COUR - Earnings call transcript Q3 2024

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to Coursera's Third Quarter 2024 Earnings Call. [Operator Instructions] And please be advised that this call is being recorded. [Operator Instructions]

I'd like to turn the call over to Cam Carey, Head of Investor Relations. Mr. begin. may you Carey,

Cam Carey

Chief thank Conference joining by Call. Executive Hahn, Coursera's and QX Jeff for XXXX Chief our Ken and Earnings Today, Officer; Officer. you everyone, us for Coursera's Maggioncalda, Financial Hi, I'm joined

the Following for will questions. call their we prepared remarks, open

and remarks located simultaneously press close prepared at of supplemental this is including being investor.coursera.com, and been the release, our more posted. our on earnings tables was where available Our after slides have Investor webcast versions issued and financial market is Relations website call

Relations During this be present most both measures non-GAAP on earnings and website. directly reconciliation GAAP Investor and in the found A of call, we release to can will financial presentation press measures. measure today's comparable GAAP supplemental non-GAAP the

refer change year-over-year all Please unless percentages note, growth specified. otherwise to

statements statements future our call from made are risks including statements number of events could in SEC this those and differ presentation release, filings. events and to uncertainties, implied Actual and these a and those based or during supplemental current all results relating earnings on materially results in discussed Additionally, to expressed expectations due press beliefs. and forward-looking forward-looking

to And to like that, it turn with over I'd Jeff.

Jeffrey Maggioncalda

you everyone. all. Good be quarter. had to It's third afternoon, a solid great We with

on Our deliver organization, our we're emphasize most including initiatives. operating and long-term in the the to financial important execution driving content, marketing across results focus and order product and growth

a Conference, Coach and annual learning with of Connect of collaborate Coursera our features. Last We the learners, to at relevant institutions engaging rapidly which together work. month, and on our and personalized, experience we our showcased connected expanding showcased educators Coursera brings learning globally ecosystem progress more future

scale able keep tools world's university forge like And technologies content education connections corporate is and global high-quality to we interactive. and academic educators pace for and a helped that to quickly move We demoed emerging and Course to increasingly is and industry and market. fast-changing Builder create ensure new modular the capabilities authors to stronger best with integrity between labor

of like across announcements are slate transformation industry process. in global a Before needs I'd micro we and discussing brief unified platform, the development our education skills addressing reshaping provide digital made of increasingly the the higher and update on credentials how to

surveyed outcomes. September, new institutions micro over found the survey higher education education credentials including those is more higher findings In believe in than than institutions Chancellors, credentials of the of across we in that leaders Provost that years. Interest our a The them were Half long-term leaders, nearly XX% representing countries. said currently micro published their adopt plan to Coursera career that Among survey and strengthen XX X,XXX XXX leaders, X Deans, consistent. more surveys offer X/X don't, can students' growing. next and micro credentials

They Despite factors with their have employers. their and curriculum with findings, of been in about the widespread that our were that for has also conviction progress that offer for said driving programs the obstacles all uncertainty by the provide demanded of quality, inconsistent integration headwinds existing in cited the Leaders job-related skills awareness, around adoption. which industry. for these challenges to pace support. been academic to enable career and outcomes are enroll credentials believe strengthen and students to over students XX% credit about long-term credentials institutions can micro XX% clear more likely micro

up certificates. Education, But entry-level to most as our European as for efforts ongoing mentioned initiative. recommendations of Previously, one now our credit well Transfer ECTS, and from to XX the American our credit Council I've our recognition Accumulation on the key professional popular micro secure credentials is which Credit of System, industry differentiators or recognize

acceptance Framework tools, or has academic suite paired of advancements and the universities how reasons by professional to higher India, paces offerings. market and I'm with our seeing integrity and from registered for Coursera country facilitate learning, for Skills second-largest one growing education online at determine When a India professional occur alignment to their achieved of learners. to efforts Today, credit our of as NSQF for of recognition Qualification XX for our these It's academic Campus, employers qualifications. pleased to we IBM. recently and expanded enhance we Google significantly evolve be countries trends will credibility universities India's Coursera share these certificates across and helping that and they National we're their critical believe the varying

Texas University programs, it of of a of of System. our micro the across Coursera, partnership Texas The access of the continues for and them with best be scale. Future the credentials fields. is and to have country's academic X to Texas University professional the program, most One extensive certificates skills UT's our continues Students equipping examples job-ready to and between deepen partnership credentials industry-recognized in variety with a one institutions

or professionals. nearly institutions. than X more professional enrolled at than we this of XX,XXX workforces home many career path date, of This requirements industry, skill Texas trend students of will of is more is program X care workforce country's care care health XX,XXX largest health more the professionals. to like advanced health in for have enrolled others, is expand earning UT's students include one XX,XXX the increasingly digital, certificates To and fall, completion. evolving certificates, even becoming announced health to The the and the

micro vital credentials qualifications. requirements to and health technology supplementing data, change, business care in are role As

various integrating treatment processes. are stages skills patient portals AI like the IT relevant managing into activities telehealth to apps mobile and and Software diagnostic and early platforms with administrative increasingly of along

I enriching platform graduates that proud for broad-based by innovation in future process. am the workforce, System the is the UT curriculum demonstrating We important and their and is are the role of in the preparing playing inspired our

