Coursera, Inc. Q2 FY2025 earnings call

Product-Related Updates - Coursera Coach: Over 2.6 million learners have interacted with Coach, and learners using Coach are 10% more likely to pass a quiz on the first attempt. - AI Translations: The platform offers over 5,500 courses in up to 26 languages, with AI dubbing tripling the number of available courses and adding support for Indonesian. - Learner Journey Reimagining: Broader efforts include a career-based discovery experience with role description pages, localized salary and job data for around 40 countries, and improvements in search, discovery, and onboarding. ### Key Priorities - Product-Led Growth: Focus on accelerating product development life cycles using advanced AI and data-driven insights. - Content Engine Acceleration: Build a faster, more agile content model with tools like Course Builder, academic integrity features, and enhanced AI production/ingestion capabilities. - Go-to-Market Enhancement: Reimagine the learner journey to create a more personalized, engaging, and valuable experience.

In the second quarter, Coursera's Consumer segment generated revenue of $123 million, a 10% year-over-year increase. Consumer segment gross profit was $75 million, up 13% from the prior year, with a gross profit margin of 61%, a 160 basis point improvement. The Enterprise segment had revenue of $64 million, up 10% year-over-year. Enterprise segment gross profit was $45 million, up 12% from the prior year, with a gross profit margin of 70%, a 170 basis point improvement. The number of paid enterprise customers rose to 1,686, up 12% year-over-year, and the net retention rate for paid enterprise customers was 93%.

Revenue Outlook - Coursera now projects full-year revenue to be between $738 million and $746 million, raising the midpoint of the range by $17 million. ### Adjusted EBITDA - The annual adjusted EBITDA margin target has been increased to 8%, representing a 200 basis point year-over-year improvement. ### Quarterly Guidance - For the third quarter, revenue is expected to be in the range of $188 million to $192 million, representing 7% to 9% year-over-year growth, weighted towards the Consumer segment. Adjusted EBITDA is projected to be between $10 million and $14 million.

Macroeconomic Uncertainty - Uncertainty in corporate spending impacts the visibility of the Enterprise segment. ### Net Retention Rate - The net retention rate for enterprise customers is still below desired levels, and there is ongoing work to improve it.

Q: Stephen Sheldon inquired about the guidance and potential deceleration, especially in the Enterprise segment.

A: Kenneth R. Hahn responded that the improvement in the forecast is mainly from the consumer business, with enterprise macro trends remaining uncertain.

Q: Taylor McGinnis asked about consumer outperformance and product/go-to-market changes.

A: Kenneth R. Hahn stated that Q3 is expected to have similar consumer growth to Q2 with some seasonality in Q4. Gregory M. Hart added on the focus of product development.

Q: Bryan Smilek asked about enterprise subverticals and monetizing AI tools.

A: Kenneth R. Hahn discussed vertical performance and NRR, while Gregory M. Hart spoke about catalog growth and AI utilization.

Q: Ryan MacDonald asked about consumer gross margins and net new learners.

A: Kenneth R. Hahn and Gregory M. Hart addressed gross margin sustainability and growth drivers.

Q: Jeffrey Marc Silber asked about Coursera for Business and the Workforce Pell program.

A: Gregory M. Hart talked about corporate spend caution and alignment with skills focus.

Q: Brian Peterson asked about top of funnel linearity and NRR.

A: Kenneth R. Hahn and Gregory M. Hart discussed conversion efforts and NRR focus.

Q: Yi Fu Lee asked about data points and gross margin trajectory.

A: Gregory M. Hart elaborated on data-driven monitoring, and Kenneth R. Hahn spoke about gross margin improvement.

Q: Joshua Phillip Baer asked about Coursera Plus subscription.

A: Kenneth R. Hahn mentioned that they haven't broken down the consumer product externally.

Q: Sarang Vora asked about Coursera produced content.

A: Gregory M. Hart talked about investment in the content engine and Coursera produced content.