Coursera, Inc. (COUR) Q4 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call reveals strong growth in registered learners and a raised full-year revenue outlook, signaling positive sentiment. The Q&A section highlights strategic investments in AI and platform improvements, which are expected to enhance margins and growth. Despite some macroeconomic challenges, the positive guidance and strategic focus on innovation and partnerships, including the Udemy merger, support a positive outlook. The market cap suggests a moderate reaction, leading to a 'Positive' rating of 2% to 8% stock price increase.

Key Financial Performance

Revenue for the full year 2025 $757 million, an increase of 9% year-over-year. The growth was attributed to a more focused and disciplined company strategy, faster execution, and investments in product experiences.

Free Cash Flow for 2025 $78 million, up 32% from the prior year. This increase was driven by improved financial leverage and operational efficiency.

Adjusted EBITDA Margin for 2025 8.4%, an expansion of 240 basis points year-over-year. The improvement was due to increased financial leverage and targeted investments in product and operational efficiency.

Q4 2025 Revenue $197 million, up 10% year-over-year. Growth was driven by both Consumer and Enterprise segments.

Q4 2025 Gross Profit $109 million, up 12% year-over-year, representing a 55% gross margin. Margin expansion was driven by improved consumer segment economics and favorable content production arrangements.

Net Income for Q4 2025 $11 million, representing 5.6% of revenue. This reflects disciplined cost management and operational efficiency.

Adjusted EBITDA for Q4 2025 $11 million, representing 5.7% of revenue. This was achieved through targeted investments and operational improvements.

Consumer Segment Revenue for Q4 2025 $132 million, up 12% year-over-year. Growth was driven by enhanced marketing, localized pricing, and subscription capabilities.

Enterprise Segment Revenue for Q4 2025 $65.4 million, up 5% year-over-year. Growth was driven by campus and business verticals.

Total Registered Learners in 2025 29 million new learners added, growing the total cumulative learner base by 17% year-over-year. This growth was driven by demand for career-relevant learning and AI-related skills.

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Operating Highlights

AI-native product innovation: Coursera embedded faster AI-native product innovation and data-driven decision-making across the business.

Generative AI catalog: Learners enrolled in the generative AI catalog at a rate of 15 enrollments per minute in 2025, up from 8 enrollments per minute in 2024.

New AI courses: Launched new AI courses for various careers, including nursing, healthcare, business, legal, and communications roles.

Partnership with Anthropic: Launched first courses with Anthropic, providing hands-on experience with Claude and skills to collaborate with AI.

Cleveland Clinic partnership: Introduced courses on applying AI in clinical settings and using machine learning for medical image analysis.

Learner base growth: Added 29 million new registered learners in 2025, growing the total learner base by 17% year-over-year.

International market focus: Enhanced marketing, localized pricing, and subscription capabilities to cater to international learners.

Revenue growth: Achieved $757 million in revenue for 2025, a 9% year-over-year increase.

Free cash flow: Generated record free cash flow of $78 million, up 32% from the prior year.

Adjusted EBITDA margin: Expanded annual adjusted EBITDA margin by 240 basis points to 8.4%.

Platform fee introduction: Introduced a platform fee effective January 2026 to fund AI-native platform capabilities.

Udemy combination: Announced agreement to combine with Udemy to enhance investment, innovation, and execution capabilities.

Enterprise Admin Home redesign: Redesigned Enterprise Admin Home to improve engagement and skill development at scale.

Focus on AI-enabled skilling platform: Shifted towards building a dynamic AI-enabled skilling platform for learners, customers, and instructors.

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Risk or Challenges

Regulatory and Shareholder Approval Processes: The company is progressing through regulatory and shareholder approval processes for the proposed transaction with Udemy. Delays or complications in these processes could impact the timeline and success of the integration.

Integration with Udemy: The integration planning and execution with Udemy involves complexities, including achieving anticipated cost synergies and aligning operating models and cultures. Failure to execute effectively could hinder the expected benefits of the transaction.

Macroeconomic Environment: The Enterprise segment's growth is expected to remain in the low single digits, with no material change assumed in the current macroeconomic environment. Economic uncertainties could impact enterprise customer spending and retention.

Platform Fee Implementation: The introduction of a 15% platform fee on new sales may face resistance from customers or partners, potentially affecting adoption rates and revenue growth.

Enterprise Segment Retention: The net retention rate for paid enterprise customers is 93%, and there is a focus on driving sustained improvements in retention and expansion. Challenges in achieving this could impact long-term growth in the Enterprise segment.

Content Production Economics: The company relies on favorable revenue share and content cost arrangements for margin expansion. Any changes in these arrangements could negatively impact gross margins.

International Market Expansion: A growing proportion of new learner traffic comes from international markets. Challenges in localization, pricing, and regional labor market alignment could affect monetization and growth.

Technological Change and Innovation: Rapid technological changes require continuous investment in AI-native capabilities and product innovation. Failure to keep pace with these changes could impact competitiveness and learner engagement.

Seasonal Working Capital Dynamics: Seasonal dynamics related to receivables and revenue share payments could impact cash flow, particularly in the fourth quarter.

Proposed Transaction Costs: The company anticipates significant cash payments related to the proposed transaction with Udemy, which could affect free cash flow and financial flexibility.