I'd discuss X now like across our And advantages. to platform updates

We recently our Business Graduate Said the including the School partners Universidad School welcomed create. universities content they of is the Oxford, XX Europea. advantage to Dubai Real IMD and Tourism, ecosystem, XXX leading University educator Coursera's Business School new credentials partners first from and partners Madrid First, and like catalog. that of our and College courses high-quality Coursera educator

also rapidly are Beyond science, and Airbus experts in business, technology Johns with Adobe, Liberty partnerships industry Xbox. and fields data Hopkins We Mutual our Amazon, health, Medicine, like including broadening

are changing as trusted Together we destination the and educators, establishing for global credentials institutions and with skills Coursera education rapidly in-demand our individuals high-quality for and the seeking economy.

generative certificates today's For entry-level key focus and on update, content credentials. I'll and categories: X professional AI

create digital pathways entry-level Our certificates can well-paying jobs. to professional

earn As towards the degree. college well as credit

this micro-credentials partners, and job in which rapidly education, credit recent industry with roles, our role are As poised transformation study is catalog of recommendations. new play languages the higher we've increasingly been expanding prominent suggests an to why

in start so entry-level launches year, Coursera partners, which added existing careers far. recent design, live on of are selection new includes X including professional on Microsoft, the platform. ADP, This we many the Adobe, Amazon, this Games, At new of in IBM we've expanding than more. and had graphic XX and game of more Epic from design, XX XXXX roles with and and sales certificates

my update. to turning Now second catalog

every these cumulative Let's with discuss courses and enrollments our and courses we're over X seeing pace XXXX of growing generative X selection the than have and of generative projects XXX to minute. in accelerate date with enrollments million now credentials. more AI AI We

that employers content a or that gains generative essential, selection are AI innovation for role training specific we broad function. job requires is and is a of looking the believe achieving Although to that unlock productivity

AI IBM generative learns marketing as and in like over cybersecurity, to specializations the that Microsoft AI functions CoPilot data tools a integrate HR, introduced with more. their recently help work. dozen instruction new latest science, day-to-day into such designed and was

our efforts However, extend new beyond content.

partners our AI enhance to continued our content. with have with of work existing certificates portfolio to We generative

refreshed Google accumulated course, nearly matter earlier has on Coursera. of and XXX,XXX directly credentials videos that year, Recently, enhance curriculum, from including readings industry feature entry-level certificates activities, has professional of the of and created courses their own enrollments most in AI Google's several AI this practical experts. months. they Their Essentials X training each launched field-specific popular a with

partners are of forefront at technologies. the Our emerging industry

services the we global of are making partnership tools work more skilling they generation our proud of and next how market broadly, education technology, will a on fundamentally accessible As create labor reshape equally and scale. and that is

reach platform. second brings the This me our advantage, global to major our of

more added million by our end base the of XXX September. growing registered learners to million we global X quarter, This new than

the of verticals. all paid spanning grew enterprise additions XX% recent with we institutions customers Additionally, number X,XXX by to over

more to which rapidly advantage, And value create expanding continue product is to for ecosystem, platform's our we our invest third innovation. in

and indication including AI educators are and teaching. both Our focused we of given making marketing, an institutional in innovation advancements across generative learning the data, uniquely the with And where platform, content, customers our and technology to leverage early will transform how on experience learners, efforts Cortera. we Coach our of are redefine AI Coursera can areas

leading as Since pass completed it Coach rapidly million case the And has new to initial assistant, per quiz building over lessons we're personalized launched more more rates, grading X use faster X enhancements. on with learning higher hour. feedback supported with Coach a and learners

First, goals. tailored Coach recommending learning experience paths paths identify their skills procured help based will explore guidance transferable career and learners and on

it the and be later career-based We important launch consumer an discovery to expect this segment. out complement year rolling in currently experience to our

authoring coming a course AI-powered learner partner our of content, a modifications refine the over than which suggest XXX,XXX experience practices. instructional Builder, instructual pedagogical to support and Since been March, building more uphold have Coach as create the design will Coach educators course new authors to best used authoring the will for thought core in designer Course design tool Second, help has act piloting begin filter personal custom launching courses, for and generative Coursera's course integration logged months. enrollments. in giving and in XXX

Coach course use see capabilities, course will to to our how builder partners further personalization and customers With coming accelerate the excited scale. and customization at we're

videos learning hands of advanced for reflections enhancement learning learning a sitting simply now is watching the is online in of now Coach watch learning take passive from and where days write to capability us Coursera then would earliest is learning the interactive instructors this. its to of MOOCs do and new was interactive a active video. us last stage, AI, back in advancing from With assessments. coach launch third learning, online active and In entering learners the XXXX live instruction. passive The learning and and to

coach language Coach The generative educator interactive personalized dialogues. launched was instructions custom give Coach that We've student large including that modalities an their courses allows powering extension uses into like unimaginable feature interaction and instructions started instructor. a started knowledge, on just that University is that before Vanderbilt an to coach deliver share we'll the partners dialogues and then other coming model integrating pleased Michigan, have on DeepLearning.AI, to others Coursera. new AI. And teaching of We the audio. Educator to credentials. which and text-based add Google months, methods to Gemini of already the also scale capability with Google, University coach new a the is types, makes interactive like these In I'm

opening wrap the remarks, Coursera position To agility our I want for as my next innovation sustainable an to reignite better up growth, chapter of long-term to growth. update provide we and efforts on

technology of lifetime underway, the One is of organization an navigating nimble. requires that is our significant the most focused environment and shifts near-term

long-term leadership have and As as increased structure can including to XXX my basis our we flattened viable content platform, points we and ensure to have marketing. discussed product expense foster business. decision-making disciplined we structure spur across intend deliver margin nearly see pacing earlier build to adjusted year, we collaboration faster this spring, our I been And you team about the a EBITDA in this of

