Coursera Aktie

Ladies and gentlemen, thank you for standing by, and welcome to today's conference call. [Operator Instructions] And this call is being recorded. [Operator Instructions] I would now like to turn the call over to Cam Carey, Vice President of Investor Relations. Mr. Carey, you may begin.

Good morning, and thank you for joining us. Today's call is intended to provide supplemental modeling context for the combined Coursera and Udemy business following the close of our transaction in May. Joining me today is Mike Foley, Coursera's Chief Financial Officer. We have allotted a half hour for today's call, including brief remarks from Mike, followed by Q&A. All supplemental materials are available on our Investor Relations website at investor.coursera.com, where a replay of this webcast will also be available following the event.

Before we begin, I'd like to remind everyone that today's discussion will include both GAAP and non-GAAP financial measures. Reconciliation to the most directly comparable GAAP measure can be found in the materials and supplemental disclosures posted to our Investor Relations website. All statements made during this call relating to future results and events are forward-looking statements based on current expectations and beliefs.

Actual results and events could differ materially from those expressed or implied in these forward-looking statements due to a number of risks and uncertainties, including those discussed in today's supplemental materials and our SEC filings. Please refer to the safe harbor statement included in today's materials for additional information.

I'd now like to turn the call over to Mike.

Thank you, Cam, and good morning, everyone. With the transaction closed and integration underway, we wanted to provide a clear framework for evaluating the combined company ahead of our next earnings report. Today, we'll focus on 4 areas: first, a baseline for understanding the combined company; second, clarity in how we intend to report and evaluate performance near term; third, a framework for full year 2026 expectations; and finally, how the combination increases our capacity to invest in the next-generation platform for skills.

Today's session is focused on the remainder of 2026. We are not introducing long-term financial targets, nor are we providing 2027 guidance. Our near-term focus is disciplined execution, speed of integration, and delivering on the synergy commitments we have already communicated. Before turning to the financial framework, it's important to recognize that the strategic rationale for this combination extends beyond cost synergies. As I regularly remind our team members, those efforts are critical and should not be underestimated, but they are table stakes, and we're well on track. The larger opportunity is how this combination positions us to pursue the global skilling opportunity ahead.

AI is fundamentally changing how skills are developed, how learning is delivered, and how organizations assess workforce readiness. It's also increasing the premium on trusted data, relevant experiences, and measurable proof of what people can actually do. AI is not only changing our market, it's changing how every company, including our own, must operate, innovate, and adapt. In this environment, speed, scale, and trusted context matter more, not less.

The long-term value of this combination will come from harnessing proprietary data, skills intelligence, and our global ecosystem to connect skills, learning, proof, and outcomes. Together, Coursera and Udemy create one of the largest skills development platforms in the world, serving thousands of customers and millions of learners across a more comprehensive career journey. That breadth matters because the future of workforce skilling will not be defined by access to more content alone. It will be defined by helping learners and organizations identify the right skills, build them in the context of their everyday work, and prove capability in ways that connect to career and business outcomes.

The combination gives us a broader lens into the global skills economy at the same moment in which the pace of technological change is accelerating the need to continuously assess and develop new skills. Coursera has a deep understanding of how the world learns. Udemy brings insight into how companies operate, how job roles are evolving, and how practical skills emerge in real time.

Together, we believe those assets create a stronger foundation for the AI era, not because we have more content, but because we have more context. Simply put, that context, combined with our scale, data, customer reach, and investment capacity, gives us a differentiated foundation to build from as we integrate the companies and invest in the next chapter of growth. Because Coursera and Udemy share similar business models and segment structures, we're not fundamentally changing how we report the business.

Going forward, we'll continue to report through 2 operating segments: Enterprise and Consumer. The primary enhancement is additional transparency into subscription revenue. This is particularly useful within consumer, where subscriptions are now the primary growth driver and a majority of revenue. To provide additional visibility, we'll also begin reporting paid subscribers.

For Enterprise, we'll continue to provide Net Retention Rate and Enterprise Customers. We've also aligned Udemy's customer definition and count to Coursera's methodology, which excludes web-enabled self-service accounts, to focus on the large customers that are the primary drivers of Enterprise performance. Our objective is simple: maintain consistency and provide more insight into the underlying drivers of performance.

Let me start with the revenue profile of the combined company. The pro forma business generated more than $1.5 billion of annual revenue in 2025, providing meaningful scale across both Enterprise and Consumer. The underlying drivers of growth vary across the platform. We continue to see growth in Enterprise and momentum in Consumer subscriptions, while parts of Consumer remain under pressure, particularly Udemy's transactional offerings.

Slide 7 also introduces two 2026 views: reported revenue and normalized combined revenue. The reported basis for guidance remains our official outlook, but because the transaction closed in mid-May, reported 2026 results will include Udemy only for the post-close period. As a result, comparative trends will not always reflect the underlying performance of the business. And for that reason, we're also providing a normalized view of the combined business that includes Udemy's pre-close revenue as if the transaction had closed at the beginning of 2026.

Lastly, our outlook also includes potential revenue dis-synergies associated with integration with our latest views reflected in today's outlook. Importantly, it does not include any revenue synergies from the combination. We believe this provides a realistic baseline while appropriately accounting for potential near-term disruption as we integrate the companies and begin to build the foundation for future growth.

As shown on Slide 8, more than 80% of the combined company's revenue now comes from recurring revenue streams, including Enterprise revenue and Consumer subscriptions. That mix improves visibility and aligns the business with a market where skills development is becoming a constant need. It also provides a stronger foundation for a next-generation platform designed around continuous skills development rather than onetime content consumption. This higher quality mix also supports the margin profile of the business.

In recent years, both Coursera and Udemy have expanded segment gross margin while continuing to invest in product, content, and go-to-market capabilities. Coursera has driven more favorable economics with initiatives like Coursera produced content and the platform fee. Udemy was further along a similar path, delivering consistent margin expansion and operating leverage while continuing to invest in the platform.

As a result, the combined company begins with a stronger financial profile, benefiting from Udemy's higher gross margin and adjusted EBITDA margin contribution. Importantly, that is before synergies. The combination allows us to build on the progress that both companies have already made, while delivering meaningful adjusted EBITDA margin expansion through our $115 million net synergy target.

Let's turn to our segments, starting with Enterprise. Enterprise now represents approximately half of combined revenue, and we believe it remains the most durable driver of growth in addition to its attractive gross margin. The segment benefits from recurring customer relationships, multiyear contracts and more than 12,000 enterprise customers as of Q1. While growth and NRR remain below our long-term ambitions, our conviction in the enterprise opportunity remains unchanged.

Organizations are increasingly focused on workforce transformation, AI readiness, and solutions that help assess, develop, and measure talent more effectively. The combination expands our customer reach, go-to-market scale, and product capabilities. Over time, we believe a more unified platform experience can improve engagement, strengthen retention, and support more durable Enterprise growth.

Let's move to Consumer. First, we see strong demand for our subscription offerings, now 2/3 of consumer revenue. At the same time, both companies have improved gross margin through better content economics, platform capabilities, and mix. Subscriptions have become the primary growth engine within Consumer, representing a majority of segment revenue and serving more than 1.5 million paid subscribers. We believe this provides value to our model, but also reflects a broader shift in how skills are continuously developed as technology reshapes the requirements for every role. That said, at a product level, the revenue trajectory remains in a transition period, particularly the Udemy transactional business, which has been under pressure.

While overall growth remains below our long-term ambitions, the composition and economics have continued to improve. These trends reinforce our view that the long-term Consumer opportunity is less about onetime content purchases or sheer content volume, and much more focused on helping learners continuously discover, develop, and prove the skills that unlock career outcomes. The combination gives us an opportunity to build a more comprehensive subscription experience spanning just-in-time skills development to longer-form credentials with the goal of increasing engagement and lifetime value to drive sustainable growth.

As we've previously discussed, we continue to expect $115 million of annual run rate net synergies. That target incorporates our latest view of expected revenue dis-synergies associated with sales integration, marketing optimization, and customer overlap. In other words, it reflects the expected net benefit to the business, not simply gross cost savings. We now expect to achieve at least $80 million by the end of 2026, representing a substantial majority of the target and a faster pace of realization than the original 24-month timeline.

Going forward, we intend to track and provide both the annual run rate synergies achieved and the reported financial benefit recognized in our results. We view integration and synergy realization as the foundation for our next chapter of growth and innovation, not the finish line. By eliminating duplication and shared product, data, and technology investments, we can increase our capacity to invest at scale, move faster, and accelerate innovation in ways neither company could achieve independently.

Turning to our 2026 revenue outlook. On a reported basis, we expect revenue of $1.21 billion to $1.24 billion, representing growth of 60% to 64% year-over-year. On a normalized basis, this reflects a full year revenue range of $1.49 billion to $1.52 billion or a decline of 4% to 2% year-over-year, reflecting modest Enterprise growth and a Consumer decline, as subscription revenue growth is more than offset by transactional headwinds and paid marketing optimization. This also assumes Q2 revenue down 3% to 2% year-over-year, with the year-over-year change expected to face further compression in subsequent quarters.

Turning to margin. This is one of the clearest areas where the combination enhances the financial profile of the business. While revenue remains in transition, we have a clear path to expand non-GAAP profitability through strong gross margins, disciplined cost execution, and the ramp of our synergy benefits. On a reported basis for the full year, we expect gross margin of approximately 61.5% and adjusted EBITDA margin of 13%.

However, those full year targets do not fully capture the run rate we expect to build by year-end. While we expect to achieve at least $80 million of annual run rate net synergies by the end of 2026, only a portion of that benefit will be reflected in reported results. That ramp is why we're also providing margin targets for the fourth quarter.

In Q4, we expect to report an adjusted EBITDA margin of approximately 16%, reflecting a more meaningful in-quarter benefit from synergy realization. Even with the near-term revenue pressure, we can demonstrate meaningful progress towards a fundamentally stronger earnings profile and substantial cash flow generation over time. We have also provided you with more detailed modeling assumptions across a range of metrics, from synergies considerations to the onetime cash expenses we anticipate following the transaction close and in support of our integration plans.

Turning to capital allocation. At the end of Q1, Coursera and Udemy had pro forma cash of $1.15 billion and no debt. For 2026, our capital allocation priorities are straightforward: execute the integration and begin realizing the benefits of the synergies, leverage our combined scale and R&D to accelerate our unified platform strategy, and remain disciplined in how we allocate capital, balancing strategic investment priorities with our ambition to drive stronger shareholder returns.

That ambition is reflected in the $500 million share repurchase authorization we announced in May. Since announcing the program just several weeks ago, we have already repurchased more than $70 million of shares, reflecting our confidence in the value creation opportunity this combination creates for our business and our shareholders.

Let me close with how I view the value creation opportunity ahead. There are 2 distinct lenses. The first is execution. We have a clear path to integrate quickly, realize synergies faster than the time line we originally communicated, and improve the financial profile of the combined company. That is the work investors should expect us to deliver in the near term.

The second is what that execution enables. Integration gives us the scale, data, and investment capacity to build the next-generation platform for skills development. One with greater reach, richer insights, and where learning is delivered in the flow of work with agentic, AI-native experiences. That is the larger opportunity, not just bringing two companies together, but building the business we believe is required to meet this moment.

Together, we believe these opportunities create a stronger company, an enhanced financial profile, and a compelling path to long-term value creation. Most importantly, they position us to better compete and lead in what we believe will be one of the largest workforce transformations in modern history. We're excited about the opportunity ahead, confident in our execution plan, and look forward to sharing our progress in the quarters to come.

Now let's open the call for questions.

Thanks, Mike. We'll now open the call for questions. [Operator Instructions] Our first question will come from Bryan Smilek with JPMorgan.

Great. Thanks, Mike, for the color today. Just 2 on my end. Between the gross and net cost synergies, can you just discuss what drives conviction here in driving the affiliated revenue synergies over time?

And I think in terms of specific timing for margin trajectory, you mentioned the $80 million annualized savings by year-end. Can you just discuss the puts and takes there and where you're seeing the majority of those synergies come from by line item?

And then secondarily, just at the segment level, can you just talk to when you expect some of the pressures on the Consumer business, particularly on the Udemy transactional side, to be going forward?

Sure, Bryan. Thanks for the questions. On the synergies side, look, we've made great progress in our integration planning prior to closing the transaction. We've got really strong, robust plans in place to execute against the $80 million of net synergies for this year. I think in terms of timing of those, probably significant progress in Q3 of this year. We've already made some progress on it, significant progress in Q3 and in Q4. So [ it will be ] sort of spread throughout the second half of the year.

In terms of the P&L benefit of that, of course, it will be weighted towards the back end of the year. So in terms of their costs to achieve, primarily Q3, a bit in Q4, and then the P&L benefit, coming through in Q4 and then on into next year.

In terms of the question around Consumer, certainly we're seeing a lot of pressure on the transactional business. Primarily that is the Udemy marketplace business continuing the trend that, that business had seen for some time. I do think we'll see that continue this year and into next year as well. In terms of the pressure there. We are seeing consistent growth in the subscription side of the business, both the Coursera and Udemy subscription businesses continue to have real strength there. So I think those trends will continue for really the foreseeable future.

Great. Thank you, Mike.

Your next question will come from Ryan MacDonald with Needham & Company.

Maybe just to break it down as we're thinking about sort of the flow throughout the year. Obviously, a lot of color on total revenue for the updated '26 guidance. But as we think about sort of the 2Q kind of flow-through or mix of revenues across Enterprise and Consumer, can you just give a little more color on that and what we should think about in terms of sort of on the as-reported basis growth rates for those 2 segments?

Yes. So on the Enterprise side, I think we were just relatively consistent, low single-digit growth rate through that business, based on the trajectory you can see there. And on the Consumer side, on subscription, I think we've got some moderation in growth in the subscription side, but still consistent growth there. And then the transactional part of that business, again, sort of consistent decline year-on-year, quarter-on-quarter decline in that business, which is what we expect as we transition into consumer.

And then we've noted for the purposes of your modeling, the degrees revenue there as well, that's a relatively consistent but slowly declining, but very high margin and important business to us. But I would anticipate that to continue its sort of trajectory of slow decline from a modeling standpoint.

That's helpful. And then on the Enterprise side, I know we've talked about in the past that there's obviously some customer overlap there, and so there's maybe some anticipation about sort of with those customers of what maybe a renewal looks like in a combined Udemy, Coursera Enterprise customer. Any sense or feedback so far in terms of what maybe those renewals are looking like in the early days post close of the transaction?

Yes. We really haven't had any significant issue there right now. We haven't had any significant renewals so far. What you see here in the dis-synergy assumption remains really just a forecast and assumption. I do expect that any -- if there is any impact there, it's going to be into next year. We don't see any significant revenue impact on the Enterprise side on a dis-synergy basis in 2026. So yes, we really haven't faced too many of those discussions with customers to date, which I think is something of a positive signal overall.

Your next question will come from Sarang Vora with Telsey Group.

Sorry about that. I had a question about gross margin. I mean, right now, we are using a blended gross margin rate of, Udemy had a higher consumer rate than you guys in Enterprise as well. So I'm curious, like does over time the gross margin rate blend more towards how the Coursera model was?

Or because as you integrate the model, I'm just thinking like a little longer, like how does the gross margin rates change across the business?

And can you help us share some of the conversations you are having with your Enterprise customers or educator partners about like how the rate is blending, from a gross margin standpoint?

Yes. Thanks for the question. Yes. So the -- as you can see, the gross margin on the Udemy business coming in was generally higher than the Coursera model. We're continuing to -- we're continuing with those two platforms. We're not integrating them right now into one platform. So I would expect that the gross margin profile for the business stays relatively consistent, and really the things that change our revenue mix, as we move to a higher portion -- proportion of Enterprise revenue versus Consumer, which is the trajectory to date, that's positive for gross margin.

And also the benefits that we had been achieving in both companies now combined, for example, on the Coursera side, with the platform fee, and the increasing proportion of Coursera produced content, that adds to gross margin as well. That's part of what you're seeing in the improvement between Q2 and Q4.

So I certainly wouldn't be thinking about it as moving from the higher-margin profile of Udemy towards a lower margin profile of Coursera. I think we continue to benefit from the strong economics from the Udemy business going forward.

Hey, Sarang, this is Cam. One additional point I'll offer for you, Slide 9 of today's presentation, it presents essentially both of the historical company segment margins. You'll note on there on the Udemy disclosed part, the segment margin is different from what was previously disclosed. They had incremental costs at the cost of revenue line relative to Coursera, which was more like content margin. So just a reduction in the revenue share that we get to the partners. And so that's been normalized in today's presentation, just so that you can see on a comparative basis, what the full base looks like.

That's great. Thank you so much. And one quick question on the capital allocation. I know you've used $70 million of the $500 million available for share repurchase. Can you help us the time line on this? I know it's still a little bit opportunistic, but I'm just curious if you had a narrower window on like dilution or just a thought on the repurchases.

Yes. I mean we are going to continue with the repurchase program. So far, as you can tell, we have been in the market from the -- really the day that we announced it. So that we expect to continue. We have no particular time line on it right now. We'll be in the market consistently going forward, is our expectation right now. It's sort of roughly this pace. But of course, it depends on where the stock price lands. And so we can't really give a forecast for that, that would be specific.

Your next question will come from Josh Baer with Morgan Stanley.

Great. Thanks for the question and the presentation. Wanted to get a little bit of help with, I know the bridge from '25 to normalized '26 is there, but thinking about what we knew about '26 before to now. You had a guidance out there. And if we took the latest from Udemy, it's getting closer to something like $1.6 billion, and now the normalized guide is $1.5 billion roughly and only $10 million dis-synergy. So I was hoping you could provide some context on that other $90 million.

Yes. I mean I think part of the issue maybe you're facing there is that Udemy didn't really have guidance in the market for quite a while. I think the primary additional headwind we're seeing is in the Udemy consumer transactional business. That's, I think, where the majority of any gap that you might see there.

