Online learning platform Coursera (NYSE: COUR) beat Wall Street’s revenue expectations in Q1 CY2025, with sales up 6.1% year on year to $179.3 million. The company expects next quarter’s revenue to be around $181 million, close to analysts’ estimates. Its non-GAAP profit of $0.12 per share was 55.9% above analysts’ consensus estimates.
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Coursera (COUR) Q1 CY2025 Highlights:
- Revenue: $179.3 million vs analyst estimates of $175.3 million (6.1% year-on-year growth, 2.3% beat)
- Adjusted EPS: $0.12 vs analyst estimates of $0.08 (55.9% beat)
- Adjusted EBITDA: $18.7 million vs analyst estimates of $10.36 million (10.4% margin, 80.5% beat)
- Revenue Guidance for the full year is $725 million at the midpoint, roughly in line with what analysts were expecting
- EBITDA guidance for the full year is $50.75 million at the midpoint, below analyst estimates of $51.02 million
- Operating Margin: -8%, up from -17.6% in the same quarter last year
- Free Cash Flow Margin: 14.1%, up from 4.1% in the previous quarter
- Annual Recurring Revenue: $231.2 million at quarter end, up 2.2% year on year
- Paying Users : 175.3 million, up 26.8 million year on year
- Billings: $208.1 million at quarter end, up 15.1% year on year
- Market Capitalization: $1.45 billion
StockStory’s Take
Coursera’s first quarter results were shaped by management’s renewed focus on product innovation and operational discipline. New CEO Greg Hart described prioritizing faster product development cycles, leveraging artificial intelligence to enhance learning experiences, and streamlining the segment reporting structure by integrating the degrees business into the consumer segment. Hart emphasized the importance of expanding Coursera’s content catalog and improving the learner journey through AI-powered features such as course translations and interactive tools like Coursera Coach.
Looking ahead, management’s forward guidance reflects expectations for continued single-digit growth in both consumer and enterprise segments, with heightened investment in content and technology. CFO Ken Hahn explained the company’s decision to moderate margin expansion in order to fund growth initiatives, stating, “We set aside enough so that we can pursue growth initiatives and new capabilities.” Management also acknowledged caution around enterprise spending due to macroeconomic uncertainty, but highlighted stabilization and improvement in key consumer metrics as supportive factors for their outlook.
Key Insights from Management’s Remarks
Coursera’s leadership attributed first quarter performance to an evolving product strategy and broader market trends impacting learner needs and institutional partnerships.
- Content Catalog Expansion: Management highlighted a 37% year-on-year increase in course offerings, now approaching 10,000, with significant growth in generative AI content and entry-level certificates to address rapid skills demand.
- AI-Driven Learning Enhancements: The rollout of AI-powered course translations and audio dubbing in multiple languages enabled improved access and higher completion rates, supporting global learner engagement.
- Segment Reporting Simplification: Coursera combined its degrees business into the consumer segment, aiming to better reflect how learners interact with the platform and to align internal management with external reporting.
- Micro-credential Demand: Early findings from Coursera’s upcoming impact report indicate that a majority of employers and learners value micro-credentials as pathways to employment and degree credit, reinforcing the focus on career-aligned offerings.
- Enterprise and Institutional Partnerships: Growth in paid enterprise customers and partnerships with leading universities and technology companies, such as Google and Microsoft, contributed to platform scale and diversified content.
Drivers of Future Performance
Management’s outlook for the rest of the year centers on accelerating product innovation while navigating uncertain enterprise demand and investing to support long-term growth.
- Product and Platform Investment: Continued enhancements to AI-driven features, personalized learning tools, and career discovery experiences are expected to drive user engagement and paid conversion, especially in the consumer segment.
- Content Engine Expansion: Rapid addition of relevant courses, including professional certificates and Coursera-produced content, is intended to address evolving workforce needs and improve gross margins through more favorable economics.
- Enterprise Caution: Management signaled prudent expectations for enterprise growth due to broader budget constraints, though specific investments are being made to tailor solutions for business and campus customers.
Top Analyst Questions
- Brian Spillak (JPMorgan): Asked where CEO Greg Hart sees the greatest opportunity to drive growth; Hart pointed to accelerating product innovation and expanding the content engine, with near-term impacts in the consumer segment.
- Stephen Sheldon (William Blair): Inquired about expanding the content portfolio; Hart cited the importance of both breadth and depth, with a focus on high-demand areas like generative AI and healthcare, as well as Coursera-produced content for better economics.
- Rishi Jaluria (RBC): Questioned the rationale for merging the degrees business into the consumer segment; CFO Ken Hahn explained it reflects internal management practice and the declining materiality of degrees as a standalone product.
- Josh Baer (Morgan Stanley): Asked about timing for upskilling and reskilling inflection points; Hart acknowledged long-term trends but noted current macro uncertainty makes the near-term outlook for enterprise demand less predictable.
- Ryan MacDonald (Needham): Asked whether investments in product and content will benefit both consumer and enterprise; Hart responded that improvements are designed to enhance both segments, though some enterprise-specific investments are also in place.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will be monitoring (1) the pace at which Coursera’s AI-powered product features and career discovery tools translate to higher conversion rates and engagement, (2) continued expansion of the course catalog, especially in high-demand fields, and (3) stabilization or acceleration in enterprise customer growth amid uncertain corporate budgets. The company’s ability to balance investment in growth initiatives with disciplined margin improvement will also be a key area of focus.
Coursera currently trades at a forward EV/EBITDA ratio of 25.4×. At this valuation, is it a buy or sell post earnings? See for yourself in our free research report.
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