we a create on will broader growth most resources allow aligned us in core of undertaking initiatives. expense are investments reduction workforce initiative. to prioritize committed X to and our that reduction the important XX%, about includes This better existing to global capacity future for a which capabilities forward, Going our are

prepared discover, help skilling the learners business technologies Coursera with harness of economy. to to through new as segment; imperatives First, ensure job could talent expanding for career their emerging their them era credentials second, flexible affordable, access unlock evolving or that keep supporting they of helping our our customers relevant and our is advance consumer pace and millions potential a of navigate

the Campus our continues particularly a modernize Coursera to supporting which for degree, approach scalable markets. transform college looking vertical, demonstrate And and international more higher to academic in third, institutions growing to education

a from strength, a a every a of track have consistent we're position balance with as with and public healthy operating We delivering growth increased and of distinct strategy record financial clear including sheet company. profitability year assets, a

growth. we our strides XXXX, product engine advantages, made competitive profitable In innovation driving that position us pace accelerating productivity the important our in and long-term and of improvements strengthening for content

on resources learners, we we momentum, focusing on that XXXX, to to expect value this of of opportunities platform where enhance the further serve. our millions Coursera's educators and the can for and Looking differentiate institutions build we the

to now turn I'd like Ken. to it go ahead. Ken, over please

Kenneth Hahn

generated was and Thank everyone. ago near we revenue term. good year total Jeff, up navigate the $XXX.X you, as line QX, from X% top we slower of afternoon, In a million growth which in

continue targeting growth Our expanding no our to growth results demonstrate to opportunities environment. financial and leverage also the matter sustainable while commitment driving operating

by raise margin us is target to X.X%. strong our year-to-date, full adjusted for the which leading This is to highlighted basis EBITDA line bottom by our XXX points year performance

focus over and Additionally, increasing Jeff record the several past prior. extending on initiative the to of reduction our while core leverage is our a expense years capabilities company, public track consistently outlined intended delivering as

incremental savings, creating our as for profitability will this full year initiative at expect financial investments in outlook reflected to well provided in least next XXXX that cost We $XX be structural quarter. as capacity targeted million annualized generate

more the pursue constrained the to to term, near that strong, fundamentally growth business growth ensure navigate a revenue return we we trajectory. efforts while remains in will As we company

note as I I and for noted. financial our otherwise measures, our Please this outlook, discuss non-GAAP call, the business review will that of remainder unless performance

third from of points or income operating year continued across percentage X.X% was $XX.X prior X $XX.X year. or XX% million quarter million improvement a adjusted was gross XX% of $XX.X margin, XX% and X.X% of was an from in operating revenue, was up of on quarter, all million, revenue, expense $XX.X discipline Net gross EBITDA the prior or For the revenue. profit functions. Total the million

Now flow let's treating investments cash million other began and In of which expect purchases like We be $XX investments as $XX flow is we discuss more inclusive of flow approximately categories our million, of year. the lowering start production to the million our CapEx assets. content in for generated we cash free budgeted the this effectively strong full cash associated of we target and cash treatment year, these QX, capital $X content free performance. of of pronounced At this expenditures, computation. free of utilization

equivalents I've content Year-to-date, generation sheet. further of those in flow balance free cash our been with $XX at approximately we've delivered quarter substantial more debt. cash flow, of million well ended pleased our We no investments. free than $XXX of million unrestricted and cash inclusive with bolstering the strong cash

from some our shortly. was year Consumer. partners. Plus, trends, of segments, prior expectations Coursera seeing the we million, signals into in tempering performance consumer expectations on from line certificate $XXX.X starting into growth coming the discuss to like retention I'd with quarter, Now including our revenue recent in with the Revenue but I'll fourth factored quarter month-to-month Consumer launches revenue and X% up the global are industry are growth outlook discuss our specifically in softer was that

And learner activity the million geographic for $XX.X revenue, seasonal range America, funnel coming we outside value. period. consumer again was quarters, traffic from XX% XX% prior from we lower average, regions profit the strong gross which, additions. peak QX the Top discussed new of our is with with Segment or correlates of in once of higher up as a proportion lifetime saw trends North of consistent recent on year in

revenue the gross million to Customers revenue from reflection ago. a of ago. compared Enterprise number increased for a Customers of government we've our was million net to Segment Enterprise XX% retention XX% prior business, dynamics $XX.X a and XX% or The discussed on And year Enterprise in was Enterprise our Paid campus was total XX% verticals. year transitory Paid quarters. X,XXX, budget in rate of Moving up our Enterprise ago and up from XX% segment. year margin $XX.X growth a to

we corporate disappointment, in quarter continue the of learning approach in year-end. that monitoring see and we'll to market be signs closely third we as stabilization the the environment Despite budgetary

of grew more $XX.X $XX,XXX our ago, a launched finally, revenue scaling students And in total some new on primarily year in XX% The program was cohorts year Degrees Indian Degree due a segment. to recent number new to growth from students launches. up sizable from programs. Degrees and of XX% million, ago recently

Degrees attributable The the costs there's Degrees XXX% revenue. gross segment. segment margin reminder, to was a no of As content

universities We opportunities including market be partnerships, capabilities in programs we serving expect intend in platform. and be best to to for the highly Degrees continue our Campus, to that served can the broader by and Coursera evolve, targeted like

Now our operating latest on to the throughout both financial and year. which top our consumer outlook, muted line more reflects demonstrated trends view strong of discipline the

to range $XXX revenue expecting the are in million we million. QX, of For to $XXX be

