Coursera, Inc. Q4 FY2025 earnings call

• Coursera delivered strong fourth quarter results with full year revenue of $757 million, up 9% y-o-y. Generated record free cash flow of $78 million. • Focused on product innovation, refining learner journey with improvements in search, discovery, and merchandising. Launched new geo pricing, marketing, and promotional capabilities. • Redesigned enterprise admin home and invested in enterprise integrations. • Introduced a 15% platform fee effective January 1, 2026, to fund AI native platform capabilities. • Added over 29 million new registered learners in 2025, with 6.8 million in Q4, a record. • Expanded course catalog to over 13,500 courses by year-end, with strong demand for AI-related skills.

For the fourth quarter, Consumer segment revenue was $132 million, up 12% year-over-year. Consumer segment gross profit was $81 million, up 15% year-over-year and 62% of consumer revenue. Enterprise segment revenue was $65.4 million, up 5% from a year ago. Segment gross profit was $46 million, up 7% year-over-year and a 70% gross profit margin.

• For Q1 2026, revenue expected to be in the range of $193 million to $197 million, up 8% to 10% y-o-y. • Full year 2026 revenue anticipated to be in the range of $805 million to $815 million, up approximately 6% to 8% from prior year. • Adjusted EBITDA expected to be in the range of $70 million to $76 million, or an adjusted EBITDA margin of approximately 9% at the midpoint. • Platform fee impact is gradual, expected to benefit gross margin later in 2026. • Anticipated annual run rate cost synergies of $115 million from the proposed Udemy transaction within 24 months of closing.

• Macro-economic uncertainties affecting enterprise spending. • Regulatory and integration risks related to the proposed merger with Udemy. • Potential impact of slower-than-expected adoption of platform fee and related revenue recognition dynamics.

Q: First, I wanted to ask about the platform fee that sounds like you introduced in January. I guess can you just give a little bit more color on the structure of that? How much of a lift do you think that could be to gross margins over time? And I guess, as you've kind of pushed that out there and communicated it, has there been any pushback in the system that you've seen regarding the fee?

A: Maybe I'll start and then Mike can add on. Thanks for the question, Stephen. So a couple of us. First of all, the intent of the platform fee, as was indicated in the scripted remarks is to enable us to invest in an ongoing way in continuing to improve the platform. And by doing so to deliver better outcomes for our learners and for our content partners as well. . They've obviously been pleased with the growth that we've shown, particularly over Q2 through Q4 with 10% growth in each of those quarters. And the intent of the platform fee is to enable ongoing investment and product initiatives that will help further that growth. They're obviously curious to get better visibility into what some of those investments might be and what our 2026 road map looks like. As Mike mentioned in his scripted remarks, the impact of the fee on gross margin because of the nature of the fee and the nature of our revenue recognition with an increasing percentage of our consumer business being related to our subscription Coursera Plus. And so the revenue gets recognized over a longer time period. The same is obviously true in our enterprise business as well. And so that's a little bit of color behind what Mike referenced in more impact will be reflected in our financials in the back half of the year. Mike, over to you.

Q: I was hoping you could talk a little bit about some of the proprietary data sets that you have that would make it hard for an LLM or a new entrant to create learning content and more broadly, like the platform that you have that can enable skilling and reskilling and facilitate workforce transformation. So some of the data or competitive moat there.

A: Yes, I'll start on that one, Josh. Thank you for the question. So a couple of thoughts on that. First of all, we ingest a lot of data from external third-party sources. That data is presumably also some of it available to some of our other participants in the space, whether there's LOMs or others. It's what we do with that, that I think is a bit unique. And so what we are trying to do, 86% of the learners who come to Coursera come to grow their careers. And what we're really focused on doing is delivering a mapping of the skills that they need to do so in whatever particular career they might be pursuing to the courses on Coursera that deliver those skills. And then specifically, the modules within those courses that deliver those skills and then how we verify those skills at scale. We just actually rolled out the launch of our verified skills path across a number of different career groupings for our enterprise partners, which has been something that we've been working on since September. The goal is to continue to innovate on that. And obviously, we use all of the data that we have on our platform from within the learning experience from within courses, within given modules, of course, is about what is driving engagement, what is driving true mastery of those skills and how do we double down on that. It's one of the ways that we actually use Coursera produced content as a test bed to figure out which optimizations drive the highest learner engagement, the highest course completion rates the most correlation with skill mastery and development. So we do think that we have a differentiated set of data across both how we use external data how we map that to the skills that we build on our platform for our learners and then how we use the learning experience itself, which is very different on Coursera than it might be in a chat environment. In an LLM to deliver a far better outcome for those learners. And we just released our learner outcomes report about 2 or 3 weeks ago. One of the things we see is that 46% of learners on Coursera report a salary increase since enrolling in their course or program on Coursera.