Certainly, the business is going through a transition to subscription, but we are seeing on the transactional side, incremental pressure there at the moment and through the remainder of the year is what we anticipate. So that's the primary issue. There's some additional headwind relative to original expectations in the Coursera Consumer side as well, in the back half of the year. But I think the primary issue is going to be in the transactional side for Udemy.

Okay. That makes sense. Fair to say that the merger served as a catalyst to move faster on deemphasizing that transition, or put differently, to move faster to push over to subscription?

Yes, that's right. I mean it's, the bigger picture, of course, is the investment in the next generation of platform. That's really where we are. That's sort of capital allocation point number one. But yes, one of the factors here is that we have a -- Coursera developed a very strong muscle on paid media acquisition.

And part of what we are able to bring to the Udemy team, if you like, is some of that expertise and really laying on some strong discipline in how we do user acquisition, for both businesses to make sure that we are having positive ROI on our investments in paid marketing.

And frankly, where that where that means we reduced paid marketing, we're doing that. And so you may see some revenue impact of that, and that's in the forecast right here. But that really reflects more discipline in paid media spend, to ensure we have a strong ROI on the spend there.

Our next question will come from Devin Au with KeyBanc Capital Markets.

Hi. Maybe just one for me. So it makes appropriate sense for you guys to build in some conservatism in the revenue guide with dis-synergies potential. But I think in the PowerPoint or in the remarks, you also kind of mentioned there's some mitigation plans. Could you maybe just talk a little bit more on what those are and kind of how we could perhaps turn those revenue dis-synergies into synergies over the near term?

Yes. Thanks for the question. Yes. Look, again, I would emphasize that the numbers here with respect to revenue dis-synergies, particularly obviously into 2027, they are estimates right now. It reflects that there is an ACV overlap between our 2 sets of customers, approximately 20%. That said, it's our intent to absolutely minimize any impact there. We have trained our Enterprise sales organization on how to have those conversations in a constructive way. We're also -- our Enterprise sales teams, as they come together, are contemplating cross-sell as well between the 2 platforms because they do provide different capabilities. And that is partly why 20% of our ACV is overlapped today because customers are willing to pay for both.

So certainly, there is some risk with respect to the revenue dis-synergy that we intend to do everything we can to minimize. There's also the potential for cross-sell of the 80% nonoverlapping ACV right now. And again, as you would expect, we don't forecast that until we see it. But I do anticipate there's some potential there that isn't reflected in the numbers you see today. So again, I would emphasize to the question we had earlier, what are we seeing in the market right now with respect to dis-synergies? Really nothing yet. And so this remains just sort of a forecast.

All right. Thank you, Devin, and thanks to everyone for joining the call today. A replay of the webcast will be available shortly on our website, and we'll look forward to speaking to you when we report our second results in July. Thanks.

This concludes today's conference call. You may now disconnect.

Ladies and gentlemen, thank you for standing by, and welcome to Coursera's First Quarter 2026 Earnings Call. [Operator Instructions]

I would now like to turn the call over to Cam Carey, Vice President of Investor Relations. Mr. Carey, you may begin.

Good afternoon. Thank you for joining us for Coursera's Q1 2026 Earnings Conference Call. Today, I'm joined by Greg Hart, our President and Chief Executive Officer; and Mike Foley, our Chief Financial Officer.

Following their prepared remarks, we will open the call for questions. Our earnings press release was issued after market close. It is available on our Investor Relations website at investor.coursera.com, where this call is being webcast live and where versions of today's materials, including our quarterly shareholder letter, have been published.

During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP measures to the most directly comparable GAAP measure can be found in today's earnings press release and supplemental materials. Please note that all growth percentages discussed refer to year-over-year change, unless otherwise specified. All statements made during this call relating to future results and events are forward-looking statements based on current expectations and beliefs. Actual results and events could differ materially from those expressed or implied in these forward-looking statements due to a number of risks and uncertainties, including those discussed in our earnings press release, shareholder letter and SEC filings. Please refer to today's earnings press release for more details on our forward-looking statements.

With that, I'll turn it over to Greg.

Thank you, Cam, and good afternoon, everyone. We appreciate you joining us. Coursera delivered a strong start to the year, reflecting continued execution across our core growth priorities. In Q1, we generated revenue of $196 million, up 9% year-over-year, driven by double-digit growth in our Consumer segment for the fourth consecutive quarter. We added 7.6 million new registered learners, a first quarter record, bringing our cumulative learner base to more than 200 million. We delivered this growth, while expanding our non-GAAP gross margin to 57%, the highest level in 3 years, reflecting structural improvements we continue to make in our business model, including stronger unit economics that demonstrate the value our platform delivers.

Given our solid execution in the first quarter, we are reaffirming our full year 2026 outlook, which Mike will discuss in more detail. Our recent performance reflects both the strength of our platform and a broader shift in the labor market as global demand continues to validate the urgency around skills development. Earlier this year, we published the fifth edition of our Job Skills Report, drawing on insights from nearly 6 million enterprise learners across 7,000 organizations.

Three trends stood out. First, AI is not replacing foundational skills, it is amplifying them. Learners are increasingly layering AI capabilities on top of core technical expertise, recognizing that AI is most powerful when built on domain knowledge.

Second, human skills are becoming more important, not less. Enrollments in critical thinking courses grew 120% year-over-year. Learners understand that as more work is automated, the ability to evaluate and guide AI output is becoming critical.

Third, skills verification is becoming essential as learners and employers alike seek more trusted signals of skills mastery. Enrollments in professional certificates grew by an average of 91% across the career areas we analyzed, reflecting the rising market demand for bite-sized, industry-recognized credentials that provide verifiable proof of skills proficiency.

We see similar trends in external data. Anthropic's Economic Index for March found that 49% of job types can now use AI for at least 1/4 of their tasks. AI is diffusing through the economy roughly 10x faster than any 20th century technology. If the gap between AI's potential and actual deployment remains significant, closing that gap will require a more advanced infrastructure for skills. We believe this creates an expanding market opportunity as the window to build competitive skills continues to narrow.

Today, Coursera is uniquely positioned at the intersection of these trends. And our planned combination with Udemy will further strengthen our ability to meet this moment with greater scale, data and product velocity.

Now let's turn to our first quarter progress, starting with the continued expansion of our global ecosystem. Coursera's platform is built on a foundation of branded credentials, verified assessments and curated career pathways taught by more than 375 leading universities and industry partners. In an environment where content is abundant and increasingly commoditized, learners and organizations are not seeking more information. They are looking for trusted pathways that directly translate skills into real-world capability.

Our value lies in combining trusted content with data-driven insights and verified outcomes, enabling learners and organizations, not only to build skills, but to demonstrate and validate them. That value strengthens as we scale.

This quarter, we reached a meaningful milestone. 205 million cumulative registered learners. At this scale, the value of our ecosystem extends beyond distribution. It creates a compounding data advantage, an advantage that will be further strengthened by our planned combination with Udemy, particularly by expanding our lens into the evolving workforce through Udemy's 17,000 enterprise customers. Together, we expect to have a broader, more real-time view into how skills are learned, how they evolve and how organizations develop talent. These insights can help fuel a faster, more agile content engine and inform the experiences we build.

Generative AI remains the clearest example of why this matters. Our platform now offers more than 1,300 AI courses, nearly double from a year ago. Engagement has continued to accelerate, with more than 20 enrollments per minute in Q1, up from 15 per minute last year and 8 per minute in 2024. Learners and organizations are moving beyond basic familiarity with AI toward continuous demonstrated capability, including the ability to apply skills in real workflows, solve practical problems for specific roles and contribute more effectively in increasingly AI-enabled environments. Our content creators, including many of the companies building these technologies, play a critical role in meeting this demand and ensuring that emerging skills developed on Coursera remain closely aligned with labor market needs.

In February, Google launched its first AI professional certificate on Coursera, expanding a Generative AI portfolio that has already attracted more than 3 million enrollments. This program is designed to build practical job-ready AI skills and help learners apply them in day-to-day workflows. As part of the launch, Google is offering learners 3 months of no cost access to Google AI Pro, enabling hands-on experience with its most advanced models and tools.

We also expanded our partnership with Microsoft. Earlier this month, we launched 11 new professional certificates with structured learning pathways across AI, data and software development, from deploying AI agents and modern data architectures to building customer-facing AI applications. These programs are designed to capture where both technology and job demand are headed, while expanding Microsoft's professional certificate portfolio on Coursera by more than 50%, building on a catalog with more than 1.3 million enrollments.

Technology companies increasingly view Coursera, not just as a distribution channel, but as a strategic platform to help close the global skills gap and support workforce transformation at scale. In addition to our reach, Coursera adds rigor, trust and validation to industry content, grounded in the pedagogical best practices of our university partners. Our credit recommendation initiative is one example.

Today, many of our professional certificates are eligible for academic credit, including more than 50 with ACE recommendations in the U.S. and over 40 with ECTS recognition in Europe. In March, we tripled the number of certificates aligned to India's NSQF framework to 30, including top programs from Google, IBM and Microsoft. We are not only expanding access to high-quality credentials. We are adding structure, assessment and validation in ways that help bridge workforce skills and higher education. For learners, this creates more flexible and affordable pathways to employment and degrees. For institutions, it provides a trusted way to integrate industry-aligned content into their curriculum, while maintaining academic rigor.

We continue to see this taking shape at a system level. Since 2022, Coursera has partnered with Kazakhstan's Ministry of Science and Higher Education to support a nationwide effort to integrate job relevant for credit learning into higher education. To date, this collaboration has reached more than 235,000 students across 100 universities, with more than 0.5 million certificates earned. In Q1, we renewed this partnership to expand skills first for credit learning and further modernize the country's higher education system through stronger alignment with evolving workforce needs.

Stepping back, a consistent theme emerges. In a skills-first economy, every participant, from learners and businesses to governments and academic institutions, requires a better system of record for skills. We believe Coursera is well positioned to become that system of record at global scale, enabling individuals to discover, build and verify new skills, helping organizations benchmark and develop new workforce capabilities and equipping instructors with tools to deliver more personalized, adaptive learning experiences.

Now turning to our product updates. As we scale our ecosystem, we are focused on translating these advantages into differentiated product experiences. The trends I outlined are directly shaping how we build and innovate. Learners are not simply consuming content. They are integrating AI into broader skill sets, combining technical expertise with critical thinking and real-world application. At the same time, AI is diffusing rapidly, while adoption within organizations remains uneven and often lags what the technology enables.

Closing the gap between AI capability and application requires more than content consumption. It requires more adaptive, contextual experiences built on an enterprise-grade AI-native platform designed to diagnose skills gaps, deliver personalized guidance and accelerate workforce readiness at scale. This is our focus in the year ahead.

I'll highlight 3 examples. First, learning in the flow of work. As AI becomes embedded in everyday tools, learning must evolve alongside it. We believe workforce transformation will depend on integrating skills development directly into how work gets done.

This quarter, we took another important step in that direction with the launch of the first learning agent built for Microsoft 365 Copilot. This agentic solution delivers Coursera's learning directly into the context of day-to-day work, enabling real-time application of knowledge within the tools employees use every day. As users build models, prepare pitches or design AI-powered workflows, the agent surfaces relevant guidance in real time, helping to accelerate time to proficiency through immediate application and reinforcement. This integration just launched at the end of March. Similar to our early ChatGPT integration, we are focused on rapid iteration and collaboration, while positioning Coursera at the forefront of AI-native skills delivery, no matter where the learning journey begins.

Second, deeper enterprise integrations. As organizations struggle to align learning investments with business priorities, we are integrating more deeply with the systems used to manage talent, performance and skills. For example, earlier this quarter, we launched the next phase of our Workday Learning and Skills Cloud integration, enabling organizations to map learning to in-demand skills, personalize recommendations and validate skill progression within employee profiles. By the end of Q1, we onboarded 10 initial customers and expect to expand this in the coming months.

We will continue investing in AI-native integrations that allow Coursera's training to be surfaced and measured more seamlessly across enterprise workflows. This is an area of strength at Udemy, where the team has developed robust enterprise integrations we plan to build upon. Together, these efforts move us toward a more connected skills infrastructure, one that positions learning as a core element of business strategy by aligning learning to business priorities, helping organizations understand and address skill gaps and measuring the impact of workforce skilling investments.

Our final update reflects ongoing efforts to enhance discovery and learning on Coursera, making the experience more interactive, personalized and contextual. In April, we launched the next iteration of our interactive Role Play experience. This launch builds on our initial text-based interface by enabling real-time voice-to-voice simulations so that learners can practice course concepts in real-life scenarios using a more natural format. It also provides immediate actionable feedback from the AI persona. This illustrates how AI-powered experiences can scale immersive learning to develop and assess a broader range of nontechnical skills, from leadership and collaboration to sales and negotiation. The rollout remains early, but initial consumer experiments show a meaningful increase in engagement for learners selecting the voice-enabled experience.

Role Play, along with recent experiments in conversational discovery, AI-powered search and micro learning builds on the early foundation we established with AI-powered features for tutoring, authoring and translation. As we look ahead, we intend to accelerate our transition from AI-enabled features to fully AI-native experiences, where learning is not only personalized, but increasingly proactive, contextual and embedded directly into how individuals and organizations operate. Taken together, these efforts reflect the start of a more dynamic AI-native platform that helps individuals develop skills in the flow of work, while enabling organizations to better assess and deploy talent at scale.

As we look ahead, our priorities are clear. We are executing a strategy focused on 3 areas: first, accelerating AI-native product innovation; second, building a more comprehensive skills development solution spanning just-in-time skills in the flow of work to trusted verified credentials; and third, improving how we reach, serve and empower our growing community of learners, institutions and content creators. Our planned combination with Udemy will further accelerate this strategy as we evolve beyond the content catalog into a more dynamic system for skills delivery, one that supports the full talent life cycle from individual career growth to enterprise-wide workforce transformation at scale. We are grateful for the continued support of our shareholders and look forward to executing on the significant value creation opportunity ahead.

I'll now turn it over to Mike to discuss our financial performance in more detail. Mike, please go ahead.

Thank you, Greg, and good afternoon, everyone. Coursera entered the year in a position of financial strength, and our first quarter results reflect continued execution against our 2026 priorities, including strong consumer momentum and improving platform economics, as Greg outlined.

In Q1, we generated total revenue of $196 million, up 9% year-over-year. Growth was driven by sustained momentum in our Coursera Plus consumer subscription. In Enterprise, the environment remains mixed, particularly within Coursera for Business, where we are focused on delivering steady improvements in our go-to-market execution and product offerings.

For the remainder of this call, I will discuss our non-GAAP financial measures, unless otherwise stated. Gross profit was $111 million, up 11% year-over-year. This represented a gross margin of 57%, marking the highest gross margin in 3 years despite the faster growth in our Consumer segment relative to our structurally higher margin Enterprise segment. The 80 basis points of year-over-year expansion reflects continued improvements in our Consumer and Enterprise segment margin rates, driven by 2 initiatives.

First, early benefits from the platform fee introduced at the start of the year, which is beginning to impact consumer margin and will gradually ramp over time as new sales are recognized. Second, higher engagement with Coursera-produced content, which carries more favorable economics given the role our technology and authoring capabilities play. These improvements were partially offset by other cost of revenue, as well as the faster growth and greater revenue mix from Consumer. Overall, we're making strong progress on delivering structural gross margin expansion with benefits that should compound once our efforts to improve our Enterprise segment trajectory begin to materialize.

Total operating expense was $103 million or 53% of revenue, consistent with our plan to invest early in the year to expand our product, data and go-to-market capabilities. As we made those investments, we remain disciplined, focusing resources on areas that improve product velocity, strengthen go-to-market execution and support long-term profitable growth. Net income was $12 million or 6.3% of revenue, and adjusted EBITDA was nearly $14 million or 6.9% of revenue.

Our 2026 plan builds on last year's momentum, while balancing growth investments with consistent annual margin expansion. Q1 performance was in line with our expectations and keeps our pacing well on track to achieve our full year adjusted EBITDA margin target of approximately 9%. As a reminder, this year's margin expansion target reflects Coursera's stand-alone operations. It does not include Udemy's higher-margin profile or the meaningful operating efficiencies we are prepared to achieve with our combined scale.

Turning to cash performance and the balance sheet. In Q1, we generated $3 million of free cash flow. This included approximately $6 million in purchases of content assets treated similarly to other forms of capital expenditures, effectively reducing our reported free cash flow. Additionally, we recognized more than $11 million of cash payments related to onetime M&A transaction costs previewed last quarter and footnoted in today's financials. Excluding these onetime M&A costs, free cash flow would have been approximately $14 million. This is consistent with our expectation for free cash flow to largely track with adjusted EBITDA over time and better reflects the underlying earnings and cash generation potential of the business.

As of March 31, we had approximately $790 million of unrestricted cash and cash equivalents on the balance sheet and no debt. This strong financial position provides us with the flexibility to invest in growth, remain agile and explore opportunities to create greater returns for our shareholders. As discussed previously, this includes the anticipated announcement of a sizable share repurchase program in short order following the close of the proposed transaction with Udemy and receipt of authorization by the newly formed Board of Directors following close.

This is one of several actions, including our efforts to manage dilution, that underscore the value we place on shareholder equity. It also reflects our confidence in the execution of our strategy, the scale of the global scaling opportunity and the long-term value creation we see for our business and its shareholders.

Now let's discuss the results of our operating segments. In Q1, Consumer segment revenue was $130 million, up 10% from a year ago. As Greg highlighted, this was our fourth consecutive quarter of double-digit growth, driven by 2 primary factors. First, we welcomed 7.6 million new registered learners, a record for the first quarter. This reflects continued expansion of our global reach, diversified marketing channels and ongoing experimentation to improve learner acquisition and conversion.

Second, we continue to see strong adoption of Coursera Plus, which remains a key driver of both growth and revenue visibility. We introduced Coursera Plus in 2021 to better align with the world where skills development is becoming more continuous, career-focused and essential to long-term employability. We continue to enhance its value through expanded content offerings, improved product experiences and localized pricing, promotion and payment capabilities.