EBITDA, adjusted million. we're a million to For of expecting range $X.X $X.X

highlighted in And million points EBITDA, to increasing our anticipate we million. margin range For full million $XXX XXX revenue earlier, as basis for we EBITDA of to our to adjusted $XXX range $XX.X the I million by outlook XXXX, $XX.X raising X.X%. annual to be adjusted are to the year and

our record our of have successfully our of cost We a strong pacing trajectory investments managing the structure, top including line. with

to position creates and growth our and we As navigate remain as lead we early historic future long-term on our dynamic stability trends ourselves disciplined large, opportunities, to our management I that strength pleased near-term financial and growth strategy execute strategic optionality for markets. better

delivering in our enable are intend order for Ultimately, discipline strength substantial in we and and is higher to growth to our value and return leadership operating how and with shareholders markets to we bolster and financial learners, these growth. create

Jeff to I'll now closing turn the remarks. for call back

Jeffrey Maggioncalda

Thanks, Ken.

who We everywhere are the quality of learners and especially to in ensuring join Coursera's proud highest us have access role the partners education.

with at our aimed equipping and week, professional Digital educator certificates literacy, a in next-generation I'm includes alongside of learners an their unveiled why responsibility were our shared Last collective which expansion entry-level marketing. our now creation teachers program content and first AI they excited is Academy, Adobe belief digital the Adobe. join mission, launched to many, community they and in choose For that

emerging we recognizes have fundamentally the talent. in their that in collaborate credentials our the they will creative to to as generation more thrilled of market the industry relevant order chosen and next training, that technologies as many and empower reshape labor partners, Like skills of are Adobe broadly, Coursera with well

up questions. call open you. the for let's Now Thank

Operator

comes [Operator line of Blair. first with Instructions] the from question Your Stephen Sheldon William

Stephen Sheldon

First, is on becoming in more Is of can you're detail more recently? in mix? you segment getting a then much just And courses? there bigger notably monetization from your that a the weakened way have to some part things how frame give where AI-related Consumer consumer

Jeffrey Maggioncalda

is This Stephen. Thanks, Yes. Jeff.

break it on don't monetization, So we AI out.

One of pieces certificates generative many in or a of The first original specializations. and with course professional to content takes stages the do forms the in the coming the that are. of content longer out is the courses It the things earlier that of is true piece AI the not format. long-form a bit little are longer were subscription-based,

say I'd So was it early relatively in little. stages, the

As launched in recent of increasing. formats, we've and number has a content it's of been more longer the these, upgraded

say will Consumer But break not of out, I we of major it this at a the don't it's overall and point. base revenue part

the are seeing other AI kind. enrollment We content. seeing particular generative to generative and AI we're enrollments greatest And like any content in minute per in search X demands compared

lot We cents on obviously platform. put of continue the to a

our more So embracing and we think credentials we're and stages content engine expensively cranking content less the still institutions at and the and we for faster individuals reason. and partners because AI are pretty is this of producing of content need the and early

when learners, the top trends, of million we signals comes them is retain it absolute not in terms attract them. in and bad, funnel, numbers. a to And at terms the of new of registered a seeing the pretty some softer strong retention. what the especially X on need learners, lot are consumer then convert to global look quarter of when Obviously, do we In you funnel consumer,

pressure. Retention factors possible So are exactly hard rates that very sure that conversion say are macro rates there to steady. look been some it's for that this under have affecting what And pretty is.

learning delivering been it, authoring lot really much pushing a and clearly on better a we've I what in script, and credentials the experience launching a as experience well. lot about more and But and content said but

technology opportunities look if threats basically from consumer and you the to changes think in historically, come disruptions, both driven has and segment market So -- what labor. and job really we in changes is

think where say of those they company. And a and new to have skills skills prove going productive showing at beginning by be are credentials the we're wave that major to to given we that in they of dislocation people could a have get

content that of disruptions So stages end this. in early and we We really at at like similar the consumer optimistic got types early we're we're of think we've kind the the think of assets Historically, disruption. products. and segment these of driven a of COVID terms have we're

Stephen Sheldon

for efforts? kind you maybe base a maybe rationale talk more the Got the and those might of of just cost helpful. level, cutting very follow-up, focusing now it. And at where be That's a just high about

Jeffrey Maggioncalda

Yes.

any when degree, investing strategy that assets So don't thinking that I many mean, I'll numbers start we're think but it. into has to whatever, a key want with sort it, if our about of about really maybe get in I we leverages large as possible. the to you Ken, know to of there's been

and credentials technology platform, one of professional institutions content including one one sell to consumers capability, and the different sell certificates formats, So degrees. then platform and sell data

in fit, a product use clear years, very have that credentials cases the little buyer, very think, we the has we've market of a assets last and environment broad given of many us value. these I It been current changed across In huge that clear bit, sell the amortize retains line segments. Where very some it's a delivering could well. is is approach growth, nicely to top that content lot has there's high able very many

isn't just cases and the piece the cases are changing creating financial a use of we there for money where it and time impact. spend that of winning certain that having kind deal bit, content, are or The use

analysis and and and we're seeing seeing pretty is in delivery. leverage, just those against more and allocated more places terms opinion biggest the regions revenue leverage, on where put seeing sales G&A where the we're we R&D segments let's and say across leverage more where less so really a just and said, and down best pull we did are growth to seeing less of we And and my generally comes against we're growth marketing simple in against it where resources growth to, places with back those let's value revenue,

that's differentiated going delivering the Where real we have we're are where growth NRRs. value, highest in to

after We And parts did. growth, focus higher let's working try simplify efforts the leverage higher if go opportunities said, there's best. so on that's more and businesses you'd Ken, essentially the are don't of the I anything what we our to know and those that of want to add.

