Coursera Inc Q4 2023 Earnings Call Transcript

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

Question: Josh Baer - Morgan Stanley & Co LLC. - Analyst : Great. Thanks for the question and congrats on a good finish to the year and a strong guide. I wanted to ask on marketing spend and marketing efficiency. Sales and marketing expense declined year over year versus a really strong revenue growth and that's been the theme this year. So I was hoping you could dig in a little on marketing spend just as your products, your certificates, catalogue of offerings expand. Are you spending more or less on a dollar basis? And then how has the efficiency of that spend changed?

Question: Josh Baer - Morgan Stanley & Co LLC. - Analyst : Great. And if I could just add one for Jeff, on your over the last year, there's been a lot of changes with degree competitors, a couple exiting their businesses and others navigating some other challenges. I'm just wondering how all of that evolving competitive landscape has impacted Coursera's degree, business, and outlook? Thanks

Question: Josh Baer - Morgan Stanley & Co LLC. - Analyst : Great. Thank you.

Question: Stephen Sheldon - William Blair - Analyst : Hey thanks and a lot of encouraging updates here. But first, let me just thinking more about Coursera for business, it sounds like companies are going to need a lot of support and handholding as they tried to develop AI skills across the organization. But it's also coming at a time when learning and development budgets are under pressure. So from a timing perspective, when do you think a fear about getting left behind on AI skills development at the organizational level starts to overpower the cost containment efforts they've put in place. It seems with the guidance that you put out there for enterprise seems like you may not be assuming much in the 2024 guidance. So you think it's something that they could start to move the demand needle later this year, 2025, 2026? I guess, how are you thinking about it?

Question: Stephen Sheldon - William Blair - Analyst : Very helpful. Thank you. And then as a follow up on the consumer segment, I guess I wanted to ask a little bit about gross margins there. You've seen it. It looks like it stepped up pretty nicely, sequentially over the last two quarters. So it's kind of the second half of your I know year over year REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 01, 2024 / 10:00PM, COUR.N - Q4 2023 Coursera Inc Earnings Call comps get a little tricky with the things that you talked about can and have been talking about for last year. But just generally, how are you thinking about gross margins, I guess, on the consumer side as we think about 2024 and going forward?

Question: Stephen Sheldon - William Blair - Analyst : Great. Thank you.

Question: Jeff Silber - MO Capital Markets - Analyst : Thanks so much. I was intrigued when you talked about the partnership you're having with the New York State Department of Labor. Are there any other state thinking of doing what you're doing there? It sounds like a really interesting initiative.

Question: Jeff Silber - MO Capital Markets - Analyst : Okay. That's really helpful. And my second question, I guess, has to do with the change in definition [for free casually] You talked about and I'm just reading from your remarks and certain arrangements will help fund the production of courses and credentials in exchange for more attractive economics as well as exclusivity on your platform. How common is that what segments are this and should we expect gross margins to potentially go up as you move towards more of these arrangements?

Question: Jeff Silber - MO Capital Markets - Analyst : Okay. Really helpful. Thanks so much.

Question: Rishi Jaluria - RBC Capital Markets, LLC. - Analyst : Wonderful, thanks so much for taking my questions. Nice to see continued strength in the business and the crossover to free cash flow positive. I want to maybe go back to thinking about the enterprise side because we're now starting to see the first signs of job disruption or maybe even potential job losses as a result of AI, it still feels like enterprises are not taking reskilling and upskilling as seriously as they need to. Maybe asking the kind of same question in a different ways. What do you have in your power to kind of make that message resonate deeper within actual enterprises, that there is a sense of urgency around this, given it's going to start with jobs, but it's probably going to be entire industries that will get disrupted as a result of this and I've got a quick follow-up.

Question: Rishi Jaluria - RBC Capital Markets, LLC. - Analyst : Wonderful. That's really helpful. And then maybe just quickly sticking on the enterprise segment. But moving a little bit to the government side. I guess you've gone abroad and talk to different governments. What's kind of the willingness to not only adopt these solutions have to kind of bring about countrywide sponsorship of these, right? So it's not just solutions targeted at government employees, but at the wider citizens, I know you had some success with that prior, but again, we continue kind of the disruption of the society coming from AI, how have those conversations with government agencies and that use case involves? Thanks.

Question: Rishi Jaluria - RBC Capital Markets, LLC. - Analyst : Wonderful. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 01, 2024 / 10:00PM, COUR.N - Q4 2023 Coursera Inc Earnings Call

Question: Terry Tillman - Truist Securities, Inc. - Analyst : Yes, thanks for taking my questions. And yes, I'm sorry. Can you hear me?

Question: Terry Tillman - Truist Securities, Inc. - Analyst : Okay. Thanks. Solid job on the quarter here and the outlook. I guess first question, Ken, for you is a multi-partner in terms of appreciate all the color on the purchase of content assets and it sounds like that there's a strategic rationale for that $5 million. I think you said in 2023. Any sense on what that could look like in 2024? And then on the GenAI kind of courses, anything you can share about the materiality now revenue being generated from the GenAI content? Then I have a follow up for Jeff.

Question: Terry Tillman - Truist Securities, Inc. - Analyst : That's helpful color. I'll leave it at that, actually. Thanks.

Question: Ryan MacDonald - Needham & Company, LLC - Analyst : All right. Congrats on a quarter and thanks for taking my question. Jeff in one of the earlier questions I think Steven's first one on, on sort of Coursera for business and sort of the phases we're in terms of Generative AI adoption, you talked about sort of being in this phase two on the experimentation side. I think it's interesting sort of the Gen AI Academy new product launch you have associated with that. I'm curious, it seems like a really great product to be able to maybe capture some demand in this experimentation phase. Just curious what you're seeing sort of in terms of initial interest and adoption on that And does this create a sort of an upsell cross-sell opportunity for Coursera in 2024, where maybe we can start to see some of the recovery in those that are our metrics.

Question: Ryan MacDonald - Needham & Company, LLC - Analyst : Super helpful. And maybe as a follow-up, quick for Ken. In the prepared remarks on some of the consumer segment here, it was noted that nearly 7 million enrolments came in for the AI courses in 2023. Can you talk about how many of those were sort of roughly net new enrolments to Coursera and then in that context, how that -- how you're thinking about sort of that 20% growth algorithm between sort of new enrolments coming to the platform versus sort of maybe higher conversion rates in 2024? Thanks.

Question: Ryan MacDonald - Needham & Company, LLC - Analyst : Helpful. Unidentified_1 Given its new topic, it would make sense. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 01, 2024 / 10:00PM, COUR.N - Q4 2023 Coursera Inc Earnings Call