In early Q1, we saw a strong uptake of our annual Coursera Plus promotion, supporting higher lifetime value and improved retention, even as it creates a modest timing effect on near-term revenue recognition. Consumer segment gross profit was $82 million, up 13% from a year ago. Segment gross margin was 63%, an increase of 160 basis points year-over-year, reflecting an improvement of approximately 250 basis points in our core consumer subscription and courses product category, offset by the lower contribution from our high-margin degrees.

As I noted earlier, we started to see the early benefit of the platform fee introduced at the start of the year, consistent with our expectations for a gradual ramp that will first impact new consumer purchases given the faster velocity of the revenue cycle. We also saw increased learner engagement with content produced under more favorable revenue share arrangements. Overall, our performance reflected continued execution of our consumer strategy. As we move through 2026, we expect to build on this progress by experimenting with opportunities to optimize our marketing funnel and deepening engagement with new product experiences.

Following the close of the Udemy transaction, we intend to continue operating each company's consumer platform independently through at least the end of the year. Over time, we believe the proposed combination can further strengthen the value of our subscription offerings, broadening the roles and domains we serve, increasing engagement with real-time skilling needs and serving the end-to-end career life cycle with a unified global platform.

Now turning to our Enterprise segment. Enterprise revenue was $66 million, up 7% year-over-year. Performance in the quarter reflected a mixed demand environment with variability across customer segments, regions and use cases. Consistent with recent trends, growth was driven by our Campus vertical, as well as a meaningful contribution from a large Government expansion we highlighted last quarter. The total number of paid enterprise customers increased by 5% year-over-year, and our net retention rate was 90%.

While retention improved in Campus and Government, performance in Coursera for Business, our largest Enterprise offering, remains below our long-term expectations. With operational changes underway and the future capabilities of a combined solution with Udemy, we expect to drive more consistent retention and expansion over time.

Segment gross profit was $47 million, up 9% from the prior year period. Segment gross margin was 71%, up 80 basis points year-over-year, consistent with the engagement trends and structural improvements benefiting our Consumer segment. As organizations prioritize skills transformation, they are increasingly focused on solutions that deliver measurable outcomes and a clear return on investment. In this environment, we remain focused on improving execution through refinements to our go-to-market approach, while improving the customer experience with the product investments Greg mentioned. This includes driving more consistent performance in Coursera for Business, our largest opportunity for improvement. We expect progress to be gradual as these changes take hold, given the longer and more variable enterprise sales cycle.

That said, we're also preparing for the combination with Udemy, which we believe will significantly strengthen our enterprise offering by expanding our skills development solutions, accelerating a shared product road map and enhancing our combined ability to reach and serve organizations at scale.

Finally, turning to our outlook. For the second quarter, we expect revenue to be in the range of $196 million to $200 million, representing growth of 5% to 7% year-over-year. This outlook reflects continued strength in Consumer, offset by the slower trajectory in Enterprise, consistent with the full year segment level expectations outlined last quarter. We expect adjusted EBITDA to be in the range of $12 million to $16 million as we balance continued operating discipline, while investing in our most productive growth opportunities early in the year.

Lastly, absent the combination with Udemy and the corresponding transaction and integration-related cash impacts, we would expect free cash flow to largely track at or above adjusted EBITDA. For Q2, we expect free cash flow to be impacted by approximately $13 million of transaction-related cash payments. This estimate only reflects transaction fees and pre-closed planning costs. It does not include additional contingent expenses expected to be incurred upon closing or during integration.

For full year 2026, we are reaffirming our prior guidance. We expect to deliver revenue in the range of $805 million to $815 million, representing growth of approximately 6% to 8% from the prior year. For adjusted EBITDA, we're pacing confidently to our annual adjusted EBITDA margin target of approximately 9%, expecting to deliver in the range of $70 million to $76 million as we work within our full year framework. As a reminder, today's guidance reflects Coursera's expectations on a stand-alone basis and does not include any impact from the proposed Udemy transaction.

As we look ahead to the combination, we remain highly confident in our ability to realize approximately $115 million of annual run rate cost synergies within 24 months of closing, primarily driven by go-to-market optimization and G&A efficiencies. Over the last several months, we have made strong progress on integration planning, positioning us to move quickly. We now expect to realize a significant majority of these synergies within the first year following close.

As with any integration of this scale, particularly as we bring together our go-to-market teams, we're being deliberate in managing potential revenue dissynergies. These dynamics are already factored into our synergy expectations. Over time, we see opportunities to drive revenue synergies, particularly through cross-selling a broader set of skilling solutions. However, we're intentionally not quantifying these opportunities until we have greater visibility into customer feedback and enablement opportunities.

In advance of our first quarterly earnings call following the close, we look forward to hosting a call to provide more detailed expectations on our integration plans, synergy realization timing, capital allocation priorities and a consolidated outlook for the future combined company. In the meantime, as we approach the close of the Udemy transaction, which remains subject to regulatory approval, we are focused on 3 priorities: executing the integration thoughtfully, while prioritizing continuity from learners, customers and partners; positioning the combined company to accelerate product innovation and deliver durable product-led growth; and delivering on the significant value creation opportunity we see ahead for our business and its shareholders.

With that, let's open up the call for questions.

[Operator Instructions]

We'll take our first question from Bryan Smilek with JPMorgan.

Great. I guess, Greg, to start, you talked about building a more comprehensive and adapted skills delivery system that combines AI with verification and data. Can you just talk a bit more about your efforts to make the product more actionable, improving discovery and engagement? And conversely, how do you think about balancing your current Consumer strength with a greater focus on the Enterprise tech stack integrations as you close the transaction with Udemy?

Yes. Thanks, Bryan. So one of the things that you're already seeing a little bit of on the platform with some of the things that we've rolled out over the last quarter or so are a more AI-centric sort of front door, if you will. So an AI-enabled search experience that is a little bit more conversational and helps guide users to content. And then obviously, they can go as deep as they want in that conversation to help make sure they're finding the right content for themselves.

But what we really want to do over time and what there's a lot of energy and attention on -- and I touched on a few of those things in my scripted remarks is have the experience, be one that is more interactive and engaging. So we talked about Role Play and voice-enabled Role Play, which has seen really positive response from users. It's a more natural way, obviously, to engage in a Role Play than just the text-based back and forth. We want to continue to do that and expand as well into dialogue and expand our dialogue efforts.

And so to remind you, dialogue is effectively a back-and-forth conversation that an instructor can create leveraging AI so that it can be integrated as an item within a course that they've created. And it will be true to whatever their rubric is because they structure it to achieve their specific goals. So continuing to do more and more of that, while recognizing also that over time, what we really want to do is have that learning experience become much more deeply personalized to each learner. And so instead of every course looking the same for every user over time, we want that to be really starting at a place that's appropriate for one user versus another based on their background, their experience and their skills to do that well, you need to, in a lightweight way, assess where they are. And so that's the vision of where we want to go to. And what you'll see reflected that's a big part of all of the planning we're doing for the combined platform with Udemy.

On the Enterprise side of things, obviously, with Enterprise, you want to handle any enterprise platform consolidation in a very thoughtful way. And so we want to make sure that each of our existing platforms, once we close, continue to provide value to all of our existing Enterprise customers. But we also think there's an opportunity to create a platform that is far better than either of them are individually. The Udemy platform on the enterprise side, frankly, is ahead of our Coursera platform. And obviously, they have a larger enterprise business.

One of the things that we are very excited about jointly is the Altus announcement that they made a few months ago. That is exactly where we believe enterprises want the learning experience to go, which is integrated directly into the flow of work. They will be piloting Altus over this coming quarter with a number of different enterprise partners, and that's going to be a core part of our vision for the future enterprise platform.

We'll take our next question from Eric Sheridan with Goldman Sachs.

I wanted to double-click on some of the comments during the prepared remarks and just frame up what you see as some of the key strategic investments you're making around AI. When you think about the content dynamic around the platform as well as some of the user experiences across a multiyear view and how you're thinking about that content and those experiences leading to higher levels of retention and more economic value being delivered by users on the platform over the long term?

Great question. So we've got -- and Udemy does as well on their side, a host of different efforts underway to make the platform a more completely AI-native experience throughout so that the courses become much more engaging and interactive and in the process of doing so, also drive better retention because they are delivering better outcomes for our learners by being more engaging and more interactive and therefore, more effective for those learners and actually achieving their end goal, which is gaining a skill. 9 out of 10 consumers in the Coursera platform come to advance their careers. And obviously, within the workforce, you need to demonstrate not just that you've taken the course, but that course has given you a skill that you can apply in your job that has value for your employer.

So one of the things that we're very focused on is really expanding everything we do around skill assessment and skill verification. And so how do we, in a lightweight way, as somebody onboards on the platform, really understand where they are against their career goals and what skills they have and that therefore, what is the right course material and content to help them improve, recognizing that we believe there's a real opportunity for us to deliver value, not just in the formal course itself, but also through the AI-driven interaction that happens around the course.

So we have our Coursera AI tutor that rides alongside the learner in every course. We would like that experience to become less of a reactive one and more of a proactive one throughout all of the experience. On the Enterprise side, I think the same broadly holds true. And really, the vision for Altus is a wholly interactive one because it is really deeply integrated into the flow of work, and that's what the Udemy team is working on that side. And so a lot of the focus that we have had in all of our integration planning has been around how do we accelerate all of that progress, how do we turn courses into ongoing learning conversations that are far more effective at skill delivery for individuals and also for companies for enterprises. And we believe that as we do that, that will deliver to the part of your question around what does that do in terms of the economics. We believe that as we do that, that will be on the consumer side of the business, lead to more engagement and therefore, more retention, so it will have LTV benefits.

And then on the Enterprise side, we think it's going to be a far stickier engagement and interaction if you can do that because it's directly engaged into the flow of work. It leverages content, not just from Coursera and Udemy, but also from the Enterprise itself because a lot of what you learn is going to come from content that's actually already in that enterprise. And we see that on the Coursera side reflected in the way that enterprises use Course Builder to pick selected modules from our Coursera university partners and industry partners and marry those with internal content that they have.

The next question comes from Stephen Sheldon with William Blair.

I guess, just starting from your conversations with corporates, I guess how important is it from their perspective to get learning solutions embedded into the flow of work? It seems like many companies are at least a little behind where they might have hoped to be in terms of getting AI-driven efficiencies across their workforces. And some of that, I think it could just be a lack of AI training and skill development. So I guess if you're successful embedding learning into the flow of work with more partnerships similar to the Microsoft Copilot agent, how do you think that could impact corporate propensity to spend?

I think it's a little early to forecast the latter part of your question yet. But -- and frankly, Udemy is a little bit ahead of us on this with Altus and their development against that. Obviously, we have the Copilot announcement that we just made a few weeks ago, which is a great step in the right direction. But I think that enterprises are at very different states of readiness for that. And so I would say that the more advanced the enterprise is on its own journey of implementing AI across the organization, the more that they are interested in the flow of work integrations versus more traditional integrations, either directly with an enterprise leveraging Coursera on its own or through LMSs or LXPs or other third-party integrations that they might have.

And so what we really want to do is skate to where the puck is going. And so that's one of the reasons that we're really excited by the vision of Altus, and it's been great to hear about the response that, that has had from enterprise customers on the Udemy side. We obviously aren't very close to that yet because we're still independent companies, but it's one of the reasons that that's a core part of our strategy as we do combine together.

Got it. That's helpful. And then on gross margins in relation to the new platform fee, how should we be thinking about the trend in gross margins in both Consumer and Enterprise over the balance of the year? Would it be fair to assume a continued progression higher as we continue to win new customers there?

Yes. This is Mike. I'll take that. So on the gross margin improvement in our subscription in course for Q1, which was 250 basis points about directionally, half of that was related to the platform fee itself. And that's just the first quarter. As mentioned last quarter, the proportional revenue on which the platform fee applies increases over time. And so yes, you should assume that the impact of the platform fee continues to increase quarter-on-quarter and into 2027, and that's what we anticipate.

Obviously, there are other impacts on gross margin, including Coursera for just content, improving gross margin. But also, there are mix shift issues there with respect to as consumer grows faster and Degrees declines as a proportion. It changes the mix. But with respect to Consumer, yes, you should expect continued improvement there.

On Enterprise, similarly, the dynamics there with respect to the platform fee, obviously, it only applies to applicable revenue and newly contracted revenue. And so it's slower to adopt in the Enterprise side, but it will continue to drive improvement in gross margin on Enterprise as well for the year.

Our next question comes from Rishi Jaluria with RBC.

Wonderful. Two questions on my end. Number one, we -- one of the thesis that we've worked with at Coursera, all of us have, is just kind of, I'd say, via that -- as there's disruption in the labor market from AI, that starts to serve as a little bit of a natural tailwind for you.

Now we've seen -- we started to see kind of this spike in layoffs, so to speak, being attributed to AI. Now I think we know a lot of that might be AI washing for the sake of correcting prior inefficiencies. Some of that is really just freeing up money for CapEx. But nonetheless, there are people who are kind of try to figure out how to cross that skills gap, and that seems to present a big opportunity for you. Can you maybe talk about some of the efforts you're making, whether it's campaign efforts, AI search, whatever have you, to capitalize on that and really importantly, help these people kind of reskill and upskill for the new post-AI world? And then I've got a follow-up.

Yes, it's a great question. And I do think, frankly, that, that's one of the factors broadly that is helping to deliver some of that momentum around AI enrollments that I mentioned in the scripted remarks, now up to 20 per minute, so 1 every 3 seconds globally in AI content.

We have done some campaigns in the past, specifically around layoffs and when layoffs come out. The challenge is, even though the broad trend happens on any given announcement, it's 10,000 people. It's very hard to target those 10,000 people specifically. We would love to be able to do that because we do think that we offer something that's definitely a value. And so instead, what we try and do is just make sure that we're increasing awareness of Coursera, generally, as a place that people can go to gain the right skills to be more relevant in the workforce, to help them find the next thing, if they have unfortunately been impacted by a reduction in force for whatever reason.

I think that one of the things that we're seeing just within the consumer numbers is the fourth consecutive quarter of 10-plus percent growth. But it's a tail a little bit of geographies. And so we're seeing really rapid growth outside of the U.S. We're still growing in the U.S. that we think there's opportunity for that to go north and grow at a faster rate, particularly as we unleash some of the product-led growth strategies that we've been working on. But we're seeing really strong growth in basically every other region.

And I think part of that is based on some of the things that we did last year, geo pricing certainly being one of the tailwinds there. Part of it has been that historically, we've actually seen higher rates of interest in and enrollment in AI content coming from outside the U.S. And part of that may be because there are certain geographies in certain countries where they have big portions of the workforce that might be in roles that are even more susceptible to AI than the U.S.

And so India would be a good example. Obviously, a lot of offshoring happened in India, a lot of those types of roles are roles that AI is automating and increasing percentage of. And so we see really strong demand for AI content coming from India. From a revenue perspective, obviously, our pricing in India is much more aligned with GDP per capita in that country. And so therefore, you're not going to see the same revenue reflection, but really strong growth is happening there.

All right. Very helpful. And then maybe just turning to the guide. So look, I mean, you had a pretty skinny beat this quarter, lower than typical. Q2, guiding a little bit light of expectations. And understand all the factors at play here, you are maintaining your full year guide? And I'm just trying to understand what's giving you confidence in kind of that back half number, especially kind of given some of the disruptions you're seeing, given we're starting to see macro pressures on results, especially in Enterprise, as we've seen early in this earnings cycle, mainly just trying to kind of really assess like what is giving you that confidence and why should we not be worried that maybe that -- there might be another shoe to drop there and have to rethink the back half ramp.

Yes. This is Mike. I'll take that. Just first of all, in context on the Consumer result for Q1, important to factor in our subscription in course revenue stream grew meaningfully above the 10%. It's -- there's a headwind there from our Degrees business that's reasonably significant. So we have confidence coming out of Q1 that subscription in course as our core consumer is continuing to have good momentum through the remainder of the year, frankly. We're more cautious in our guide for Q2 and maintaining for the full year is on the Enterprise side.

We continue to see on Coursera for Business, a more challenging environment. Some small portion of that is in the Middle East, but really, it's an overall sort of macro impact of consolidating tech stacks, L&D budgets being under pressure. We've had that theme for a number of quarters, but we're still seeing it significantly. So we have -- we're being very cautious about our outlook for -- on the Enterprise side for the remainder of the year. But our main consumer business, we're seeing good traction there and good double-digit growth continuing.

The next question comes from Josh Baer with Morgan Stanley.

I want to just follow up on some of the Coursera for Business commentary that you just gave. I mean, I know the consumer is the piece that's really exciting double-digit growth, and we like you to meet business maybe more advanced in some ways, but there's still 40% of your gross profit coming from the Enterprise segment. I wanted to just understand, like how much do you think performance is being impacted by the Udemy merger just as far as your own reps, productivity, as far as your customers, like the sales cycles? Are they waiting to see what happens? What are you telling customers? And then maybe I have a follow-up.

Yes. This is Mike. I'll take that and invite Greg to add any thoughts. I don't think we're seeing any significant impact from the Udemy merger per se, meaning we're not seeing customers hesitate or wait for that. I don't think that's a significant factor in the overall environment we're seeing.

I do think there is execution improvements that will take some time to filter through into revenue, of course. We see it in ACV earlier. But there's execution improvements we can deliver on our Enterprise business that I think, frankly, the Udemy business has already seen some benefit from in the past with their higher growth and larger size in their business.

So I do think there's opportunity and execution. And Anthony Salcito, our GM of Enterprise, is implementing a number of changes as mentioned before to help drive better execution on the Enterprise side overall. So there is opportunity there. I do think just the biggest factor, though, continues just to be the macro environment. And I think we just continue to see a challenge in growing our ACV in that business regardless of the other factors. But again, I don't think that the merger itself is a significant factor in the performance of our business today.