Kenneth Hahn

about Yes. well. timing the Stephen asked as

And way timing up and been We've much for that approached us our the discussed so next since the part and preserve timing drive public disciplined EBITDA margin we to both about of our as have in EBITDA areas. allowed year. exactly growth perspective is leverage year. setting up EBITDA This an was to we very as from been for to to XXXX. always as it course, the improving rate within the is our for planning a to next setting The as what we've can context. as But company, growth we this script and vary. we is of

say, dev side, have how it, we'll is year. this X to with concept I'd we growth on guess more than focusing described headcount I end and broadly doing we're ending next year on around plan emphasize the Jeff

I that's think to of lot how a example now right see specifically I one thought it's results. seeing we're But about it. side so we the product on think early we've on And AI. the opportunity illustrate before And

Operator

Ryan from MacDonald with Needham. of question the comes line next Your

Ryan MacDonald

is And has of to retention a what's little or Consumer about Maybe that topics how it into to for life think And retention on you've dig that deeper useful Consumer? can there about extent fall expected? where -- got think some other seen monetization a as as changed? specific those visibility some softer than comments maybe areas of about we there talk you the off bit areas you subject content are maybe the the you than from on quicker then in on perspective, you've internationally,

Jeffrey Maggioncalda

then in. Ken, here start to chime feel and I'll Yes. free

of So on now, about depends in titles on to we're talked what awful bit a the title. include Useful Life, really partners lot lot the And our with popular of doing it more an script, AI. we're of we upgrading a pieces our

So our title. do time. content per the Generally difference over better our sort and And speaking, to it look by that. being at getting and ability partners if declines you in ARR is better said, to refresh month help that of

a than Some content others. seem faster of to bit types decline little

they We've said teach thinking about the in career. they on so to been get do there's skills are go portfolio to companies, is when people top the required It these the have them. the the and It's who and credentials generally entry-level skills of an required are and just and that consumer or our job. to I'll past, entry-level skills ideal growth. come professional job here, the a segment get, people need remind of folks lot engine certificates call for do really to really switching They openings starting from that want go to branded

entry-level lifetime that generally value historically We have these the seen many been than higher professional in of titles. certificates has other learners

higher, been of kind saying. that I'm is has rate retention So what the

factors We why, certificates. North professional as softness years I of among tell a might in are seen, macro tailwinds, now. cannot there lot the month-to-month on were America, play the but right especially have these some likely just we're be that retention, at of in entry-level great macro headwinds thinking you ago, happening exactly factors

Ken, -- times have those to that not those and highest the typically that's add titles that? value, rates some not titles. But at you'd are anything probably the seeing all at we're in the lifetime But fall all regions. of and and retention

Kenneth Hahn

No.

Ryan MacDonald

the segment. Great. up enterprise then And maybe following on

continues terms just Enterprise in nice kind continues seeing logo of where pieces of NRR of a guess, most close you're on about additions, you obviously, maybe terms to the within quarter here. Can come but down growth So accelerating in talk there? sort the of spend the of the quarter into business softness sort drive And going what of visibility here I of renewal to have that rates fourth down? we NRR kind and on of level do

Jeffrey Maggioncalda

well, budgets, a are still are think we Yes. a before transitory to bit otherwise, remain NRR people locked Well, help mentioned NRRs people under to script, in interested and governments period of what pandemic productive that and home. last I and about try as lot lot I'll transitory talk the during about and in. to of of that are closes these the upskill pressure. the were talked quarter little sort We at clearly when budgets dollars a sort spend had quarter they of

continued those the we the budgets of to sector. weakness government durable, of Some some see are is less have that's and in where

on place, the sort in the American train of to we're technology that not we and of many are generative of North there companies a Business then people it. of about other strategy, getting with Europe, with realizing are that how bookings EMEA of and But seeing we the pipeline seeing of computing, bit terms here. the just North world, AI, you development parts Like question for on Coursera you interest technologies, of optimistic a like talking some in the beginnings lot and other AI. regions, strategies in is in you in be we sequencing and in of Certainly seeing use America buy visibility, a cloud awful get then of more and an are the among

we're been we this seeing anything highlights. if As has gen North like by you in supported AI be definitely or Coursera for that? Business interest feeling generative the the some really think retention, of AI demand stabilization to Ken, persists, would add in we about X might And train. America and

Kenneth Hahn

probably, talked little proceed a about bit You it.

Jeffrey Maggioncalda

learning I learn who there's students rapidly, can have changing skilling are transformed they experience is take of in this addition very programs recognizing that so to of of not get terms in skills. want just mean the this number I need much you needs and faster for students do graduates in that whole technology. campus, universities what is course, get order of what need of want by fundamentally to happened to I college Yes, can in the get of a to that employers do changing technology demand the keep terms is and kind the up. schools to to and from interesting. job. jobs, school at degree they being also That than are to teaching it's saying, want But what a And

builder for and about instructors. Coach for coaching what the we that's course students the And talk

strong for definitely bit we in well. of in a So as NRR you job good technology Coursera this do student quite the relevant we generate and seeing script lot AI where you credit other expansion. get integrate we a college particular, for gets generative see interest contents, are curricula put cutting-edge this and in degree, the Campus college in and very When where the especially and

wave So something case again, is higher trillion attract curriculum saying to help part to and that's a and use general. $X that, we that like health can integrate of early education, the so only way campus students bigger think, of improve up keep a we of it, kind the our Coursera in market

