 2022
		Gross Carrying Value														Gross Carrying Value	Accumulated Amortization		Net Carrying Value	Gross Carrying Value		Accumulated Amortization	Net Carrying Value
Content assets
Developed technology
Assembled workforce	3 years	$	181	$	(83	)	$	98	$	181	$	(143	)	$	38
Developed technology	6 years		8,446		(1,930	)		6,516		8,446		(3,337	)		5,109
Content assets	5 years		3,956		0			3,956		5,721		(777	)		4,944
Intangible assets		$	12,583	$	(2,013	)	$	10,570	$	14,348	$	(4,257	)	$	10,091


Years Ending December 31
2022	$	2,586
2023		2,551
2024		2,558
2025		2,030
2026		364
2027		2
Total	$	10,091


2024	$	4,258
2025	3,713
2026	1,621
2027	1,190
2028	892
Thereafter	46
Total	$	11,720


2024	$	6,764
2025	47
Total lease payments	6,811
Less imputed interest	(215)
Present value of operating lease liabilities	$	6,596
Operating lease liabilities, current	6,557
Operating lease liabilities, non-current	39
Total operating lease liabilities	$	6,596


	December 31, 2023		December 31, 2022
Weighted-average remaining operating lease term (in years)	0.93		1.93
Weighted-average operating lease discount rate	5.78	%	5.76	%


	December 31, 2023		December 31, 2022
Deferred tax assets:
Net operating loss carryforwards	$	130,849	$	112,003
Capitalized research and development costs	51,940		29,047
Research and development credits	42,764		31,248
Stock-based compensation	11,160		22,196
Lease liabilities	1,512		3,312
Deferred revenue	937		1,058
Accruals and reserves	813		743
Gross deferred tax assets	239,975		199,607
Valuation allowance	(225,513)		(185,606)
Total deferred tax assets	$	14,462	$	14,001
Deferred tax liabilities:
Deferred commissions	(6,768)		(5,586)
Depreciation and amortization	(5,810)		(5,086)
Operating lease ROU assets	(1,070)		(2,172)
Total deferred tax liabilities	$	(13,648)	$	(12,844)
Net deferred tax assets	$	814	$	1,157


	Purchase Obligations
2024	$	9,875
2025	11,308
2026	1,875
Total	$	23,058


		December 31, 2020
Shares Series	Issue Date	Authorized		Outstanding		Issue Price		Carrying Value		Liquidation Amount
A	December 2011 and June 2012		23,023,168		23,023,168	$	0.9628	$	22,127	$	22,167
B	June 2013, July 2013, and October 2013		12,849,539		12,849,539		4.9029		62,901		63,000
C	August 2015 and September 2015		12,091,062		12,091,062		5.0935		61,351		61,586
D	April 2017, June 2017, September 2017, and October 2017		10,900,409		10,900,409		7.50		81,482		81,753
E	April 2019 and July 2019		9,166,666		8,794,164		12.00		104,820		105,530
F	July 2020		8,389,961		7,647,058		17.00		129,612		130,000
			76,420,805		75,305,400			$	462,293	$	464,036


	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
Balance—January 1, 2019		27,748,135		$	2.16		8.13	$	4,574
Granted		8,229,541			5.73
Exercised		(4,261,484	)		2.09
Canceled		(2,750,552	)		2.08
Balance—December 31, 2019		28,965,640		$	3.18		8.00	$	106,730
Granted		10,054,450			7.90
Exercised		(4,240,315	)		2.42
Canceled		(2,321,367	)		5.04
Balance—December 31, 2020		32,458,408		$	4.60		7.75	$	625,058
Granted		663,256			29.99
Exercised		(8,731,889	)		3.70
Canceled		(1,388,903	)		5.62
Balance—December 31, 2021		23,000,872		$	5.62		6.81	$	436,630
Options vested—December 31, 2021		13,931,506		$	3.48		5.91	$	292,064


	Number of Shares			Weighted- Average Grant Fair Value		Aggregate Intrinsic Value
Unvested balance—January 1, 2020		—		$	—	$	—
Granted		3,286,400			17.91
Forfeited		(9,800	)		12.78
Unvested balance—December 31, 2020		3,276,600		$	17.92	$	19,454
Granted		5,405,979			35.13
Released		(502,135	)		15.73
Forfeited		(793,156	)		27.07
Unvested balance—December 31, 2021		7,387,288		$	29.68	$	180,545


	Number of Shares	Weighted-Average Grant Date Fair Value		Aggregate Intrinsic Value
Unvested balance—December 31, 2022	22,773,053	$	17.75	$	269,779
Granted	7,335,245	12.41
Vested	(8,449,866)	17.73
Forfeited	(3,297,386)	19.91
Unvested balance—December 31, 2023	18,361,046	$	15.24	$	355,653