That's really helpful. And then just so like connecting some of those macro impacts to the 90% net retention rate, is there any theme or like a theme or pattern of the customers that are churning dollars, whether it's like a year, a cohort year or a market segment, geography or anything else to note there?

I'll get some thoughts on that. I mean I think we're seeing impacts in larger enterprise where they're downscaling in some cases, their commitment versus necessarily churning. And that is typically an environment where the L&D budgets are under pressure in the larger enterprise space. So that is one segment where that I'd point to. I think, as you'll know, in the Udemy business, they are a much broader base down to the mid-market as well. And so that might be one of the differences you'll see there. So certainly seeing pressure in the larger enterprise. But I'm not sure there are any other big themes to point to or any verticals or other differences that's kind of fairly broad-based.

The next question comes from Ryan MacDonald with Needham & Company.

Maybe on the Consumer business, Greg, Mike, can you remind us, as you have some of the new content coming out, specifically the AI content, the launch of the new Google search. Where do you typically see a greater benefit from that content, whether it's Coursera Plus subscription adoption or more of a on a course by course basis? And then based on that, can you talk about sort of the visibility that gives you into the remainder of the year on that Consumer business and the ability to kind of keep that 10% plus going?

Yes, Ryan, I'll start, and then maybe I'll pass to Mike. On C Plus, and so as we mentioned a quarter ago, C Plus represents more than 50% of our consumer courses and subscription revenue, which is obviously great. That percentage is increasing. And so C Plus continues to increase as a part of the Consumer business overall and certainly, obviously, as part of our courses and subscriptions piece of that, separate from Degrees.

Obviously, C Plus is a better deal than any given course because you get access to almost the entirety of the catalog within C Plus. The vast majority of things are part of C Plus. And so -- and we will upsell people from individual courses into C Plus as they go through the funnel to help make sure that they recognize that, that it is a good deal for them. So we expect that, that trend will continue, that C Plus is going to continue to increase.

One of the things that we saw in Q1 that had a little bit of an impact on the quarter and will also play out over the rest of the year is our C Plus annual promotion that we always do every year at the start of the year in January, natural time for that type of annual promotion, really performed quite well. And so that has some tailwind benefits across future quarters, but also has a little bit of short-term headwind aspect to it.

And so stepping back from all of that, one of the things that we are very focused on as we have more and more interest in AI-driven content is really making sure that the product is doing the right job of guiding people to not just the right content immediately, but then also how they continue down that learning journey. So it's not just a course and then you achieve your "objective" and then move on. But Mike, I'll pass it over to you to expand.

Yes, just to agree with that, I would reiterate that as we get -- when Google content -- special Google AI content comes on to our platform, we get a significant interest in that significant engagement with it. And part of the job is to make sure that if somebody just goes through that certification, that they don't drop out at the end of it, that we provide that next moment for them to continue their journey of learning. And that typically is most logically done, as Greg said, with our subscription -- our broader subscription offering. So it's really capturing the engagement of those users who come in for one thing, and we want to keep them in the platform and continue to broaden their skills around AI and other things. So I hope that helps, Ryan, a little bit.

Yes, it does. And then maybe just from a follow-up perspective on the Enterprise, I understand the macro environment being tough. But how much is your, I guess, pipeline progression and building being inhibited, I guess, sort of as you progress towards closing the merger given -- Greg, it sounds like, obviously, you're kind of bought into the sort of Altus from Udemy being sort of a core tenet of that strategy. So I mean, I guess how does that impact the pipeline progression and development in the near term? And I guess, once the deal is closed, how quickly maybe can you progress in sort of kind of close those Enterprise pipeline initiatives and efforts post-merger?

Yes. On -- well, first, on close, just to remind everyone that we received shareholder approval on both sides on April 9, we are still awaiting regulatory approval in one country. We are very confident that, that will happen in the near term. We expect that to happen by the end of Q2. And we're very much looking forward to seeing that happen so we can move from integration planning to actual integration and really focusing on putting the pedal to the metal for the combined business.

On pipeline, Anthony and Mike referenced this a little bit. Anthony joined in October. He substantially reorganized the team at the start of the year. And so it's still adapting to a new motion. And that takes a little bit of time in any enterprise sales motion. We feel actually good about the pipeline for the business. And so it's not so much that we feel we're paused to the comment that Mike made earlier. We don't feel like we're paused, just because we haven't closed yet. Obviously, we do have a shared book of business, and maybe I'll let Mike speak to that and how that might play out.

But we really want to make sure that given that enterprise, as I mentioned earlier, enterprise integrations, you really need to handle very thoughtfully because people are using whatever given integration they have in specific ways. And so we want to make sure that we do two things at the same time. One, we make really rapid progress towards a new improved platform that brings some of the best capabilities of each existing platform, and two, that we continue to enhance the existing platforms in the meantime because our enterprise customers expect that, and we expect that for our business as well. But Mike, over to you.

Yes. This wasn't exactly your question, but it's sort of part of the broader perspective. With respect to synergies on the merger, we've said before that the $115 million number, which is very high confidence for us, includes some revenue dissynergy applied in there.

Just to give a little more color on that because I know it's been a question in prior calls, and we haven't given much specificity on it. On the enterprise side, our ARR -- combined ARR from a dollar standpoint, there's about 20% overlap between our dollar ARR on the enterprise side. So first of all, that means there's 80% that is not overlapping. We do believe there's a really good opportunity to cross-sell between our customers on that basis, which is not factored into the $115 million. But we recognize on that 20% of overlap, there is some risk with respect to revenue dissynergy.

Clearly, that doesn't appear until the end of the contract period as we bring together 2 contracts into one. But regardless, we have factored that into getting to our $115 million, very high confidence at synergy number. And again, just from a timing standpoint, getting to that the substantial majority of that within 12 months post close.

Thanks, Ryan. That wraps today's Q&A session. A replay of this webcast will be available shortly on our Investor Relations website. We appreciate you joining us.

This concludes today's conference call. You may now disconnect.

All right. Before we get started, for important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. And if you have any questions, please reach out to your Morgan Stanley sales representative.

My name is Josh Baer, software analyst at Morgan Stanley. And we are thrilled to have Coursera CEO, Greg Hart, join us today. Thank you so much for joining us.

Thank you, Josh. Thrilled to be here. Good to see you all.

And a quick note, CFO, Mike Foley, just couldn't make it because he is under the weather. He's got the flu, saving us all by not being here.

Perfect. So Greg, let's start with a little bit of a recap of this past year. We saw growth accelerate from 6% exiting '24 to 10% in the back half of '25. Your ending growth for the full year '25 at 9% was more than double the initial growth guidance. And so what drove that acceleration and improvement in results throughout 2025?

Well, one of the things that we really tried to focus on right after I joined the company in February of last year is, first of all, just better execution. Second of all, a real focus on product-led growth and on focusing our investments in product on things that we thought would make a material difference for the business. And so across top of funnel consumer retention -- or sorry, conversion retention and ARPU, what are the product initiatives that we can drive that will help.

A few of the things that we did over the course of the year that you would have seen reflected on the platform and also reflected in the performance were change to our freemium model, first module free and then pay to go beyond that, our geo pricing initiatives. So those were some of the more obvious changes that we made to improve the performance in the business.

And then an investment that is playing out over a longer period of time on really accelerating the pace of content creation and content optimization to deliver better results for learners. The Udemy combination will help with that tremendously just because of the nature of their content model. But those were a few of the things that enabled us to really go from an initial forecast of 4.5% at the midpoint for 2024 to delivering 9% for full year and then 3 quarters of successive growth at 10%. That's been driven primarily by performance in the Consumer side of the business. So Consumer exited the year at 12% in Q4.

The Enterprise side has been a little bit more muted. We believe that a lot of the things that we've done over the course of the last year and particularly since we brought on Anthony Salcito, our Head of Enterprise in October, will start to show up in our numbers over the course of 2027 -- 2026, sorry.

Excellent. So we'll dig into those segments and some of those key initiatives. We wanted to ask for your top strategic priorities as we do think about 2026. And really, how should investors track your execution against those throughout the year?

Well, number one strategic priority is successfully executing the close and integration with Udemy. We believe that fundamentally transforms our business and gives us a really balanced offering. We, historically at Coursera, 2/3 Consumer, 1/3 Enterprise. Udemy me is 2/3 Enterprise, 1/3 Consumer. As we bring the 2 companies together, we'll have $1.5 billion of revenue that's split 50-50 across Consumer and Enterprise. And so as we go through the integration, we really want to make sure that we are able to not just integrate the 2 platforms, but do that in a way that really accelerates our pace of innovation. And so we committed to $115 million of annualized run rate.

Cost savings. When we announced the acquisition, what excites me about the combination is not just the ability to deliver those cost savings and to deliver margin improvement, but to really accelerate revenue growth over time as we combine the 2 platforms. Right now, both platforms are broadly similar and we invest in a lot of the same things. We are not intending to deliver a lot of those cost savings through reduction in R&D, certainly not in the short term. Instead, we want to leverage the combined teams to really accelerate as we go.

And so those are some of the key priorities that we have. And one of the main ways that I imagine we'll talk about that we're focused on is how do we continue to have the experience become a much more AI-centric experience. That is not only the #1 thing that people are learning about on our platform, but it's also a tool that we are using to deliver that learning.

Excellent. Greg, let's stick to the combination with Udemy. Maybe take a step back and if you could review the strategic rationale for the combination. Why are Coursera and Udemy better together?

Well, as I just mentioned, both companies are in the same space, serving broadly the same type of needs for our customer sets, whether those are Enterprise or Consumer. Our approaches, though, have been very different to that, and they're very complementary.

So our content model grew out of, at first, higher education, Stanford and top universities in the U.S. and then around the world. And then we added content from industry partners, Google, Microsoft, DeepLearning, AWS, Meta, et cetera. That is really a curated marketplace approach. And the content that we have brings a high-level pedagogical rigor.

On the Udemy side, they have 85,000-plus subject matter experts from around the world, creating content at a very rapid clip in many, many languages. And so there's a lot of complementarity between those 2 different models because we'll have everything from a short-form, in-the-moment content in Indonesian about the latest version of Claude to an entire multi-week, potentially multi-month course on Coursera coming from a top university or from one of our industry partners. And so the breadth of that content offering is incredibly rich. That enhances the value that we provide to our learner community.

Coursera has 197 million registered learners from around the world. They have 82-plus million registered learners. So combined, we will have a learning community that is approaching 300 million registered learners around the world. That's a huge audience. We'll have this amazing content offering that combines the best of both of those that we can offer to those. Obviously, it provides more value to each of those consumers, also provides more value to the enterprises that we work with.

So there's a lot of industrial logic that the combination offers. But to me, what really excites me about the opportunity through the combination is we are seeing a fundamental -- I'm sure every single other conversation at this conference is analysts and investors asking CEOs, how is your business being transformed by AI? What are you doing to change your business and leverage AI? We, Coursera and Udemy and the combination, are a tool that all of those CEOs can leverage to upskill and reskill their workforce to actually become not just conversant with AI, but to leverage it as a way to improve the performance of the business.

Perfect. We'll spend probably the rest of the time talking about skilling and reskilling. A couple more on this merger and combination. One of the themes that I heard throughout your strategic rationale is scale, scale of content, scale of learners, customers. With that scale comes potential cost savings. So what are the largest sources of that $115 million in run rate synergies that you guys are targeting?

Yes, the $115 million is net of some level of revenue dissynergies, but the 2 largest buckets for the cost savings. And obviously, there's some people elements to it and some non-people elements to the cost savings. The 2 largest are sales and marketing and then G&A. And so on the sales and marketing side, we have been much more efficient in our marketing spend than Udemy has been on both the Consumer and Enterprise side. And so there's an opportunity to cut some of the costs that they've leveraged in their Consumer business and deliver the same results from a lower spend.

And then on the G&A side -- sorry, there's also on the Enterprise side of the business, we have overlapping sales territories, et cetera. And so we'll remove a portion of the sales organization that is overlapping. Obviously, we'll focus on doing that in a way that keeps all of the top performers.

And then on the G&A side, we're both public companies. There's a lot of overlap in functions. We don't need 2 CFOs, 2 Heads of HR, et cetera, and that flows down through the organization. And so there's an opportunity to recognize some cost savings there as well.

Great. We're talking about accelerating revenue growth more broadly. You just mentioned some revenue dissynergies, presumably with some of the overlap. But I guess I'm wondering how do you think about -- you laid out very specific components and a number around cost savings, what about the revenue synergies and revenue optionality there?

Yes. The number that we communicated doesn't include any forecast for revenue synergies. It is net of some revenue dissynergies, which is really on the Enterprise side. We have some overlapping accounts. And we will -- as we reduce the size of the combined sales teams, there will be some quota that gets lost. And so that's factored into that net number. We did not try and model the revenue synergies that we believe we will be able to deliver over the long term just because we think it's a little bit premature to do that, and we really want to focus on getting through the integration as quickly as possible.

The things, though, that I believe will be catalysts for that will be the fact that we're going to have instead of 2 separate platforms investing in the same things, we're going to have one platform with a larger R&D team that is able to move faster and deliver much more benefit to our enterprise learners. We'll also be able to -- both companies independently over the last year have really tried to reorient from being what I would call historically catalogs of learning material that were delivered either to individuals or to enterprises into really skill-focused delivery vehicles.

And so for Enterprise, what are the specific skills that your specific job functions need to have to fully deal with the transformation being brought by AI and leverage that within their individual roles. And on the Consumer side to help consumers address that same thing. I believe there's a massive opportunity as we do that to also expand the value that we provide, in particular, on the Enterprise side by differentiating and diversifying our offering to them. So it's not just content, but it also helps them with just skills assessment. And then skills verification, skills as a system of record, so they can really start to enable, in the relationship that we provide them, a much more comprehensive approach to how do they evolve their talent management.

That makes sense. And so it's not just the potential to bundle or package additional content. There's that opportunity and all of these incremental products and capabilities from the platforms.

Yes, exactly.

Excellent. Just given your insight, your visibility into an enterprise workforce and how they're engaging with your learning content, want to ask you a high-level sort of macro question on changes in the workforce. Is there anything thinking about either how consumers are behaving or enterprises that you're seeing around engagement or use of your platform that suggests that we're already seeing big shifts in workforce or disruption from AI?

Well, on the consumer side, the number that sort of jumps off the page is that every 4 seconds, somebody is enrolling in a course on GenAI on Coursera. And so it's 15 enrollments per minute in 2025 in GenAI content. On the -- for 2024, that number was 8 per minute. So it's basically doubled year-over-year. Part of that is because we've doubled the size of our GenAI-related content catalog. But I think the larger aspect of that growth has really just been the fact that everybody is seeing how quickly the capabilities of the LLMs are really changing and therefore, the need to urgently become conversant with that skill set.

That is also playing out on the Enterprise side, where enterprises, I would say, if you roll back the clock a few years, were primarily using either Coursera or Udemy, more for broad L&D type offerings. And now increasingly, we have functional buyers, who are -- the CPO, the CTO, the Chief Data Officer, who are really looking for, I need to upskill or reskill my workforce to be able to do X, Y and Z, and I need a partner who can help me do that. And so the conversations are increasingly becoming much more functionally focused.

We -- in recognition of that, in September, we rolled out curated skill tracks on the Enterprise side of our offering. One for GenAI, one for data, one for IT, one for software and product development that are curated collections of courses from across our catalog that are really meant to appeal to a given functional buyer to help them create a much more customized learning pathway for whatever that function might be.

And typically, what enterprises will do is they will leverage one of those skill tracks and then they'll combine it with their own content that they have. And then we enable, through our Course Builder offering, which is an AI-assisted course creation or learning program creation capability, them to combine, okay, we have these elements of content that we've created in our company that we want to make sure everybody has context around, and we want to combine them with these courses that deliver these functional skills, and they can create that sort of per role and we work with them to do that. So that's been a big trend that we've seen. And I think that's just going to continue to accelerate.

Excellent. Sticking with skilling and upskilling, anything to add as far as your positioning and how you're -- to ensure that Coursera will be able to capture the skilling and reskilling opportunity? And also want to ask it from the perspective of competition, how is Coursera differentiated in this area?

Well, in a world where AI makes it easier than ever before to create content, I think the value of the branded, trusted content that we have coming from the top universities and technology companies in the world is a real differentiator for us. And the way that we can not just take that content, but also really package it with. We understand exactly what enterprises are using to upskill and reskill their workforce and what works really well. And we can take that signal back to all of our content creator partners and really optimize the performance of those courses by leveraging that data, that becomes a differentiator as well.

As we bring in Udemy, there -- they have a much larger enterprise business. And one of the things that they are ahead of Coursera on is really integrating directly into the flow of work within Enterprise using MCP. And the fact that they have across their 85,000 content creators, a content base that gets changed on a much more rapid clip than ours does is a real asset.

And so I think the combination of those 2 things, you have branded, trusted content from the best institutions in the world and then you have content being created immediately as a new model releases from a massive army of subject matter experts around the world in every language you can possibly imagine, natively. Obviously, we do AI translation, AI dubbing. That combination of speed and brand, I think, is a really unique one.

Great. We've been talking about some different capabilities around platform. You recently introduced a platform fee. So could you talk about that, what that opens up from an investment perspective, where are those dollars going to go around platform enhancements?

Yes. So the platform fee started on January 1 of this year, and it's a 15% fee that basically changes the economics that we have with our content partners. It doesn't change Consumer pricing. It doesn't change Enterprise pricing. It -- and the purpose of it and the rationale behind it was to enable us to invest in the platform in a more durable ongoing way. We are seeing the pace of technological change just increase and accelerate. We need to keep up with that on our platform. The platform fee is a mechanism to enable us to do that. And so most of that investment is going to go into increasing the pace of innovation, specifically around how we use AI on the platform.