Services. that NRR are in seeing So for spots in segment some bright we

Operator

Rishi of line the from comes question Jaluria next with RBC. Your

Rishi Jaluria

continue thinking about and Wonderful. Maybe to rates that now want growth right causing the kind softness. I things of are just

the on bit us helped kind pieces of little a consumer. you've of You understand

at pockets and of the over these, before seeing we guess the unpacked back, secular upskill softness been years a AI economy X about aren't of that reskill step seeing people higher that. do -- But have I tailwinds You've in think to past enterprise if given of all so the these of rates? your why maybe and changing education nature we've just talked or even kind and growth need we some all the Gen for back, you take

be least digits, happen to about upwards to those what outside back maybe would of help the there? see those a kind needs all I've of follow-up. recovery to rates at quick growth And of way think to inflect then got a to us what double macro right understand kind of Or pieces

Jeffrey Maggioncalda

really you but I'm to for. going right. to high-level give this, what going thanks, view -- I'm Rishi. of All asked a that's

not relates When really credentials learning much that to to to that prove productive going they in the So believe that readiness, do and things. is which at at a people winners. as starts higher really remains skills really about to we be the learning agree, institutional suggest AI readiness believe are to I -- it with them a we growth people that's high -- clearly do so what's workforce. rates it like going proven, -- that I lot be individual specially for be think But and institutions. helps look in demand I create and of have a level, we that, order happening.

they're the campuses. disruption. facing organizations. I let's Campuses, look institutional greatest the They governments readiness, are think very agile not ones at when about But and businesses,

think agile lifetimes. greater to with of anything or institutions a jobs. fast that to deliver change. hitting But customers the are students attract They helps around I the than get education curriculum we've higher need with them any call it's don't and someone going in I like seen rate them world. think is most they without to of disruption, can us. the ], Because hard do which for up not our higher it is they're not -- they like organization, keep be [ value, those education to organizations.

well But as they're growth that. a seeing happen are that, very I quickly are crack positioned be it is believe large because fast, to not a would we still like. as to not little we and will do market rates very while we

see high. very saying, focused but you I readiness the this importance, there, of not universities to something say exclusivity very So because in think is happened -- people people, university about technology. we're our people very how see to let institutional can The fundamental quite on

quickly frankly, force would almost really and AI right that then ago, onto the the X side, coming. On readiness I of I and and that thought when benefits So the recognition have this years not I X their was outlined technology, response businesses already gen credentialing is adopt there, rapidly learners. see kind would years productivity that ago happen is business learning

definitely not with but in starting talking, doing, an as just I North increase We said, seeing America. are

see McKinsey equally big functions where $X.X like software R&D, the to faster. and engineering, across transformation happen productivity I and at functions put trillion where companies are McKinsey But the job Here's and that this and Other support, dollars going will productivity When likely gains more functions out. expected. sales number function. to start are how the seeing I are support playing mean, happen gains job will customer not Those happen are lays take the place. is big is slowly. customer most product job out marketing. what

start from the productivity view demand companies the gains they new and current are it, training in if using that people functions. major hire. these will is My or employees from companies gains But employees seeing there, these technologies their either productivity these are technologies when that

AI productively valuable those country employees, Sometimes their not job employees proving to as as generative going candidate. that you be will can new current more you skills same in the is use knowing a make and

at a individual optimism the the in we when surveys among you lot more So is there different than and and generative look do surprisingly, AI for States. employees positivity in readiness United countries, in there's India

people of about the pretty in lot States I'm worried A United their jobs.

impact any seen a yet, this. on haven't just We reluctant but they're little

a job, way how using get to that as way And who to We employees need we're these I every front there's productive that, new and I do that the see are that. a on think the you're come do these going of to bit tools. things the to sequence. to indication still learn way think business, edge from going tools, to are is to a do is new going have this. I say, who to businesses your impetus going we're their

I'm the we've rate product for content at sorry, with at with going Rishi. and I creating our credence been the us keep we're one that a going partners creating to of lot of doing and and value I learning positions shown up rate look you'd look moment for tailwinds the more value But has not when of the now. value really especially are set here, teaching not the us has believe up. kind just opportunity to anything the yet is that? It The of revenue, what right? Ken, going occur, in to it for shown year. creating well add right ratings institutional we're yet last that in matches

Kenneth Hahn

had side. early, will And question, I how results. we're to resist I going might to time. just be and double-digit look only product-driven more and what we course seeing maybe that's little bit about creating for the like. talk more our that bit going sell back end, going Coach fundamental going be thing we want in that I is just the us some of do add, to value of a getting was is product course, more better to the capture little to We're customers, builder, over You on we're a think growth. It to

Jeffrey Maggioncalda

of anymore, last learner experience. Yes. terms just not May Coach we theoretical of mean launched It's in least year. I at in

of needs. institutions tailor really how They That's specialization And it, company's market a saying, now X the in on the been a just seeing we've on year we're putting They we've on forces lot have side, them but our translations with builder one over they're like finishing really and are world-class pressure to faster million many using So been of it. We I people people retention products things for as faster. like courses mind take and had course it. using helping. over they these are Gena learning coach. see rates the can

and cost high. value value about content focus to innovation. focused there delivered there's and to And see product our customers for we going that value resources delivery a It's it's value revenue. up and we of from the engine to But not progress we're think as us going we're push and continue from show and longer benefit theoretical reductions, of still from rate the where seen we're it. in is early, So hard have no lot on our that the where on

Rishi Jaluria

it. Got

balance billion -- because revenue trading cash net just very Maybe But just sheet. X.Xx should is helpful. be Stock was the nearly that super about deployment? thorough That's got we sub-Xx answer. Okay. approaching thinking are $X.XX You've multiples on a of revenue. at very quick follow-up a cash capital that how

so the you these are, buy on I pull different growth ahead, and bullish the low drivers trigger path of all and fact, business opportunistically in back these and guess, shares the at kind super levels? why not If

