Coursera Inc at Needham Technology and Media Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ryan MacDonald - Needham & Company, LLC - Analyst : Well, with that, we've got a lot to cover, Ken. So why don't we jump right in? For those who might not be familiar with Coursera, how about a brief overview of the business?

Question: Ryan MacDonald - Needham & Company, LLC - Analyst : Yeah, absolutely. Now let's start with the 20 -- started 2023. The company had a really strong start to the year, beating revenue and adjusted EBITDA in Q1. You raised your outlook for the year as well. So what drove the strength in the quarter? And how is this giving you confidence in raising the 2023 outlook?

Question: Ryan MacDonald - Needham & Company, LLC - Analyst : Sure, yeah. So let's start with the consumer business. I mean, you talked about it being -- starting to show its countercyclicality. And so we're really seeing some nice strength in that business. We hit 124 million registered learners on the platform in Q1. You seem to be positioned across that 125 mark pretty quickly. You've really developed this nice cadence for [5 million] new registered learners added per quarter. Can you talked about what you found most effective in the evolution of your content and marketing strategy that's producing that level of consistency in the registered learner adds? How confident are you in being able to continue that cadence throughout 2023?

Question: Ryan MacDonald - Needham & Company, LLC - Analyst : And do you think that the, like you said, microcredentials and job-ready skills are becoming increasingly important? And microcredentials has really been -- in the professional industry, certifications are really a big focal point in the strategy in driving up growth. Do you think they would become more important now that we start to see the labor market softening? I guess as you look at the partners, which ones do you think become most important in this transition in the labor markets?

Question: Ryan MacDonald - Needham & Company, LLC - Analyst : Yeah. Interesting. Coursera Plus has been another nice initiative and driver of success in the consumer business. Can you talk about in terms of like how important the pricing's been as a lever within Coursera Plus? And I think you've been testing a lower price, $49-per-month subscriptions. How does that enhance your flexibility to convert top-of-the-funnel demand and drive better free-to-pay conversion over time? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 18, 2023 / 7:45PM, COUR.N - Coursera Inc at Needham Technology and Media Conference

Question: Ryan MacDonald - Needham & Company, LLC - Analyst : Yeah, absolutely. I want to shift over to the enterprise segment now. Obviously, when we think enterprise and B2B, it's been more of a difficult selling environment in B2B, just broadly, in technology this year. But your enterprise segment has continued to come in nicely ahead of expectations. So within the segment and (inaudible) serving business, government, and Coursera for campus, how would you describe the strength you're seeing? And is it broad-based? Or would you -- is it more specific to specific buckets within enterprise overall?

Question: Ryan MacDonald - Needham & Company, LLC - Analyst : For sure. Yeah. And one of the questions we get often is on the NRN -- NRR trends for Coursera for business and sort of how that's gradually started to fall. I mean, can you talk about where you think that that potentially troughs at or how you think that that continues to trend throughout this year on the NRR side?

Question: Ryan MacDonald - Needham & Company, LLC - Analyst : And maybe the last one on enterprise. I wanted to touch on Coursera for government. Because we started to see more and more activity around international governance taking a more active role in sort of upskilling, reskilling their populations. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 18, 2023 / 7:45PM, COUR.N - Coursera Inc at Needham Technology and Media Conference You see India has a commitment on gross enrollments, I think, out till 2030 to get that to 50%. Japan has committed to, I think, (inaudible) [5 to 7] billion on education over the next five to seven years. How is that impacting the pipeline of opportunities on the Coursera for government side?

Question: Ryan MacDonald - Needham & Company, LLC - Analyst : Yeah, absolutely. Let's shift to degrees. It returned to growth nicely in Q1, and the outlook seems to be looking in brighter insight. You talked about there's one area that maybe you underperforming since the IPO was on degrees. But it seems like you maybe chuckstarting to turn a corner on that business. And at your Analyst Day, you talked about an expectation for 25% growth in segment in fiscal '24. But you since announced 10 additional degree program wins during Q1 alone, which I think was a record. So how are you thinking about three segment growth relative to the 25% expectation, additional programs already announced. How are you feeling about the trajectory of that business throughout '23 and getting in towards that '24 target?

Question: Ryan MacDonald - Needham & Company, LLC - Analyst : Yeah, absolutely. And I'm curious about that. It feels like 2023 has been sort of a resurgence in terms of demand from universities looking for online degrees. You had a record first quarter in terms of the number of announcements, too. You've been having success as well like on some of the flex options. So it seems that there's this kind of reinvigoration of online degrees. I've been curious, like from the conversations you have with university partners. What do you think is driving this? Is it almost them seeing -- hey, macro is weakening, labor markets are getting soft. So maybe you need to invest now ahead of that? Or is it perhaps they see the enrollment cliff looming and they need new revenue streams? I'm curious what you're seeing there. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 18, 2023 / 7:45PM, COUR.N - Coursera Inc at Needham Technology and Media Conference

Question: Ryan MacDonald - Needham & Company, LLC - Analyst : Yeah, absolutely.

Question: Ryan MacDonald - Needham & Company, LLC - Analyst : We could definitely go around a rabbit hole about the regulatory issues around education or even healthcare, I'm sure. But we would run out of time before we talk about the topic du jour, which is ChatGPT. We have to talk about it. I think I might be contractually obligated this year. But you've talked recently about some announcements using ChatGPT and started to leverage it, building it into the platform, whether it be the Coursera Coach, AI-assisted course building, and others. What are these new offerings? And what are you hoping to gain from them? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 18, 2023 / 7:45PM, COUR.N - Coursera Inc at Needham Technology and Media Conference

Question: Ryan MacDonald - Needham & Company, LLC - Analyst : Yeah, absolutely. Yeah. No, it's interesting that the potential -- even on the content generation side, it has a potential to be not only cost saver, but like almost a top-of-the-funnel demand driver as you localize the content into more areas or automate the creation of the content or the development of new content. One of the interesting announcements that OpenAI made last Friday was this concept -- this plug-in store, sort of an app for GPT-plus, where essentially, if you are a subscriber, you can pick your plug-in. And (inaudible) made this announcement around if the word course comes up, it can source content. Is that a potential avenue and use case for Coursera over the time that can be a potential use of lead gen tool if you will?

Question: Ryan MacDonald - Needham & Company, LLC - Analyst : For sure. Before we let you go, can we -- we got to talk about profitability. That is still an important factor, even for growth companies in this new market environment. Essentially, at your investor day, you committed to adjusted EBITDA profitability in fiscal '24. You updated that to reach profitability by fourth quarter of '23. But can you talk to investors about how you think about your margin targets on an annual basis and how you -- so that is the basis for how you set your operating plan. Because I think it will help investors understand how you balance out, let's try to achieve those targets early versus reinvesting for growth.

Question: Ryan MacDonald - Needham & Company, LLC - Analyst : Maybe just last and quick. Where do you think the key points of incremental leverage come from as you start to break through breakeven and start to generate more leverage?

Question: Ryan MacDonald - Needham & Company, LLC - Analyst : Excellent. As always, Ken, we've run out of time before we can fully cover everything. There are so many interesting things going on with the business. But I do appreciate you taking the time today and walking through the nice, strong, recent success and the nice road map for Coursera moving forwards. So with that, we'll end the fireside chat. Thanks, everyone, for participating and enjoy the rest of the conference.