So right now on Coursera, I talked about Course Builder, we have Coach which is an AI-driven tutor that rides alongside the learner in every single course that they're taking. We really need to bring all of the innovation that lies behind Coach, front and center throughout the learning experience and throughout the user experience as they're on the platform, not just when they're in the active learning in a specific course but more broadly so that we can help guide people to the right content, help them between things that they're doing.

Our real goal is to be a lifelong skilling partner for consumer learners and to be a lifelong company partner on the Enterprise side to help them upskill and reskill their workforce. And so the platform fee is going to go into helping address that.

Great. Before we dig in a little bit on Consumer and Enterprise, I want to stick with AI. But ask how you're using it internally? How is it making your business more efficient across the different OpEx categories, but also from a content creation perspective?

Well, I'll start actually with content creation. We create content on our own as well. So we have Coursera Originals and Coursera-produced content. We continue to increase the investment in that. That provides a couple of different benefits for us, and I'll talk about how AI enables that to operate much more efficiently.

The reasons that we create the Coursera Originals are number one, because we see gaps in the platform and our current content partners aren't perhaps filling those gaps as quickly or as comprehensively as we might like.

Two, we see an opportunity to use that content as a test bed. So we really test different approaches to learning to understand what works best. And so if we see, for example, across our content that we see drop-offs in given places or we see learning patterns where a more interactive approach at a given point in the learning journey can help engage the learner and keep them engaged for longer and deliver better outcomes for us financially. We use our Coursera Originals to test those hypotheses and then roll them back out to the rest of the content.

And then the third piece is the margin benefit that we get. Obviously, we're trading off for Coursera Originals content, we're trading off a fixed investment in the cost of that versus no rev share versus on the other side, we have no fixed content investment for, of course, that comes from universities, for example, but we have a rev share. And so there's a margin benefit that we get from our originals. We leverage AI to bring down that fixed content cost. And so with every year, we have substantially decreased the cost per course, and I expect that trend to continue.

We're also leveraging AI to make it easier for all of our content partners to create content. And so I mentioned Course Builder. One of the things that Course Builder does, it makes it very easy for a content partner or an enterprise to create content, whether it's a course or a custom learning pathway, at a much lower cost. And so they can leverage AI and start with really an outline content that they might have already in a different format and easily transform it into a format that will work really well and be engaging on Coursera. So that is a big focus for us.

Other ways that we use it internally, we use it across all of our different functions across the company. And our focus right now is to really drive as much experimentation across the company with AI as possible. Yes, of course, we want to use it to become more efficient, but our primary focus right now is not cost savings. It is much more about experimentation and penetration of AI into every possible role that we have across the company. And the reason for that is just that we are still so much in the infancy of GenAI and the pace at which it's moving that if we focus sort of myopically on cost savings now, I think we'd lose the opportunity to move much more faster across the broader organization. And so that's a big thing.

One of the things that we do to help do that is we have what we call AI Spark's sessions every month. We have the company come together and people basically just get up and volunteer. Here's what I've done. Here's the workflow I created, Here's how I did it. Here's what worked. Here's what didn't work. Here's how I tweaked it. And it just becomes a really viral way for us to share what's working really, really well because it's not tops down, it's bottoms up. We augment that with a centralized team that basically takes in requests from any area of the company. And it's a really small team that basically in a week, will turn out a prototype for how a given workflow in a given part of the company can be transformed by leveraging AI. So we sort of have a mix of those 2 approaches. And it's working so far really, really well.

Great context. I want to ask you a question on consumer growth. And maybe I'll provide some context. I mean most learning platforms saw tremendous acceleration during COVID. And most faced really tough comps and had trouble growing after that. And Coursera has consistently grown every year. Most recently, double-digit growth in Consumer over the last 3 quarters. Is there a way to decompose that growth? I mean focusing more recently, it's coming from AI, from new learners onto the platform, existing learners. Like any way to think about the different types of products that you sell from individual courses to professional certificates, specializations, like where is that growth and the durability of that growth coming from?

I would say there's two broad themes. One, I think the company has done a very effective job over the last couple of years of really improving the efficiency of our paid marketing. And so that has helped us both expand what we're able to spend there because we're seeing a really good return on that investment. And also start to experiment in new channels as consumer patterns change and as the way people search and learn about things changes, it's really important that we continue to diversify that. So that's one trend.

Another trend has broadly been the growth of our Coursera Plus subscription offering. And so we commented on in our Q3 call that that's now more than -- subscription revenue is now more than 50% of our Consumer business. We expect that to continue to increase over time. We like that for a couple of different reasons. Obviously, for the subscription, you see a longer relationship with the consumer. And you have more predictable revenue flows from that. And so it starts to resemble a mini enterprise-type business from that perspective. Those have been a couple of other things.

And then I think we certainly are benefiting from the fact that there is such a huge transformation happening with AI, and you see that reflected in that stat that I mentioned earlier about an enrollment every 4 seconds. So that's been another factor that's helped drive the growth as well.

And then I think we continue to evolve the product piece of the platform. We are earlier on that just because that takes a little bit of time. And I started a year ago. We hired our Chief Product Officer, Patrick Supanc, in June, and we're still making changes, but you saw some of that get reflected in some of the freemium and geo pricing changes that we made and you will expect to see or you can expect to see some changes to continue to bring AI more fore -- more to the fore in the experience as well.

And that statistic that you mentioned earlier, like clearly lays out some of the tailwinds from AI. How -- but how would you respond to the market or the investor concern that some of your learners will meet their learning needs elsewhere, either through LLMs or new entrants because of GenAI?

Yes. I mean, clearly, that is a sentiment that overhangs our sector and has for a long time and now overhangs many other sectors as well. My perspective on that is that we are providing a very differentiated skill-focused outcome, and it's up to us to make sure that we are demonstrating that to individual learners and to enterprises in a way that delivers material ROI.

9 out of 10 learners who come to Coursera come to advance their careers. 91% of the learners on Coursera who take a course report that they've had a tangible career outcome since completing that course. That is a really powerful and very differentiated stat versus what you might experience by just going to ChatGPT and learning something. You're not necessarily getting the same skill. You might get general knowledge, but you're not necessarily generating a skill that can actually transform to a career outcome.

46% of the learners on Coursera report a salary increase since enrolling in the course. And so the more that we can leverage those types of outcomes in the way we market Coursera and in the on-site experience to both reinforce the value of what we provide, but also help direct people to the things that are best correlated to delivering those outcomes for us, I think the better we'll be able to differentiate ourselves and provide defensible value versus LLMs.

Excellent. Maybe shifting gears to the Enterprise. Your net retention rate improved by 4 points last quarter, which is great, but it still remains under 100%. So not where you want to be. Within the Enterprise, you've got Coursera for business, governments and campus. So can we unpack a little bit of what you're seeing in those different end markets just around downsizing expansions and customer demand?

Yes. So the -- our Enterprise business with C for B, C for C and C for G, the majority of that business is C for B, the business focused element of that. There, as we've talked about on some of our calls, the environment remains muted because of economic uncertainty and some of the changes that companies are trying to wrestle with, whether that may be tariffs or the threat of AI, all of those potentially cause companies to, particularly the ones who are a little bit more short-term focused, potentially pull back on spending. And so we see an uncertain outlook there.

On C for G, our government business, that tends to be a more cyclical type of business where it's really hard to project the same level of year-over-year relationship with any given government just because of the nature of the funding cycle. Having said that, we saw some really good performance in C for G in Q4 in part because of one particular expansion opportunity that we had with the government in Asia. That is actually a really powerful proof point of what Coursera can do. And so this particular government was using Coursera as a means of upskilling their entire citizenry. And that's one of the things that I think we're uniquely positioned to help forward-thinking governments or companies do as they're trying to think about upskilling broad populations.

And then Coursera for Campus is a smaller portion of our Enterprise business, but we think we are very uniquely positioned there. Every single university in the world is facing the challenge of how do I move my institution at the right pace as AI reshapes what is possible in learning and in education and also what is demanded of the graduates of any given institution. And a lot -- particularly in the U.S., a lot of universities are really under threat because there is a perception that they're not delivering a value when people finish their college career that is commensurate with the cost that they have paid for that college career.

We provide a way for them to augment their in-person curriculum with all of the richness of the really skill-focused delivery and particularly that comes from our industry partners. And so we've seen a lot of good traction in Coursera for campus. And so that's growing at a pace that we really like. We want to continue to expand that. We also want to do a better job of demonstrating the value that we provide to our Enterprise business because that is the biggest part, C for B, the biggest part of the business. And so that's on us to really deliver better value delivery to those enterprise partners.

Just to follow up on Coursera for Campus. It always seems like such a bright spot of the Enterprise segment. Any context for how large that business is or how to frame the opportunity? It sounds like what you have is very unique. Correct me if I'm wrong, but not sure if there's real competition for exactly what you're trying to do.

There isn't any real competition for us. That is still a small portion of the business, but it's growing well. We want it to become more material, but we want it to become more material, not necessarily by becoming a larger percentage, but just by growing at a faster rate as we also grow all the other pieces at a faster rate.

The challenge of that business is, I think we haven't had the -- we now have a leader in Anthony Salcito, our new Enterprise leader, who actually has 20-plus years of experience in -- he led Microsoft's worldwide education business for the better part of 2 decades. So he actually has a very informed viewpoint on how to go about doing that because he has a deep familiarity with that customer segment. And so I am very hopeful for the future growth trajectory of that, both in the near term and over the long run with Anthony on board.

That's helpful. And just thinking about the upward trajectory of this net retention rate, how does the Udemy combination impact that over the next several quarters? Is there -- are there customer behaviors that you're seeing like, "Oh, let's wait to see what happens." Does that hurt the momentum?

Well, we have some overlap in customers. And so there'll be a bit of work that we have to do as we work through the combination to understand how we take those individual relationships and package them into something that's larger for the combined entity.

One of the real opportunities that we feel that we have as we combine is we now have a better toolkit for every single enterprise customer. So if you are a Udemy enterprise customer, and their Enterprise business is far larger than Coursera's, they now will have the ability to access all of the content that we have on the Coursera platform from our university and industry partners. And the brand value of that is really appealing to Enterprise.

On the Coursera side, even though our Enterprise business is smaller than theirs, we now have the ability to give our enterprise customers, the access to all of this really rapid shorter, more modular content that is being created by their network of subject matter experts. And so we think there's an opportunity to give every single one of our enterprise sales team basically a better arsenal to go out to market with and hopefully do a better job of both landing new accounts and also expanding our relationship with existing ones.

If you think about this proposed merger, all stock, like the pro forma combined entity will still have a lot of cash and no debt. So like how do you think about capital allocation or industry consolidation going forward?

Well, we committed when we announced the deal to a sizable buyback at close. When we combine the companies on a pro forma basis, we'd have $1.5 billion in revenue, between $1.2 billion and $1.3 billion of cash on the balance sheet with no debt. That's a lot of powder. We certainly will want to use a sizable portion of that to do a share buyback. We also want to make sure that we preserve enough of it to have the opportunity to really look at inorganic ways to drive faster growth.

What we really are going to focus on as a combined company is how do we accelerate the growth profile of the combined entity. Yes, we will have through the nature of the combination, but also through the 10% EBITDA margin pre synergy and improving EBITDA margins post synergies, we really want to focus on how do we leverage the balance sheet and how do we leverage the fact that we will be generating free cash flow on a combined basis at a nice healthy clip to drive faster growth. And so we really think that there is an opportunity for us to leverage some of that balance sheet to look at inorganic ways to accelerate that.

And then we also, of course, want to think about how do we deliver the right return to shareholders. Part of that may be through an ongoing share buyback program. Part of that may be through our expansion into adjacent spaces that delivers higher growth profiles, a different margin profile and better returns for shareholders overall. We will work through the share buyback in a very short order following the close. We believe it's really critical that we do that because of the commitment. And then with the new Board, we will chart a longer-term approach to capital allocation that we think strikes the right balance between growth and then enhancements for our shareholder return.

Perfect. We're out of time. Greg, thank you so much for the conversation.

Thank you very much, Josh. Thank you all.

Ladies and gentlemen, thank you for standing by, and welcome to Coursera's Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] And this call is being recorded. [Operator Instructions] I would now like to turn the call over to Cam Carey, Vice President of Investor Relations. Mr. Carey, you may begin.

Good afternoon. Thank you for joining us for Coursera's Q4 and Full Year 2025 Earnings Conference Call. Today, I'm joined by Greg Hart, our President and Chief Executive Officer; and Mike Foley, our Chief Financial Officer. Following their prepared remarks, we will open the call for questions. Our earnings press release was issued after market close, and it is available on our Investor Relations website at investor.coursera.com where this call is being webcast live and reversions of today's materials, including our quarterly shareholder letter have been published.

During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP measures to the most directly comparable GAAP measure can be found in today's earnings press release and supplemental materials. Please note that all growth percentages discussed refer to year-over-year change unless otherwise specified.

All statements made during this call relating to future results and events are forward-looking statements based on current expectations and beliefs. Actual results and events could differ materially from those expressed or implied in these forward-looking statements due to a number of risks and uncertainties.

Please refer today's earnings press release, shareholder letter and SEC filings for more details on our forward-looking statements. With that, I'll turn it over to Greg.

Thank you, Cam, and good afternoon, everyone. We appreciate you joining us. Coursera delivered a strong fourth quarter. Over the past year, we've been focused on a clear set of priorities to build a more durable foundation for long-term growth, sharpening our execution refining how we operate and embedding faster AI native product innovation and data-driven decision-making across the business.

2025 marked the early phase of this work. As the year progressed, we began to demonstrate tangible progress reflected in our results. For the full year, we grew revenue to $757 million, an increase of 9% year-over-year and more than double the 4% growth rate we shared in our initial April outlook.

We generated record free cash flow of $78 million, up 32% from the prior year and we extended our track record of delivering growth with increased financial leverage, expanding annual adjusted EBITDA margin by 240 basis points year-over-year to 8.4% and while continuing to invest in the next generation of product experiences.

Our results reflect a more focused, disciplined company, one that's translating strategy into faster execution. I'm proud of the early progress our team has made, and I'm equally clear that we must and will continue to move faster. In December, we announced an agreement to combine with you to me, a company and team we have long admired. This transaction is an important step in accelerating our strategy.

By bringing together 2 highly complementary platforms, operating models and cultures, we meaningfully increase our collective ability to invest, innovate and execute at scale. Just as importantly, this combination reinforces the direction we have been taking all year, building a more agile, more focused and more capable company and evolving beyond a content catalog into a leading technology platform for skills.

More broadly, the environment around us continues to underscore why this moment matters. Skill requirements are changing quickly across nearly every industry. Organizations are under pressure to reskill and upskill their workforces at scale and individuals around the world are increasingly seeking learning that is more personalized, job relevant and clearly connected to advancing their career goals.

Together, we believe we can execute at greater scale and speed, share product and data investments to accelerate our road map and be better positioned to address the global skilling and talent transformation opportunity. Our companies are progressing through the regulatory and shareholder approval processes, and we look forward to providing updates in the coming months as our integration planning advances.

In the meantime, we are not slowing down. Coursera's ecosystem and the infrastructure that powers it continues to expand and evolve to better serve our learners, customers and instructors. Throughout 2025, we strengthened Coursera's position as a trusted platform for career-relevant learning, supported by a growing and increasingly differentiated global ecosystem.

At the center of that ecosystem are our learners. Over the year, we added more than 29 million new registered learners, growing our total cumulative learner base by 17% year-over-year. In Q4, we welcomed a record 6.8 million new learners, the highest fourth quarter additions in Coursera's history. Learners come to Coursera with a clear purpose. To build skills that help them advance their careers and adapt in a rapidly evolving labor market.

Our platform combines data and product innovation with a broad selection of branded credentials and curated career pathways taught by more than 375 universities and industry leaders. These world-class instructors enable us to deliver a wide range of learning needs from foundational technical and human skills, to job relevant credentials that span every stage of career progression.

By year-end, our platform offered more than 13,500 courses, expanding our catalog by over 45% year-over-year. The fastest pace in the past 5 years. As job requirements continue to evolve rapidly, demand for career-focused learning remains strong, including the accelerated demand for AI-related skills.

In 2025, learners enrolled in our generative AI catalog at a rate of 15 enrollments per minute, up from 8 enrollments per minute in 2024. Many of our most popular courses and certificates are created by leading technology companies, including long-time partners such as Google, deep learning.AI, AWS, Microsoft, Meta and IBM.

In November, we launched our first courses with one of our new partners, Anthropic, designed to give learners hands-on experience with [ Claude ] while building the skills needed to collaborate effectively with AI. Coursera is now collaborating closely with many of the leading AI companies serving not only as a platform of choice for distributing high-quality content, but also as a partner on product innovation, including new approaches to search discovery and learning in the flow of work.

We also see that demand for these essential skills extends well beyond technical roles. Earlier this week, we announced new AI courses encompassing an increasingly broad range of careers from nursing and health care to business, legal and communications roles. Many of these new skills are being taught by leading universities, including Vanderbilt, the University of Colorado Boulder and Macquarie University in Australia as well as organizations with deep expertise in a specific industry or field, including health care.

In January, we welcomed Cleveland Clinic, one of the world's largest health systems to Coursera. Their initial launch includes courses focused on applying AI in clinical settings and using machine learning techniques to analyze medical images. It's one example of how our expanding ecosystem continues to strengthen Coursera's role as a critical platform for skills development as AI reshapes how we live, learn and work across industries worldwide.

Now let's turn to our product updates. First, we continue to refine the learner journey on Coursera, making focused improvements across search, discovery and merchandising designed to better attract and convert learners. The scale and data of our platform create powerful opportunities for more personalized and contextual guidance, allowing us to tailor content, language and recommended pathways to support the career needs of learners across regions, roles and levels of mastery.

Over the past several months, we've made continuous enhancements. We redesigned our homepage to make it easier for learners to get started and navigate Coursera. We also launched new geo pricing, marketing and promotional capabilities to better serve our growing international learner base resulting in early gains in paid conversion and Courseras adoption.