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Guidance & Outlook

Revenue Growth for 2026: Coursera anticipates revenue to be in the range of $805 million to $815 million, representing growth of approximately 6% to 8% from the prior year.

Consumer Segment Growth: Expected to grow more than 10% over the prior year, driven by subscription and course offerings, with a slight offset from a 100 basis point headwind in the Degrees product category.

Enterprise Segment Growth: Anticipated to grow in the low single digits year-over-year, with no material change expected in the current macroeconomic environment.

Adjusted EBITDA Margin for 2026: Expected to be in the range of $70 million to $76 million, representing an adjusted EBITDA margin of approximately 9% at the midpoint of the revenue and adjusted EBITDA ranges.

Platform Fee Impact: A 15% platform fee on new sales across eligible consumer subscriptions, courses, and enterprise offerings is expected to gradually improve gross margins, with initial benefits in the second half of 2026 for the Consumer segment and in 2027 for the Enterprise segment.

Cost Synergies from Udemy Transaction: Anticipated annual run rate cost synergies of $115 million within 24 months of closing the transaction, with a majority achieved within the first year post-close.

Free Cash Flow Performance: Expected to track at or above adjusted EBITDA, excluding cash payments related to the proposed transaction with Udemy.

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Shareholder Return Plan

share repurchase program: As we discussed on the December announcement call, this includes our anticipated execution of a sizable share repurchase program following the close of the proposed transaction with Udemy.

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Key Q&A

Q:Can you provide more details about the platform fee introduced in January, its impact on gross margins, and any pushback received?

A:The platform fee is intended to enable ongoing investment in improving the platform, benefiting learners and content partners. It is expected to significantly contribute to gross margin improvements by 2026, with more impact reflected in the second half of the year. There has been no change to consumer or enterprise pricing due to the platform fee.

Q:Where are you making incremental investments in the business for the 2026 budget?

A:Investments are being made in sales and marketing to drive new learner acquisition and in R&D, including hiring, software tools, engineering, and product development. G&A expenses are expected to grow modestly.

Q:What proprietary data sets or competitive advantages does Coursera have to differentiate itself from LLMs or new entrants?

A:Coursera uses external data and its own platform data to map skills to courses and modules, verify skills at scale, and optimize learner engagement and outcomes. Coursera-produced content is used to test and improve learning outcomes. 46% of learners report a salary increase since enrolling.

Q:Is there a difference between the platform fee and a pricing increase for new customers?

A:The platform fee is not a pricing increase. It applies to new revenue in 2026 for eligible content and is an ongoing fee of 15% before revenue share payments to content partners. Consumer and enterprise pricing remain unchanged.

Q:What are the plans for international expansion, particularly regarding AI dubbing and geo-based pricing?

A:Coursera plans to expand AI dubbing and machine translation to more courses, as learners engage more with content in their native language. Geo-based pricing has shown positive results, and further adjustments are planned for 2026 to align with purchasing power in different countries.

Q:What feedback has been received from university and enterprise partners and Udemy instructors regarding the combination with Udemy?

A:Feedback has focused on how the integration will work. The combination is expected to benefit all stakeholders by expanding audience reach and content offerings. Post-close, input from partners and instructors will guide the integration process.

Q:What is the timeline and potential regulatory hurdles for the Udemy merger?

A:The merger is expected in the second half of the year, but the timeline could vary. Regulatory filings are progressing well, and no specific hurdles were mentioned.

Q:What kind of traffic is Coursera seeing from AI platforms like OpenAI and Gemini, and what are the expectations?

A:Traffic from AI platforms is in early stages but shows higher intent compared to traditional search. Coursera is collaborating with OpenAI to improve integration, but it is too early for substantive results.

Q:How does the platform fee work, and what percentage of consumer revenue comes from subscriptions?

A:The platform fee is an ongoing 15% fee on new revenue for eligible content in 2026. A significant portion of consumer revenue comes from subscriptions, particularly Coursera Plus.

Q:What are the main drivers of growth in the Consumer segment, and how is the subscription model performing?

A:Growth is driven by subscriptions and courses, with Coursera Plus being the fastest-growing segment. Annual subscriptions are showing strong momentum, supported by efficient sales and marketing efforts.

Q:What are the priorities for improving the Enterprise segment, especially with the Udemy merger?

A:Priorities include operational improvements, product development, and leveraging Udemy's strengths in enterprise offerings. The merger will create a balanced consumer-enterprise revenue mix and enhance product capabilities.

Q:What factors are contributing to the Q1 revenue guidance and the sequential decline?

A:Factors include cautious outlook for Coursera for Business due to macroeconomic uncertainty and the revenue recognition timeline for Coursera Plus subscriptions, especially annual plans.

Q:Why was there a step-down in net new enterprise accounts added in the quarter?

A:The step-down is attributed to macroeconomic trends affecting Coursera for Business and the natural lumpiness of government contracts in Coursera for Government.

Q:Review of Unclear Management Responses

A:Management avoided providing specific details on the timeline for the Udemy merger, stating only that it is expected in the second half of the year with a wide range of potential outcomes. Additionally, they did not provide substantive data on traffic from AI platforms, citing early stages of integration.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

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