Coursera Inc Q1 2025 Earnings Call Transcript

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

Question: Bryan Smilek - JPMorgan - Analyst : I guess, Greg, to start, can you just help us understand where you're spending the most time in your new role and where you see the most opportunity to drive improved growth? Is it in the Consumer segment, Coursera for Campus, Enterprise or the mobile app?

Question: Bryan Smilek - JPMorgan - Analyst : Great. And I just have a quick follow-up, too. I mean 1Q was such a strong quarter and record quarter in terms of registered learner net adds. Could you just help us understand what drove that performance? You mentioned stabilization across trends. Was that across retention, top of funnel or both?

Question: Stephen Sheldon - William Blair and Company - Analyst : Greg, I wanted to follow up on the content front. Now that you've had a few months at Coursera, where do you see the bigger opportunities to expand the content on the platform as we think about subjects, for example, building out more breadth in health care or other subjects, by the source of content as we think about corporate and university partners, along with potentially new sources and just by content type? I'm curious how you're thinking about how that content kind of portfolio might look as we might sit here two to three years down the road.

Question: Stephen Sheldon - William Blair and Company - Analyst : Got it. That's really helpful. Maybe as a follow-up, on the career discovery solution, really interesting what you guys are doing there. And I guess as you think about the opportunity, how comprehensive of a solution could Coursera look to build there, especially as you think about the opportunity to actually be a connection point potentially down the road between learners and prospective employers? Is there a bigger monetization opportunity that you may start to pursue at some point?

Question: Rishi Jaluria - RBC Capital Markets - Analyst : Maybe I want to start with the recategorization of Consumer and Degrees into one segment. Look, I understand what you're talking about streamlining the organization, but maybe two pieces there. Number one, I mean, they are fundamentally different businesses. I understand with micro-credentials and pathways, there's maybe a little bit of a blurry line, but you're targeting different people. So maybe help me understand better the logic behind that. And the second piece to that, I mean, the obvious pushback that I think you're going to get from investors is, well, Degrees has been a little bit of a challenged business over the past couple of years. Is this just a move to hide future weakness in Degrees? Maybe just help us understand both of those, and I've got a quick follow-up.

Question: Rishi Jaluria - RBC Capital Markets - Analyst : Yes. No, that's super helpful. And then maybe I just want to think about now the outlook for the year. Nice to see a raise there. I just want to kind of understand your sets of assumptions behind that guidance, right? And especially just given -- I mean, no one knows how this macro picture and everything is going to shake out. But I think it is clear we've seen consumer sentiment start to weaken. That's obviously a very critical growth driver on your side, is the Consumer business. Maybe just help us understand, given the global nature of your business, global nature of your learners and the Consumer business, how are you thinking about what's kind of the base case embedded in the guide, especially as it pertains to all these pieces?

Question: Joshua Baer - Morgan Stanley - Analyst : For Greg, just wondering, I mean, I'm very bullish on the long-term secular trends around skilling and reskilling. But I'm more uncertain on the timing of when it is going to matter for companies and exposed. And so I'm wondering your perspective coming into this sector on the timing of that opportunity. When does skilling and reskilling inflect and translate to momentum for you? And really, what will it take to get there?

Question: Joshua Baer - Morgan Stanley - Analyst : Great. I was hoping, Ken, you could just comment on why 100 basis points is the right level of margin expansion. We can see that's below where it's been. If you could talk through some of the methodology of deciding how much to invest in what projects and that level of margin expansion is also coming with a lower level of growth this year than in the past, too.

Question: Ryan MacDonald - Needham & Company - Analyst : Greg, as you think about the investments you're making in the business today, a lot of them, you talk about product innovation, content generation, it seems like there are sort of benefits to the core Consumer business that perhaps, if successful, will also benefit sort of the Enterprise segment down the line. Is that the way you're sort of looking at in terms of prioritization in the business? Or are there separate sort of enterprise-specific investments that you think also help to separately drive growth in that business or drive a reacceleration of growth in that business?

Question: Ryan MacDonald - Needham & Company - Analyst : Super helpful color there. Ken, maybe for you, I recognize that we're, on an annual basis, showing some nice EBITDA margin expansion, but the sort of implied guidance for second quarter and what's implied for the back half of the year sort of shows some adjusted EBITDA margins, obviously, that are sort of below the annual targets. So one, can you talk about when you think adjusted EBITDA margin troughs as we think about fiscal '25? And two, how are you thinking about sort of payback period on these investments? I understand you're not including any revenue benefit in the implied guidance right now. But how should we think about how quickly some of these investments could actually translate to top line improvements?

Question: Ryan Griffin - BMO Capital Markets - Analyst : Can you hear me?

Question: Ryan Griffin - BMO Capital Markets - Analyst : This is Ryan on for Jeff. I just had a quick question. This is helping us to measure the success of product innovation and go-to-market initiatives from the outside looking in. Just wondering, what percentage of registered learners are paid today? And then what percentage of registered learners do you envision as paid once all these initiatives flow through?

Question: Ryan Griffin - BMO Capital Markets - Analyst : Understood. And then just a quick follow-up. I was wondering if there's any knock-on impact of the Department of Education potentially closing, whether it's budgets and grants coming into scrutiny, in some of the higher end of the education institutions that you partner with?