In Q4, we continued experimenting with features like natural language search, AI-powered discovery and learner motivation using rapid testing and iteration to improve relevance and drive stronger engagement over time. While much of our product innovation starts with the learner experience, it's equally important that we continue to strengthen the value and choice we provide to enterprise customers who manage workforce learning at scale.

We are focused on delivering a more intuitive, data-driven enterprise experience that helps customers assess skills, drive engagement and translate learning investments into more measurable workforce outcomes. A key area of progress this quarter has been the redesign of our enterprise admin home.

Admins rely on this view as their primary interaction with Coursera and customers want it to be more actionable, role-based and clearly connected to outcomes. In pilot deployments, the redesigned home delivered improvements in admin led engagement, reinforcing our belief that clearer insights, targeted nudges and contextual assignments can influence learner behavior and skill development at scale.

Based on these early results, we began rolling it out more broadly in January. Beyond the admin home, we continue to invest in enterprise integrations and workflow improvements designed to embed Coursera more deeply into customers' existing technology ecosystems, positioning learning closer to the flow of work where skills can be applied, measured and reinforced.

For example, our product priorities for 2026 include verified skill pathways, MCP based discovery capabilities and deeper integrations with HR and LMS platforms as well as an expanding set of AI and collaboration tools. These initiatives reflect a broader shift towards making Coursera not just a catalog for learning, but a central system of record for skills development, helping organizations engage learners more proactively, benchmark talent and enable workforce transformation at scale in an increasingly dynamic labor market.

Now turning to today's final product update. Over the past several years, we have been investing in building a faster, more agile content model, one that preserves the value of our trusted brands while evolving beyond the static catalog into a skilling platform designed to keep pace with real-time learner and business needs.

To support this evolution, we have introduced a platform fee designed to establish a more sustainable model to fund ongoing investment in Coursera's AI native platform capabilities. As Mike will discuss, we expect the financial impact of this change to be gradual. Effective January 1, the platform fee will apply to eligible new sales across our consumer subscriptions and courses as well as our enterprise offerings.

The fee is not retroactive, and pricing for learners and customers remains unchanged. While we expect this to provide a structural benefit to gross margin over time, our primary objective is to support continued investment in our AI native capabilities and enhance the value of our platform for all users.

For learners, this enables more personalized and adaptive experiences from AI-powered role play simulations to coaching and career guidance. For customers, it allows us to expand our skills infrastructure and tools to better measure talent and align learning to business outcomes.

And for instructors, it provides access to AI-enhanced tools and new authoring capabilities that help them create, augment and deliver more impactful learning experiences at a global scale. When I stepped into my role a year ago, I was clear that product-led growth would be central to our strategy and the foundation for Coursera's next chapter.

As we look to 2026, we intend to push further. Our goals extend beyond simply keeping pace with technology. We are innovating on behalf of learners, customers and instructors to build a more dynamic AI-enabled skilling platform that is designed to help them succeed in a rapidly evolving skills landscape. With that, I'll turn it over to Mike to walk through our financial performance and provide more detail on our initial outlook for 2026. Mike please go ahead.

Thank you, Greg, and good afternoon, everyone. Coursera finished 2025 in a position of financial strength. We delivered double-digit year-over-year revenue growth for the last 3 consecutive quarters, expanded our gross and adjusted EBITDA margins and generated strong cash flow while continuing to invest in strengthening the long-term fundamentals of the business.

These investments are focused on building platform capabilities that learners and customers increasingly require as skills change more quickly. The results I'll discuss today reflect how we're managing and planning the business on a stand-alone basis. I'll begin with our fourth quarter results and then walk through our guidance and outlook assumptions for the first quarter and full year 2026.

In the fourth quarter, we delivered total revenue of $197 million, up 10% from the prior year period, driven by growth across both our Consumer and Enterprise segments. Please note that for the remainder of this call, I will discuss our non-GAAP financial measures unless otherwise stated. Gross profit was $109 million, up 12% year-over-year, representing a 55% gross margin, an expansion of approximately 90 basis points from the prior year period.

Margin expansion was driven primarily by continued improvement in our consumer segment, reflecting higher learner engagement with newer content created under more favorable production arrangements. These arrangements typically feature lower revenue share and content costs, reflecting the growing role our technology and authoring capabilities play in enabling high-quality learning experiences at scale.

Additionally, as we deliver faster innovation cycles and our reach continues to grow, we will continue to explore structural opportunities to improve unit economics over time. including the platform fee Greg mentioned earlier, which took effect at the start of 2026. This structure better aligns economics with the value our technology delivers, while supporting continued investment in innovation.

I'll share more detail on the expected margin impact with our outlook. Total operating expense was $103 million or 52% of revenue. Consistent with the prior year period as we paced ongoing investments in R&D and go-to-market capabilities expected to drive sustainable growth and improve long-term operating leverage.

Net income for the fourth quarter was $11 million or 5.6% of revenue, and adjusted EBITDA was $11 million or 5.7% of revenue. For the full year, Net income was $67 million or 8.8% of revenue, and adjusted EBITDA was $64 million, representing an 8.4% margin. As a reminder, we began 2025, targeting 100 basis points of adjusted EBITDA margin expansion to 7%.

We later raised that target to 8% as our execution and visibility improved and ultimately exceeded both delivering 240 basis points of year-over-year expansion. We achieved this while deploying targeted growth investments across product, content and go-to-market initiatives, with quarter-to-quarter flexibility provided by our annual margin framework.

In a year defined by rapid technological change and a refined operating model, that flexibility was critical enabling us to deliver meaningful margin expansion while continuing to make long-term decisions on behalf of our learners, customers and broader stakeholders. This balance remains central to how we operate the business.

Now turning to cash performance and the balance sheet. As Greg highlighted earlier, we generated a record $78 million of free cash flow in 2025. A clear signal of the earnings potential in our model. This included a use of $2 million in the fourth quarter, driven by seasonal working capital dynamics related to receivables timing of our revenue share catch-up payment as well as $3.8 million in cash payments for M&A transaction-related costs.

For additional clarity, these costs have been footnoted in the financial tables of today's press release. Moving to the balance sheet. We ended the year with approximately $793 million of unrestricted cash and cash equivalents with no debt. This strong financial position gives us the capacity to invest in growth moved quickly in a fast-changing landscape and create additional opportunities for shareholder returns.

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. Now let's discuss the fourth quarter performance of our operating segments, starting with Consumer. In Q4, we delivered consumer revenue of $132 million, up 12% year-over-year.

Growth was driven by acceleration in our core consumer subscription and courses category powered by enhanced marketing, localized pricing and subscription capabilities with Coursera Plus. These capabilities help learners discover, develop and validate skills more effectively as labor market needs evolve.

This strength was modestly offset by the anticipated fourth quarter decline in our degrees product category previously disclosed with our decision to integrate Degrees results into our consumer segment at the start of 2025. As Greg mentioned earlier, we added 6.8 million new registered learners in Q4, the highest number of fourth quarter additions in Coursera's history despite the seasonal softness we typically see in our fourth quarter top of funnel.

Consistent with regional trends observed over the past several quarters, a growing proportion of new learner traffic continues to come from international markets. This global demand underscores the importance of product innovation that improves relevance, localization and value across regional labor markets and in effect supports monetization of our funnel over time.

Consumer segment gross profit was $81 million, up 15% year-over-year and 62% of consumer revenue, up from 60% in the prior year period. As I mentioned earlier, this margin expansion reflects increasing learner engagement with content produced with more favorable revenue share economics.

Overall, our consumer momentum reflects renewed execution and the early investments we've made across product, content and marketing over the past year. In 2026, we plan to build on this momentum, delivering faster innovation cycles, more engaging experiences and greater value through our large and growing subscription offerings.

Turning to our Enterprise segment. Enterprise revenue was $65.4 million up 5% from a year ago. Growth was driven by our campus and business verticals with demand trends and spending priorities varying by customer, region and use case. The total number of paid enterprise customers increased to 1,730, up 7% from a year ago, and our net retention rate for paid enterprise customers was 93%.

The improvement in net retention was driven by Coursera for campus as well as a large government expansion. However, we remain focused on driving sustained improvements in retention and expansion across a broader set of enterprise customers over time, particularly within Coursera for business.

Segment gross profit was $46 million, up 7% year-over-year and a 70% gross profit margin. This was an improvement of 130 basis points from the prior year period, driven by content engagement trends similar to those benefiting our consumer segment. Overall, our expectations for the enterprise segment remain largely unchanged as we remain focused on the long-term growth opportunity.

As organizations increasingly prioritize skills transformation, they're looking for platforms that combine relevance, agility and measurable outcomes. We plan to continue investing in product features and tools to better meet those needs, recognizing that progress in this segment is typically more measured given the nature of the revenue cycle.

Finally, turning to our financial outlook. As we enter a new year, we're providing additional detail on the composition and pace of the business underlying our guidance. This includes onetime segment-level growth estimates as well as other modeling considerations. Importantly, today's guidance reflects Coursera's expectations on a stand-alone basis and does not take into account the proposed transaction with Udemy.

We expect the transaction to generate meaningful operating efficiencies, including anticipated annual run rate cost synergies of $115 million within 24 months of closing primarily through optimized go-to-market motions and streamlined G&A expense. We are confident that a majority of these run rate synergies can be achieved within the first year post close.

And we look forward to providing updates as we progress through the regulatory and integration planning processes in the months ahead. With that context, for the first quarter of 2026, we expect revenue to be in the range of $193 million to $197 million, representing growth of 8% to 10% year-over-year. For adjusted EBITDA, we're expecting a range of $11 million to $15 million, which reflects our typical seasonality and our focus on deploying growth investments early in the year.

For full year 2026, we anticipate revenue to be in the range of $805 million to $815 million, representing growth of approximately 6% to 8% from the prior year. From a segment perspective, this anticipates consumer segment growth of more than 10% over the prior year, reflecting the performance improvement we continue to drive in our subscription and course offerings.

Slightly offset by an anticipated 100 basis point headwind from our degrees product category. For our enterprise segment, we expect 2026 growth in the low single digits year-over-year and have not assumed any material change in the current macroeconomic environment.

For adjusted EBITDA, we expect to deliver in the range of $70 million to $76 million or an adjusted EBITDA margin of approximately 9% at the midpoint of the revenue and adjusted EBITDA ranges. This initial target is designed to extend Coursera's strong track record of delivering operating leverage through annual EBITDA margin expansion while continuing to make targeted investments in growth initiatives that enhance learner and customer value over time.

While we did not manage the business to optimize adjusted EBITDA for any single quarter, we expect our 2026 bottom line performance to be weighted to the second half of the year for 2 reasons. First, our focus on deploying investments early in the year to support our most productive growth opportunities.

Second, we expect to begin seeing the early financial benefit of the platform fee on gross margin later in the year. As Greg outlined, the 15% platform fee only applies to new sales across eligible consumer subscription and courses and enterprise offerings.

There is limited or no impact on certain product categories with structurally higher margins today such as Coursera produced content and degrees. The financial effect is expected to be gradual as we begin to recognize revenue from new sales over time. We anticipate seeing some initial expansion in Consumer segment margins in the second half of 2026, followed by enterprise segment margin improvement in 2027 given the multiyear contract structure and revenue recognition dynamics in enterprise sales.

Finally, in a standard year, we would continue to expect free cash flow performance to largely track at or above adjusted EBITDA and excluding the impact of cash payments related to the proposed transaction. For additional visibility today, we wanted to provide our first quarter forecast of approximately $14 million of cash payments related to the transaction fees and planning expenses.

This does not factor in additional costs contingent upon close or any post-close integration expenses. We look forward to providing more detailed expectations in future updates. To close, 2025 marked meaningful progress across several fronts. We delivered solid growth, expanded margins, generated strong cash flow and strengthened the foundation of the business.

We entered 2026 with a disciplined operating plan, a strong financial position and clear set of priorities focused on long-term value creation. With that, let's open up the call for questions.

[Operator Instructions]

Our first question comes from Stephen Sheldon with William Blair.

First, I wanted to ask about the platform fee that sounds like you introduced in January. I guess can you just give a little bit more color on the structure of that? How much of a lift do you think that could be to gross margins over time?

And I guess, as you've kind of pushed that out there and communicated it, has there been any pushback in the system that you've seen regarding the fee?

Maybe I'll start and then Mike can add on. Thanks for the question, Stephen. So a couple of us. First of all, the intent of the platform fee, as was indicated in the scripted remarks is to enable us to invest in an ongoing way in continuing to improve the platform. And by doing so to deliver better outcomes for our learners and for our content partners as well. .

They've obviously been pleased with the growth that we've shown, particularly over Q2 through Q4 with 10% growth in each of those quarters. And the intent of the platform fee is to enable ongoing investment and product initiatives that will help further that growth. They're obviously curious to get better visibility into what some of those investments might be and what our 2026 road map looks like.

As Mike mentioned in his scripted remarks, the impact of the fee on gross margin because of the nature of the fee and the nature of our revenue recognition with an increasing percentage of our consumer business being related to our subscription Coursera Plus.

And so the revenue gets recognized over a longer time period. The same is obviously true in our enterprise business as well. And so that's a little bit of color behind what Mike referenced in more impact will be reflected in our financials in the back half of the year. Mike, over to you.

Yes. I would just add in terms of gross margin overall, we do expect to continue to make improvements in progress on gross margin in the aggregate the platform fee is a significant component of that in 2026, along with continued investment in Coursera produced content. .

Of course, we also have offsetting that, the mix of revenue, our fastest-growing business in our consumer subscription is our lower margin business. and enterprise growing slower as our higher-margin business. So there's a mix shift to offset that from an overall gross margin percentage basis. But it is a meaningful uplift in the platform fee for the second half of the year and definitely into 2027.

Got it. Yes, that makes sense. And then following up -- can you just dig a little deeper on where you're making incremental investments in the business as you thought about the 2026 budget? Are there specific areas where you're reinvesting more than you have historically? Just given some of the comments in the prepared remarks, it sounds like you have a lot of product ambitions. But just any color on where you're kind of pushing the pedal a little bit more than you historically have. .

Yes, I can take that. So we'll continue to invest in our sales and marketing to drive new leaner acquisition. We've seen significant improvements in efficiency over 2025. In that spend, we expect to see more efficiency in 2026. The other area, as Greg alluded to, is in R&D, and we are expecting to invest more in R&D this year.

Part of that is hiring that we've already done and part of that is continued investment in software tools and more engineering and product into 2026. So those will be the 2 areas I'd highlight. G&A would just grow modestly this year.

Our next question comes from Josh Baer with Morgan Stanley.

I was hoping you could talk a little bit about some of the proprietary data sets that you have that would make it hard for an LLM or a new entrant to create learning content and more broadly, like the platform that you have that can enable skilling and reskilling and facilitate workforce transformation. So some of the data or competitive moat there. .

Yes, I'll start on that one, Josh. Thank you for the question. So a couple of thoughts on that. First of all, we ingest a lot of data from external third-party sources. That data is presumably also some of it available to some of our other participants in the space, whether there's LOMs or others.

It's what we do with that, that I think is a bit unique. And so what we are trying to do, 86% of the learners who come to Coursera come to grow their careers. And what we're really focused on doing is delivering a mapping of the skills that they need to do so in whatever particular career they might be pursuing to the courses on Coursera that deliver those skills.

And then specifically, the modules within those courses that deliver those skills and then how we verify those skills at scale. We just actually rolled out the launch of our verified skills path across a number of different career groupings for our enterprise partners, which has been something that we've been working on since September.

The goal is to continue to innovate on that. And obviously, we use all of the data that we have on our platform from within the learning experience from within courses, within given modules, of course, is about what is driving engagement, what is driving true mastery of those skills and how do we double down on that.

It's one of the ways that we actually use Coursera produced content as a test bed to figure out which optimizations drive the highest learner engagement, the highest course completion rates the most correlation with skill mastery and development.

So we do think that we have a differentiated set of data across both how we use external data how we map that to the skills that we build on our platform for our learners and then how we use the learning experience itself, which is very different on Coursera than it might be in a chat environment.

In an LLM to deliver a far better outcome for those learners. And we just released our learner outcomes report about 2 or 3 weeks ago. One of the things we see is that 46% of learners on Coursera report a salary increase since enrolling in their course or program on Coursera.

So we believe there's a strong correlation between the input of learning on Coursera and the output that learners are coming to Coursera to achieve, which is to grow their career.

Great. And just wondering, just a little confused on the platform fee. Like is there a difference between the platform fee and a pricing increase for new customers? .

Pricing for customers is not impacted. There is no change to consumer pricing or enterprise pricing for that matter.

Our next question comes from Ryan MacDonald with Needham.

Congrats on a nice quarter here, guys. This is Matt Shea on for Ryan. Wanted to touch on international. It seems like it's been a real bright spot the last couple of quarters. 2-parter here. Maybe first, on the translation side, you achieved your goal of 100 courses with AI doing across 5 languages.

It seems like this has been particularly helpful in unlocking international learners. I guess given that success, how much more translation could be in store for 2026? And how immediate is that benefit? And then maybe second, geo-based pricing was a big topic last quarter that seems to be bearing fruit. How has that evolved?

And any plans to roll out incremental geo-based pricing to new countries in 2026?

Great question, Matt. So a couple of thoughts on that. First of all, yes, we are absolutely going to continue to expand the number of courses that we have translated both through AIW, but also just through machine translation of text. We believe that -- and the data shows that learners are far more likely to engage in courses that are in their native language and ideally in that native language through verbal audio, not just through text.

So we're going to continue to invest in that area. It's also something that our enterprise customers will often ask for in certain geographies to make sure that they get the right content for their workforces in those native languages. It's also one of the reasons just sort of stepping back and thinking a little bit about the combination with Udemy, that's really interesting for us because Udemy has 85,000-plus instructors from around the world, creating content in a huge range of languages.