Kenneth Hahn

Ken, course. this Rishi, of is So

throwing overall in an cash cash basis, a given off market, considered. we've question didn't On the fair and certainly our add is free where a we thing flow. given the you one of So lot are we're --

even don't We to question. there's a spot. ask So more that reason need

has our right relates where think, financial to period think bit, customers. growth as we I now it pretty a important slowed little this given stability, is

optionality, strategic the across It's hard that been the yet. done we're Additionally, see opportunity. We with not sector.

we And other okay. So with your that you and we growing, say, first much. look then question. not led don't people as shouldn't aren't into That's around grow perfectly

should is faster. the take the advantage be We are for growing So while back around space do growth. We us getting things to it. of strategically in there we be should opportunity moving think to double-digit

so We haven't yet. done

that. we we You some close thought might purchasing there didn't deal a going to to think some be active quarter, we we non-GAAP prices for to we disclosed wasn't reason, and expenses because Absolutely, We're stock we active. significant last weren't strategic and opportunity remember, about If deal. like continue remain moving forward at going

Jeffrey Maggioncalda

did and we did, with... complete share be time. repurchases wouldn't the it we if And not first And some

Kenneth Hahn

right, million this year, this this we've worth back Just maintained we $XX balance year. cash stock of bought

on. spot So

to for to it's isn't us hopefully good active strategically. look question, monitor. and also the a to But continue formed and us, more be concept So we'll

Operator

of Your Morgan next comes line Joshua from Baer Stanley. with the question

Josh Baer

A weakness. prepared lot the remarks more around as were the of consumer far as

the Q&A, enterprise. On definitely, into got we

sure make I guidance. far understand the the different to want as from change prior the I business So

before different Like will this QX, now, guess between incremental government like churn? part on you was focusing that this the was like what Or contracts had like previously is on I question, enterprise, the of churning. XX of it about it's my the is follow-up XX lower. was be some get there talked split or maybe what how to businesses? So that million implied does up those

versus was drop that in incremental around what net wondering rate, quarter? like Just last retention

Kenneth Hahn

majority that the reason weakness where it's is focused The a on vast prepared occurred. on consumer because of the the question, business remarks Josh. we Yes, is good the

but on the business thing The plus -- is revenue contracts side, not margin slightly the that lot a affect last The were it On from year in year revenue on quarter, materially. than from a term, the previous. predictable plus relatively only enterprise renewals. that renewals historic A a does the perspective, it's weaker certainly. of just the model near is

So consumer. primarily is the miss

Jeffrey Maggioncalda

it And of is about mostly in what's on drag NRR. last on NRR, we terms of persistence time had that things talked the the

Josh Baer

Okay.

by So losing driven customers? large it that wasn't you're saying drop quarter-over-quarter

Kenneth Hahn

nonrenewals of That's some some onetime only from some were the right. yet onetime the from There less, yes. of preferred

Operator

next question from Taylor Your McGinnis comes UBS. the line with of

Taylor McGinnis

on just the side. consumer first So one,

that think you So the the of launches of in guys implied the of about guide rollout by some I prepared acceleration part the previous was remarks. recent driven content in talked the

So And delays Is softness like that in not like gone guess you the should just keep anything else those seeing seeing any if there's live, been maybe anticipated? conversion you one, those? just are of or we mind? there so, be since if any with curious have why might are with the like I you seeing those that part -- the traction in

Jeffrey Maggioncalda

Jeff. is this Taylor, Yes,

seats. we new cranking big Amazon, content So launched Those nice XX big is are segment, in brands, Epic, generative the been consumer IBM, We have moneymakers lot like on certificates. XX Adobe, Microsoft, of clearly professional a AI the entry-level upgraded and and the this engine.

generative AI, of there next are our we're Strategy, what we call So Gen AI where getting phase pillars. the definitely the X Academy into

for then generative third AI it about Executives. pillar been then AI is responsibly. think work? it of big And AI? you We what there's launched these an basically is should it was does And are general Generative AI Generative Academy Teams. Everyone. about titles. the AI kind this AI last purpose has And first titles and how Generative November, And the for that are How for And job-specific

recently partners of generative titles. AI started So job-specific creating these have started our we more and have --

to titles We the work. are productivity productivity, launched unlock, it quality in unlock of skills handfuls. are have teach the that them had that a couple be And we going when anticipating higher a few of those comes do people their to of jobs to kinds will

So at we're We're the those. still early about stages. excited

our have expectations. according to performed asked early. you relatively Now It's still they

I -- in. pulled in say pulled shouldn't have We

the to side, rate number new year new on titles year launches for big have coming the have or We we say, site on was in have titles professional into the the the be pretty traffic certificate as some seen the are production it the rates before, accelerated not Google coming the to conversion high been new last of of steady. as of from people

we're good So about pretty conversion. feeling

retention consumer existing about, before. the But question board, titles, to, new with certificates. are the Rishi's, about as we the consumers some slightly we professional talked rates, lot it which includes guide that lower retain it or of certificates, was maybe was retention of have than seeing new just kind is I Josh's have and think including higher had at we it across related historically was of rates not And a

of think that about came us factor. new makes a macro I anything It titles kind don't current think the more So of there's it's out.