And so we believe that will be a fantastic addition to better serve learners around the world. The other thing that you mentioned about geo pricing. So we're definitely pleased with the results that we've seen from geo pricing. We think there is further opportunity to keep looking at that type of change to our pricing model just to make it more responsive to actual purchasing power in different countries around the world.

And so I do expect that over the course of 2026, we'll continue to look at that and make sure that we're fine-tuning that in the right way.

Got it. I appreciate that color. Maybe one on the combination with you to me. At the time of the announcement, it was a bit early to gauge feedback from the instructor base, but now assuming you've had a chance to connect with partners, how do your university and enterprise partners feel about this combination and conversely, to the extent you can share, I guess, any additional feedback from outman structures about how they feel about the combination?

Well, I'll start by saying that we firmly believe that the combination will provide far better outcomes for every participant in our value chain. So from a content creator perspective, Coursera has now 197 million registered learners. Udemy has 82 million plus registered learners so approaching 300 million with the combination. .

Then from a -- and obviously, 300 million registered learners on the consumer side of the business is a massive audience that any content creator, whether that's a university partner of ours, an industry partner of ours. -- or a subject matter expert in structure from Udemy's network can reach through this combination. And so we believe that will absolutely expand their capacity to tap into new audiences and deliver effective learning for them.

For learners, obviously, they benefit from more content they benefit from all the content being created, not just by Courseras 375 different university and industry partners, but from the 85,000 plus subject matter experts on the Udemy side. And then finally, for enterprise, we have 1,700-odd enterprise customers, Udemy has 17,000.

And so that is a huge audience, again, the content creators can develop content for and serve and a real opportunity to grow their business through that. I would say that the feedback that we've had has really been how is this going to work, which is a logical and completely fair question. And we have to think through that really carefully.

The last thing we would want is to simply have a content soup of content from all of these different instructors and institutions. And so we want to make sure that we do a good job of developing the right experience. We will develop that with feedback from those audiences.

Obviously, we can't really do that right now when we're pretty close. But as we get post close, getting input and feedback from those audiences as we build out the integration into a single platform is going to be an important part of our plan.

Our next question comes from the Nafeesa Gupta with Bank of America.

Am I audible?

Any so we can hear you.

My question is on -- firstly, in terms of Udemy merger, any potential time lines for it? I know it was mentioned second half of the year, but any updates on that? And is there any regulatory hurdles that you see in that process?

Yes. This is Mike. I can take that. Yes. So no real updates to that yet. We're moving forward with the regulatory filings and shareholder and SEC filings with good pace. Our guidance continues to be the second half. But frankly, there's a wide range of potential outcomes there.

There's a theoretical path to being side than the second half of the year. or it could be later than that. So no real update at this point in terms of timing. I'm sorry, the second half of your question?

The second question I have is on your traffic from AI platforms. You partnered with OpenAI and Gemini and then -- you also talked about MCP based discovery capabilities for 2026. So what kind of traffic are you seeing from these ad platforms? And what do you expect going forward?

At a high level, it's still very early days in terms of the integration with OpenAI and chat GPT. We continue to collaborate with them on building out and improving that experience, but still really early days, so nothing substantive to share at this stage.

I think what you're seeing more broadly is that we get a different type of traffic from the than you would have historically seen from search. And so you see higher intent on traffic coming through from the ALM. And so we're pleased by that. But it's still very early days in terms of the actual integration that we have with ChatGPT .

Got it. And if I may, one last one. On the platform fee, is that like a onetime fee for any new subscription on consumer or enterprise? Or is that like an ongoing monthly fee? Or like how does that work? And could you also remind us what percentage of your consumer is in subscriptions?

Yes. The platform fee, it applies to new revenue in 2026 on related to eligible content. So not all of our content categories as noted earlier, and it effectively is 15% that comes, if you like, off the top before we calculate the revenue share payments to our content partners. So that's how it works, and it's an ongoing fee.

And again, there's no change to consumer pricing or enterprise pricing connected with the platform fee.

Our next question comes from Brian Peterson with Raymond James.

This is Jessica on for Brian. In your commentary on your guidance, if I see consumers agented to grow over 10%. Even you consider potential headwinds you're expecting from the Greece segment, what are the main drivers of the strengths that are expected in consumer?

Like are we considering a subscription continuing a higher mix of the revenue? Or is that you're continuing to bring in more learners or just converting learners are just like a higher price points. So what -- how should we be considering all the factors involved here?

Well, at a high level, I'll start and then Mike can certainly join in our subscriptions and courses piece of our consumer business continues to be the fastest-growing piece of our consumer business. And we expect that to continue to be true in 2026. We are pouring more energy into that, both on the external marketing side, from a paid marketing perspective, but also within the platform.

It is, by far, the best value from a learner perspective. And so it makes the most sense for people to subscribe to Coursera plus either monthly or annually depending on their learning goals. So you should expect that to increase. The other investments that we are making, Mike referenced the fact that we'll continue to invest in sales and marketing and driving that efficiently, which we've done over the course of 2025, and we also anticipate that continuing.

Mike, do you want to add some more color?

No, I think that's right. The only thing I would add is one of the things that gives us confidence here around that rural is the momentum that we had in Q4 around subscription and courses and not just the monthly subscription, but real strength and momentum in our annual subscription.

So that gives the continued fast growth of our annual subscription gives us increasing confidence against the delivery of the number for 2026. So the combination of product-like growth improvements. We've seen an uptick in retention in Q4. So we'll get various signals that give us confidence in the outlook for '26.

It's really great to hear. And a follow-up then also in your enterprise segment, NRR is like inflected back to 93% this quarter. As we're thinking about the rest of this year, while it's crores, but also potentially following the Udemy merger, what are the main priorities you're still considering within the segment?

And how like are you thinking about leading with pad development? Or what other aspects are you considering to be improving the segment and continuing driving its performance.

I'll start with the NRR comment, and hand to Greg for the priorities. So yes, we're pleased to see the uptick from 89% previous quarter to 93%. But overall, we're not pleased with the number. We won't be happy with our number until it's frankly above 100%. So we've got -- we know we have a lot of progress to make there.

A number of the changes that we made operationally in our enterprise business and have been, I think, very positive. We have a relatively new general manager and enterprise be here around 4 months, made a number of significant changes to just how we go to market there that I think are going to bear fruit.

But based by the nature of that business, we would likely see the impact of that. until probably the back half, if not into 2027. But I'm confident that we'll see improvements just operationally there. the uptick for this quarter was really driven by one large expansion at least half of that uptick was one large expansion in our government business in Asia, and that sort of was a fairly needle-moving deal on that front.

And so that was a positive. But we don't as yet see sort of trend of continuous improvement in that number for this year until we start to see the fruits of both product led growth as well as the improvements in the operations that I mentioned earlier.

And then maybe just to speak a little bit to the question that you had, Jessica, about the combination with Udemy and their enterprise business. So their enterprise business is obviously much larger than ours. They are roughly 2/3 enterprise, 1/3 consumer, and we are the inverse of that, 2/3 consumer, 1/3 enterprise. The combination will give us a company with pro forma revenue of $1.5 billion roughly that is roughly 50% consumer, 50% enterprise.

They are, frankly, ahead of us on a number of things with enterprise, not just from a revenue perspective, but also from a product perspective. That's one of the things that's really appealing and interesting about the combination in the same way that we are ahead of them in many ways on the consumer side of our offering from a product perspective, not just a revenue perspective.

And so the opportunity to bring all of that under 1 roof and 1 platform and offer that to both consumer and enterprise customers is really appealing and to do that in a way that helps on the consumer side. Do an increasingly better job of delivering -- helping learners find the right skills that they need to grow their careers enabling them to more easily learn and master those skills and demonstrate through verified assessment of those skills, that ability to potential employers.

On the enterprise side, the ability to do all of those same things from an upskilling and reskilling perspective, but also to do that within the flow of work through MCP integrations and really deep integrations directly into enterprise systems. And so we are very excited about the opportunity that this combination creates to do all of that

We will take our final question from Devin Au with KeyBanc.

And congrats on a strong quarter. When I look at the first quarter guidance at the midpoint of the revenue guide, I think it's contemplating sort of a greater decline quarter-over-quarter in growth than prior years. I know you've kind of called out around 100 bps of headwind from degrees, but is there any other kind of factors that's worth highlighting and driving the larger sequential decline?

I would just point to -- on the enterprise side, we continue to have good momentum with Coursera for campus. The largest part of that business, of course, is Coursera business. And we're just taking a cautious outlook there for the remainder of the year. We'll see what happens in the year.

There's -- the macroeconomic environment remains uncertain as it did through 2025. So I would just say that we're taking a cautious view on how that -- how the year plays out on the Coursera business, just with the lack of visibility that we have on how that plays out over the next 4 quarters. That would be the only real thing I would point to.

The one other thing I might just build off Mike's response is, as we see more of our consumer revenue come from Coursera plus subscriptions. And as we see increasing success in Coursera Plus annual subscriptions, the revenue recognition of that plays out, obviously, over a far longer time horizon than a normal a la carte course purchase or Cs monthly.

And so that's also a factor as you think about what happens in Q1 specifically.

Got it. I appreciate the context. And just a quick follow-up question. Looking at the kind of net new enterprise accounts that you've added in the quarter, kind of a step down in terms of net add. If you look at the past couple of quarters or a few years, can you maybe unpack that a little bit?

Have you seen any kind of deals kind of pushed out in 2016 that would explain that? Just any color would be helpful.

Well, every quarter, you also have deals that push out that you don't want to. I wouldn't say it was necessarily any worse in this quarter on that particular dimension than it is on others. I think I would just echo sort of what Mike said a little bit earlier about some of the macro trends that we're seeing play out in the C4B segment. C4C, we've had some good strength in that. We continue to be uniquely positioned to serve that. particular segment really well, but it's a smaller piece of our enterprise business.

And then C4G has natural sort of lumpiness in that particular part of the business just because you have typically annual government contracts versus multiyear deals. And so you see that kind of move up and down, and we've seen that historically as well.

That wraps today's Q&A session. A replay of this webcast will be available shortly on our Investor Relations website. We appreciate you joining us.

This concludes today's conference call. You may now disconnect.

Ladies and gentlemen, thank you for standing by, and welcome to today's conference call. [Operator Instructions]. And this call is being recorded. [Operator Instructions]

I would now like to turn the call over to Cam Carey, Vice President of Investor Relations. Mr. Carey, you may begin.

Good morning. Thank you for joining us to discuss Coursera's announced combination with Udemy. You can find more information about the transaction, including our press release and investor presentation on our microsite at courseraandudemy.com, as well as on our Investor Relations website at investor.coursera.com.

Joining me today are Greg Hart, CEO of Coursera; Hugo Sarrazin, CEO of Udemy; and Mike Foley, CFO of Coursera. We have allotted 30 minutes for today's call to walk through the transaction details followed by a brief Q&A session.

Before we begin, I'll remind you that today's presentation includes both GAAP and non-GAAP financial measures. A reconciliation can be found in the appendix. The discussion may also contain forward-looking statements regarding the proposed transaction, including expected timing, benefits and financial impact. Such statements are based on current expectations and assumptions that are subject to a number of risks and uncertainties. Actual results could differ materially. Please refer to the safe harbor language in our press release and both companies' SEC filings for a full discussion. We undertake no obligation to update these statements.

With that, Greg, over to you.

Thank you, Cam, and good morning, everyone. This is an exciting day. Coursera has entered into a definitive agreement to combine with Udemy. We are bringing together our global learning ecosystems to create a leading technology platform and redefine skills discovery, development and mastery for learners and organizations at scale.

This year, I focused on our need to build durable capabilities that drive long-term growth. Today, I'll walk you through how this combination accelerates that vision. This is a defining moment for Coursera and Udemy and a transformative step in how we ensure our millions of learners, thousands of enterprise customers and global community of expert instructors have a platform that keeps pace with technology acceleration.

To understand why this combination is necessary now, we must first look at the reality our learners and customers face. The World Economic Forum estimates that 39% of key skills will change in the next 5 years. And our own data shows that 86% of learners come to Coursera specifically to transform their careers. Learners need guidance on the skills they need to advance their career. Organizations need talent and tools that adapt. Both need a platform as agile as the rapidly evolving labor market.

This combination unites consumer and enterprise leaders under one roof, creating a platform anchored by 5 core pillars: greater value, impact and choice; leading platform capabilities, accelerated AI native innovation; enhanced global reach and market opportunities; and a stronger long-term financial profile.

Let's start with the first pillar, greater value, impact and choice. Combining Coursera and Udemy pairs the speed of agility with the rigor of verification. Individually, both are success stories that have benefited more than 270 million learners around the world. Together, we unite 2 proven operating teams with deep expertise and complementary strengths across the consumer and enterprise segments.

Coursera is the world's most trusted ecosystem for verified learning. We combine incredible technology with a managed marketplace of branded credentials and curated career pathways taught by more than 375 of the world's top universities and industry leaders. Udemy has built a large enterprise business powered by the world's most dynamic marketplace for practical skills development. Their content engine powered by more than 85,000 expert instructors captures trends at the speed of innovation. United, we can execute at scale in each of our core segments and be in a stronger position to capture the fast-evolving global skilling and talent transformation opportunity.

For learners, we can meet their lifelong learning needs, whether it's a just-in-time answer to a coding problem for today or a professional certificate to pivot and advance their career tomorrow. For organizations, we can help drive business outcomes that deliver a higher ROI by offering seamless skilling solutions and deeper, more integrated product experiences that serve the entire workforce. Together, we'll build a unified system of record that allows leaders to benchmark, develop and track the skills of their talent across every stage of their career.

Second, this combination creates a leading learning platform with powerful capabilities. We are uniting Udemy's dynamic AI-powered marketplace and skills acceleration platform with Coursera's world-class university and industry brands, creating a comprehensive ecosystem to deliver greater value and choice across a broad spectrum of learning needs, technical and soft skills, flexible modalities and job-relevant credentials spanning all stages of career progression.

This is not about aggregating content. It is about equipping the world's best faculty, industry leaders and global subject matter experts under one platform and equipping this powerful community with AI-enhanced tools, data-driven insights and massively expanded distribution and reach. This allows us to deliver incredible new learning experiences from AI role play simulations to personalized coaching and career guidance at unprecedented speed and scale.

Third, we can accelerate innovation. As technology reshapes every industry, speed matters more than ever before. Until now, our companies have been building parallel tracks, investing separately in duplicative features and tools like AI tutors, authoring, personalization and assessments. We have made progress, but we can and must move faster. Sharing product and data investments accelerates our highly aligned road map to become a truly AI-powered skills acceleration platform for the global workforce.

We will implement the best features from both platforms, such as Coursera Coach and Udemy AI-powered Role Play simulation technology and MCP server. We will join engineering talent to build AI native experiences that are more personalized, proactive and integrated directly into the flow of work. And we will leverage insights from a combined global learner base to deliver and measure verified skills from discovery to development and mastery, improving both career and business outcomes. We are no longer just maintaining pace with technology. We are innovating on behalf of our learners, customers and instructors to ensure they stay ahead of it.

Fourth, this combination delivers enhanced global reach across our platform. Together, we significantly improve our ability to attract, retain and serve both consumer and enterprise learners. Coursera's Consumer segment is vibrant and growing at scale. In Q3, we added 7.7 million new registered learners, our highest quarterly addition since 2020, bringing our total learner base to 191 million. Recent growth acceleration has been driven by new marketing, localization and subscription capabilities with Coursera Plus, a strength we believe can bolster Udemy's consumer subscription goals.

Conversely, Udemy brings deep enterprise expertise. Udemy has more than 17,000 enterprise customers, which spans small businesses to global corporations in nearly every sector and in more than 150 countries. Udemy Business ended Q3 with more than $525 million of annual recurring revenue, and the company generates more than 60% of its revenue outside North America, offering greater global diversification in geographies that are highly complementary to Coursera's business.

This also unlocks a powerful network effect for our expert instructors. We are taking Coursera's world-class offerings and putting them on a vastly expanded stage with Udemy's enterprise scale, while giving Udemy's expert instructors access to Coursera's large and growing global consumer learner base.

Finally, this transaction creates a stronger financial profile. Together, our scale allows us to make the right long-term decisions on behalf of our learners, customers, shareholders and other stakeholders. It also accelerates our strong track record of balancing growth and increased financial leverage in our operating model. Our combined pro forma annual revenue exceeds $1.5 billion over the last 12 months, and this scale allows us to generate meaningful efficiencies, which Mike will detail shortly.

Critically, these efficiencies are not just about savings, they're about sharpening our focus and strengthening our capacity for sustained investment in AI-driven innovation and product-led growth. We are building a business that is more predictable, more profitable and more capable of capturing an important market opportunity.

Before I hand it over, I want to acknowledge the team. I have long admired Udemy. As I look closer at their business as part of this process, I saw a culture that mirrors our own. They are builders, they are mission-driven, and they are motivated by the outcomes and impact we deliver.

While our approaches may differ, our vision is identical. We transform lives through learning. Together, we will ensure the world's learners gain the essential skills to advance their careers while empowering the global workforce to excel in a skills first future.

With that, I will turn the call over to Hugo.

Thank you, Greg, and hello, everyone. This is a defining moment for Udemy and a pivotal moment for our industry. Greg has already outlined the strategic rationale. I would like to share my excitement and strong conviction that this combination is the right step forward for both companies. When you combine Udemy's enterprise AI-powered reskilling platform and dynamic marketplace with Coursera's academic rigor, you create a platform that adapts to industry needs in real time with valuable credentials.

For the past year, we have been purposeful about our transformation, evolving beyond a marketplace into an AI-powered skill acceleration platform. The solution we are creating helps learner master and validate the skills they need to be successful in their careers while helping enterprise customers bridge skills gap to achieve desired business outcome. This comprehensive approach positions the combined company to successfully become a true AI-powered platform.