these associated be that another generative are skills pillar we is to titles gains. productivity learn have that increasing thing these companies do to the employees AI third say unlocks that of going Academy, need and these in with productivity kinds that But with of because Generative expecting demand as more counting AI learning to role-specific on skills that's to I'm their

been high. as it good, So not as The been is content not has but conversion been growing retention many engine has answer has people. good, the

pipeline at a we of QX content we QX, when looking thought titles out. overall, together, when things add as rolling period be getting So we're you not new as revenue will as in much that from these the were that these

Taylor McGinnis

some just going be to those super you're given there's the -- last and back that $XX helpful. leverage. one to like That's going you Awesome. like areas less going pull savings on, And growth the areas to that cost be on talked that then million would you're about look less

and in combined about segments of potential revenue of anything that we we could takes the consider? overall any that that from focusing thinking think this that on we're occur the the puts different shift headwinds initiative? segments to other any as when Or about areas, like So should with with

Jeffrey Maggioncalda

a And I'll more little granularity. obviously maybe of growth you show leverage. to and bit can we high guiding at provide basically a have At well, principles. give But looked the all analysis basically this sort not We level, details. Yes. is of going the Ken, you -- then don't we're

where towards So certain dedicated are dollar do have and per we're some then the marketing growing bit we spending and certain R&D leverage, mostly fastest regions and we with we looked because We R&D that and little markets sales a it. on started types segments, of to segments.

And not are huge feel so on good going have a cost rate. that our to reductions pretty impact we growth these

We are product still said and the source continuing in with to Builder. engine and content in to the innovations invest like Course we Coach

customers way pull So has when at that on content value now. I of a tried shipping ahead growth. I we some look think and spend ways really impact right to that we're of we To lot in amount where our we're the of are back find degree, terms where in can least the of a on products,

I think yet for a they're titles, not ready lot of the them.

to find I that they are think really a these them, of features will lot are the product and valuable. new

value. down shipment of our slow to really planning So we are not

add to trying seeing back market segments, those on are things. in the certain to sales against We marketing Ken, We traction. mostly marketing, sales to you'd and the want not anything just pull where market dollars our don't put that? we're and

Kenneth Hahn

I'd like line are one process just I Yes. it thought well just the where areas to say this, growth by it. about I'd the risk and anytime and there's say thing what support. a started we how we going acknowledge is started, at we change we to approach revenue the creates was guess the on looking broadly, described items

paired we're So there. to XXXX get in in again, with where from to there, the grow required areas weren't that we going emphasis us and beyond, around and that

Jeffrey Maggioncalda

pacing, our a pacing investments the pacing are Part Yes. new about that the some pacing different lot of thing talk is kind change I'll adopt market the world, around which mention. our One there another to of investments comes There's time some -- rates. with organizations readiness happens with use here. We word growth in out, respond of Any our the at final we technology rate. new major just innovations.

of market edge don't go to leading the ready. Either. at faster this, want is we're the than we think but I

level for I amount that excess the far incremental it. shipping of in think we're of we're value is revenue the getting of that

to don't just want much the absorb before is too to ready we So out there it. put market

those delivering. to we're features the we're of so most we where product need side, really about on value also the are immediate seeing that monetize and ability And thinking adoption the

we're not to also leverage. to pacing internally So growth rates just market adoption, and

Operator

from with comes the question Jeffrey next Markets. line of Silber Your BMO Capital

Jeffrey Maggioncalda

Okay.

I'll So know ask late, so it's I just one.

below for might sizable pretty the be there the it like a that. had guess I of in the any You little might looks fourth quarter. adjusted in into beat expenses coming the you that potentially that you third bit fourth shift guidance timing EBITDA Were implied benefited quarter? quarter a the third And quarter

Kenneth Hahn

a It's grow Ken. try specifically. to repeat is nothing do we we Jeff. the EBITDA within to offset we nauseam. No, us, what There -- for What ad margin repeat that. is so year, and What much I'll as as we do we then pick can you're newer we with target we was

see we to be trying can. EBITDA. we'll do in We some higher we QX, try not we we're so where commit. enough. to We expenses spend In And wherever come because growth an try invest couldn't on to for

say spend we longer-term areas little to had We've a taken that for which to in couple some is of is which opportunity able spending QX. our why bit enough should to to last been haven't quarters, which to EBITDA. growth, way we it, funny had a so more we contribute guidance And to, increase perhaps had can

no, will do go incremental some delays So but no There that. we'll spend, quarter-to-quarter. that be

Jeffrey Maggioncalda

I'll sustainable just think we recurring pacing, growth When chime in. expenses. about about and we And talk

further the a pulling growing And -- back be sure don't QX, we're we on to going make we we top than lot to that's right? we rate or our that line. spend expenses, so of in in in So on look, said, excess want to recurring of a be of hiring what going back started lock i.e.,

the this when really that ways want Ken and expense further in make we growth for for next year, we sure finding year. our about ways outpace deploy EBITDA year margin rest because revenue to looking can about are but for QX, we the of manage are year So nonrecurring the next growth help thinking talks and to to don't

not going so And spend to unwisely. money we're

like to or QX We expenses find by are the our further putting recurring in very we buy expenses about next sort we can that people growth of growth use in would ways careful to hiring in to year.

be EBITDA when feel out recurring But you just as because like QX at adjusted spend as money, year's balance, we go in for into how expenses, want to we're growth don't growth to and margin look bigger the to this we a and it adequately thoughtfully deploying consider next turned lock on our we expenses it. we

Cam Carey

wraps Investor you this session. available webcast will That A of Q&A Relations for Thank our website. today's care. replay joining Take be us. on

Operator

today's gentlemen, Thank participation, you for you and your conference call. may now conclude and Ladies disconnect. does that

Coursera (COUR) 24 Oct 242024 Q3 Earnings call transcript