We recognize that organizations need more than content access. They need a technology solution for skills, mastery and validation at scale. That's why this combination with Coursera is so compelling. This deal is about accelerating innovation. By combining our data, our talent and our resources, we can execute an AI-powered product road map far faster than either business could accomplish alone. We will leverage our insights to deliver personalized adaptive learning experiences that support career advancement for individuals and integrate directly into the flow of work for enterprise customers. We are grateful to all our customers for their ongoing trust and partnership.

For our instructors who are at the heart of everything we do at Udemy, this creates significant opportunity to access next-generation content creation tools and a vastly expanded scale with Coursera's 191 million learners, allowing them to amplify their reach exponentially and monetize their expertise like never before. For our shareholders, this all-stock transaction offers the opportunity to participate in the significant upside of creating an enhanced platform.

I also want to address our employees. This combination is a testament to the incredible marketplace and enterprise business you have built. While our businesses are complementary, what truly unites us is our shared mission. I'm incredibly excited about what we can achieve together.

With that, I will turn the call over to Mike.

Thanks, Hugo. My focus today will be on the financial framework of the transaction, the significant value it unlocks and the timeline to completion. First, the pro forma profile. This combination creates a company with significantly enhanced scale. Together, we will have an annual revenue run rate exceeding $1.5 billion. Scale is critical, creating a more balanced globally diversified revenue mix while opening new growth opportunities.

Specifically, this unlocks 3 primary growth levers. One, a comprehensive product portfolio that drives higher engagement, retention and lifetime value for learners and customers. Two, increased consumer recurring revenue. We intend to support Udemy's subscription goals by leveraging our marketing capabilities and expertise with Coursera Plus, which has grown to encompass more than half of our Consumer segment revenue. Three, enterprise expansion, utilizing Udemy's go-to-market scale, partnership network and deep customer relationships with over 17,000 organizations. Most importantly, we're combining 2 companies with strong and proven fundamentals. Each has demonstrated meaningful progress in expanding operating leverage and generating cash flow in recent years.

On a trailing 12-month pro forma basis, the combined company generated gross margin of just over 60% and more than $150 million of adjusted EBITDA, which represents a 10% adjusted EBITDA margin at the outset. Crucially, that margin is before synergies. We have identified $115 million of annualized run rate cost synergies, which we expect to fully realize within 24 months of closing. These will come primarily from operational efficiencies, including optimized go-to-market motions and streamline G&A expenses.

As Greg mentioned, this also accelerates our innovation capacity. By eliminating duplicative technology stacks, we can focus our combined resources on delivering our AI native product road map to our customers at a much faster pace.

Regarding the transaction structure, this is an all-stock transaction. Udemy stockholders will receive 0.8 shares of Coursera common stock for each share of Udemy common stock. Upon closing, existing Coursera shareholders are expected to own approximately 59% of the combined company, and Udemy shareholders are expected to own approximately 41% on a fully diluted basis.

On capital allocation, both companies enter this transaction with a healthy balance sheet, and that strength only grows through this combination. On a pro forma basis, the combined company holds nearly $1.2 billion in cash as of the third quarter 2025. This strength gives us the capacity to invest in organic growth as well as the optionality to explore additional levers for shareholder returns. To that end, Coursera anticipates executing a sizable share repurchase program following the close.

Finally, the time line. The transaction has been unanimously approved by both Boards. Subject to shareholder and regulatory approvals, we expect to close by the second half of 2026. We look forward to updating you as we move through the process.

Greg, back to you for closing comments.

Thanks, Mike. Throughout this year, we laid the groundwork to build new capabilities that start to reimagine our platform experience focused on helping learners advance their careers. This combination accelerates that vision by uniting our global ecosystems to build a leading technology platform for skills, powered by AI native experiences and world-class instructors.

On day 1 post closing, we will be stronger than either company is today with shared assets that deliver agility and verification, academic rigor and job relevance, practical skills and trusted credentials. However, this is ultimately about our future velocity. With AI, speed disproportionately matters. By combining our product talent and pooling our data, we can innovate on behalf of our learners and customers faster than ever before while equipping our expert instructors with next-generation tools to deliver more personalized learning at unprecedented speed and scale.

Our goal is simple: to ensure that human potential has a platform to keep pace with the technology that is rapidly changing how we live, learn and work. The market opportunity is significant, and our path is clear. We are creating a company that delivers more value to learners and greater impact for customers and the foundation for delivering stronger returns for our business and shareholders.

I am excited for what we will build together. Now let's open the call for questions. Thank you.

[Operator Instructions] Our first question will come from Stephen Sheldon with William Blair.

At a high level, I guess, can you just talk some about how you envision the product offering and go-to-market to look in enterprise? I'd assume you'd be doing that under one motion brand, et cetera, at some point going forward.

And then on the consumer side, I guess, how could this impact -- I think it was mentioned about the ability to push subscription packaging even more. I guess, can you maybe talk about that a little bit more, how you envision that to look with maybe a combined subscription offering to consumers need?

Happy to start, Stephen. A few thoughts. First, on the enterprise side. Obviously, we've long been admirers of Udemy's enterprise strength. The businesses are mirror images of one another in many ways, 2/3 enterprise on their side, 2/3 consumer on our side. We believe that there's a real opportunity to leverage a single platform in all of the content and capabilities, so AI-driven product innovation, integrations with LMSs, LXPs, MCP to deliver a far better set of outcomes for enterprise customers in a single go-to-market motion. The brands will unite under one brand, the Coursera brand. Obviously, we'll do that in a thoughtful way over time with phases to make sure that we're bringing both our instructors and our customers along as we do that. But obviously, the benefit of that is we don't dilute our efforts across multiple different platforms or brands.

On the consumer side, obviously, we've had strength on the subscription side of our business with it representing more than 50% of our consumer revenue, which we talked about on our Q3 call. And that's something that Udemy has started to move in that direction as well. I believe there is a real opportunity to continue to innovate on the product side for consumer, both in terms of the feature set that we offer with things like Coach, Course Builder, Role Play, et cetera, combining the best of both technology stacks and how we bring that to market. How we market that, how we package it, how we promote it, et cetera. And so a lot of work to do, obviously, on all of that, but I believe it's going to be really positive on both sides.

Your next question will come from Josh Baer with Morgan Stanley.

Just wondering how you're thinking about Udemy's content creator reaction. Like obviously, on the one hand, there's a tremendous opportunity to sell into Coursera's registered learner base. On the other hand, a lot of uncertainty on what types of content are pushed or highlighted and sold. So just hoping you could shine some light on the expected reaction from that instructor base?

Well, maybe I'll start and then pass it to Hugo, who obviously is going to have a much better sense of that than I will, given his far greater familiarity with their instructor base. But at a high level, I think that the combination does exactly what you said, Josh. It first gives exposure to an audience that is now going to be 270-plus million combined individual learners across Coursera and Udemy. And so all of the instructors will have access to that massive global learner base in addition to nearly 20,000 enterprise customers. And so we think that's going to be really compelling.

We intend to continue to invest in platform tools that make it easier for instructors, whether they're instructors coming from Udemy's dynamic marketplace or coming from our university partners or industry partners to create content, optimize content, update content and ensure that it is very aligned in giving the skills that learners need to demonstrate in today's workforce.

But I'll pass it over to Hugo to expand on their content instructor marketplace and the potential reaction from them.

Yes. Thank you, Greg. As he mentioned, we're going to maintain both model, they're complementary. And our instructors have been excited about the distribution that we provide. We're just expanding distribution. So I think on the overall, they're going to be excited about this opportunity.

Great. And do you have a sense of how much your respective learner bases are mutual or overlapping?

We do not have a sense of that. We haven't looked at that. I'm sure there is some level of overlap, but I think there's also an opportunity to continue to expand the size of that learner base with 270 million plus individual consumers around the world. It's a sizable audience today, but it's still a relatively small fraction of the working population. And given the expanded pace of change, there is a real need for the skills that this combination will be able to deliver more effectively.

Your next question will come from Bryan Smilek with JPMorgan.

Congrats on the deal today. I guess, could we just get a better understanding of where the combined entity's content focus will be? Obviously, 2 different content strategies, really Coursera leaning in towards more branded credentials, co-branded with partners as well. So just curious how that will evolve over the combined entity as you bring in more of the Udemy marketplace.

And then conversely as well, can you just share a bit more color on any potential regulatory pushback. Obviously, the transaction expected to close in the back half of '26. But just curious how you view this from a regulatory perspective.

On the regulatory perspective, I'll start with that. Obviously, we just announced this. We just signed this and so a lot to do between now and getting to close. We are part of a massive market. And so the education space spans everything from K-12 to university to postgraduate, workforce training. It is a huge market, and it's served by both online players like Coursera and Udemy and obviously, physical institutions throughout most of history. And so a massive, massive market. We believe that our combination delivers better value to every single element of that value chain. And so better for learners by a combination that allows us to invest more in delivering better skills to them more effectively, better for our content creators, better for our enterprise customers and better for shareholders. So that's our perspective on it. Obviously, we'll need to go through the process to understand what questions we receive, but hopefully, that will be a smooth process.

On the content side and how our approach might evolve. I would say that while historically, Coursera and Udemy have taken different approaches to the content, there is a lot of commonality in some of the areas of focus and areas of interest from learners across the 2 companies. And so we believe that's a strength. We also believe that the different nature of the content creators, the instructors is also a strength. And so we want to absolutely keep both elements. It's not a matter of favoring one over the other. They are complementary and they bring different skills and assets.

And so we'll work through as a combined team, what exactly that will look like over time. But our belief is that this creates a lot of shared value for learners and for instructors and the opportunity for us to innovate on that content and do a better job of helping all of our content creators, create skill-based and outcome-focused learning experiences.

We'll take our final question from the line of Ryan MacDonald with Needham.

Congrats on the announced transaction. Greg, you talked about earlier about the opportunity that Udemy can potentially open up for Coursera outside the U.S. Can you just talk about maybe what you've seen thus far, whether it's from a content perspective, a geographic perspective in terms of reach about where you see sort of the most near-term post transaction close opportunities for Coursera to sort of benefit from some of the scale outside the U.S. Udemy aspects?

Sure. A couple of thoughts. And then maybe I'll pass it to Mike to add his perspective. At a high level, the companies are incredibly complementary in terms of not just the fact that our business historically at Coursera has been more consumer centric and Udemy's business has been more enterprise-centric, but also from a geographic perspective, our business is leaned a bit more towards North America, and Udemy's business has leaned a bit more towards international. We think that creates some really interesting opportunities for us to take the things that have worked in each of our respective geographies and segments and bring that to the other side of the audience, if you will.

So we haven't gotten to the point of targeting specific countries or markets as a result of this combination. That will be something, obviously, that we will talk about as we go through integration planning. But we think there's a real opportunity post close for us to do a better job of serving learners and companies across all of those markets.

Mike, anything that you'd like to add?

Yes, I would just echo that, and looking at the pro forma combined business, it is incredibly balanced between consumer and enterprise geographically. And while in our synergies that we've outlined here, we have not contemplated revenue synergies that we do believe that there's significant potential for revenue synergies in the combination to ensure that we're conservative and have high confidence in both the amount and timing of synergies. We're focused on cost synergies. But again, I do believe that there is that potential for revenue synergies between the combination over time.

All right. That wraps today's Q&A session. Thank you all for joining. A replay will be available shortly. Thank you.

Good afternoon, everyone. My name is Ryan MacDonald. I lead Needham's EdTech research efforts here at the firm. Thank you all for joining us today for this virtual fireside chat between myself and Coursera's CEO, Greg Hart. We've got about 40 minutes to go through a wide variety of topics around the business and outlook and product strategy and all the good stuff. And so we'll be jumping into that.

But if you do have questions for Greg, you can send me an e-mail Ryan -- [email protected], and we'll save a few minutes at the end to get those asked and answered. But with that, we'll jump right in.

And Greg, thank you so much for joining us today.

Thank you very much, Ryan. It's a pleasure to be here. Excited for the conversation.

Absolutely, me as well. So since stepping into the role in this past February, why don't you sort of give investors sort of an overview of sort of what surprised you most about Coursera and the education industry more broadly? And are there certain aspects that give you reinforcement to your conviction and the opportunity when you joined the company?

Great question. Maybe I'll start just by talking a little bit about what attracted me to Coursera because I think it's relevant to your question. And part of it is that I saw a lot of -- even though I never worked in EdTech, I saw a lot of similarities between the experience that I had and the business challenges that Coursera was facing and the opportunity to do a better job of serving the customer through a lot of techniques and experience that I had exposure to. So my background is rooted in building and scaling technology-driven solutions for customer problems that serve tens, if not hundreds of millions of customers depending on the product and the prior point in my career. And so while I think higher ed is a new sector, I think a lot of the customer problems that we are trying to solve at Coursera have a lot of similarities to things I've done in the past in my time at Amazon.

And so the approach that we took at Amazon was to try and always focus on the customer and famously work backwards from that to try and figure out a better way to deliver a service or a solution for that customer through technology. And I think that same principle really applies here at Coursera. And so our customers, our learners are seeking really flexible, trusted and job-relevant education. And they are doing that to drive growth in their career. 86% of the learners who come to Coursera are coming to advance their career.

And I think we have an opportunity to help them do a better job of finding the right content to help them accomplish their career goals and then also helping them go through that experience in a way that delivers them a tangible skill they can take into the workforce.

And then when I think about our other customer sets, both our university and industry content creator partners, they obviously are the ones who enable that learning for our end consumers and for our enterprise partners for that matter as well. So they share that same goal, and they're all using our platform to take their world-class content to market, if you will, and deliver personalized learning at a global scale. And I think that there's a huge opportunity to continue to leverage AI to transform that experience. So in the same way that AI is transforming jobs far faster than educational systems can adapt.

It also provides an opportunity and a tool that we can use to evolve our learning experience and everything that we do to help our learners achieve those career outcomes through things like Coursera Coach, our AI-driven tutor, through Course Builder, which helps our university and industry partners create content much more quickly and in a way that's much more aligned with the outcomes that our learners want to achieve as well. And so I think there's a real opportunity to continue to take skills that I might have developed and applied in the past at Amazon and apply them within the educational technology space.

And then finally, I just think that Coursera is incredibly well positioned to continue to transform the online education space. So we have been a pioneer in that space since our very beginning with Andrew and Daphne co-founding the company out of the MOOC movement that they were pioneers in themselves. And now we've seen that grow to 191 million registered learners around the world, fantastic content and AI-enabled platform. And then, of course, a very healthy balance sheet. All of those are incredible assets that I think we can use to continue to evolve our leadership position within the space.

Yes. That's well said. I mean, look, learning is lifelong. And the great thing about education is content is never static. As innovation comes, you need to require new content for that. And clearly, the business is in a really great position to sort of help foster that continued learning innovation.

Maybe sticking on sort of, let's call it, management changes. The company obviously is currently going through a CFO change, and Mike Foley was announced last week as the interim CFO. Can you just talk about the decision to bring in an interim CFO from, I guess, you want to call outside the day-to-day operations of the company? And is Mike being considered for the permanent role? And maybe just provide a bit of an update on the search process or sort of the rationale around that.

Sure. So obviously, as you and your listeners all know, Ken stepped down as our CFO at the end of October after 5.5 years with Coursera very grateful for Ken's help as I got to know the company and the space. And with that transition, obviously, the CFO role is such a critical one for us as a public company. And I want to make sure that we are approaching that with the right mix of urgency and discipline. And so I want to make sure that we have the time to take a very thoughtful approach to that search to find the right candidate.

In the meantime, obviously, we announced Mike Foley as our interim CFO. One of the reasons for that is, number one, Mike is a phenomenal leader. He has over 2 decades of finance and operational leadership in global tech and in media. He has a proven track record of scaling companies through rapid growth and transformation. And his prior roles include a really interesting mix of different finance and operational experience at various different companies that I think can be very helpful for us in this interim period. And so I believe that he can help us continue to make progress. Like we can't afford to and nor certainly would I settle for pausing progress in critical areas while we search for a full-time CFO. And so he can help us keep advancing the ball forward in the meantime while we continue with the search. That search remains underway.

I am very focused on candidates with public company CFO experience and strong operational leadership. And as with the other roles that I brought into my leadership team this year, so Chief Product Officer, Chief Data Officer, Anthony Salcito, who we just announced as our enterprise GM, I am extremely interested in finding leaders that can round out and elevate the skill set of our entire executive team. And so that's the approach that we're taking. I'm confident that we'll find the right leader who's motivated by our mission, but also ready to help build on the momentum we've demonstrated so far this year.

That's great. That's great. Greg, in your tenure thus far as CEO, you've made a number of adjustments across the business. Can you talk about what areas you're emphasizing in terms of investment heading into '26? And how do you think about the right balance of sort of growth versus margin expansion for the business moving forward?

Well, first of all, I've been really pleased with the fact that we are starting to execute with both renewed focus and at a faster pace. And so I joined in February, as you mentioned, we provided our first guide for the full year 2026 following our Q1 results. And at that time, we were guiding on the revenue side to $720 million to $730 million, so 4% year-over-year growth at the midpoint. And in keeping with the annual EBITDA margin percentage guidance that the company has provided in years past, we provided an annual EBITDA margin of 7% on that call in April.

And since then, we've had 2 -- so we grew in Q1 at 6% year-over-year, which was basically the same growth rate that we had grown at in Q4 of last year. And then in Q2, we grew at a 10% rate, and we increased our guide on the EBITDA side. We also increased our guide on the revenue side. And so did the same again in Q3. So grew 10% year-over-year in Q3. So 2 sequential quarters of 10% year-over-year growth. So nice to see that improve from the 6% that we had shown in Q4 and Q1. And then on the EBITDA margin side, we're now guiding to annual EBITDA margin of 8%. And then on the top line, revenue of $750 million to $754 million, so a growth rate of 8% to 9% versus the 4%. So we've expanded or increased both the year-over-year revenue growth rate and the EBITDA margin.

And so I'm very, very pleased with those early signs of the impact of that renewed focus and a little bit faster pace of growth. I believe that the framework that the team had used historically is a great framework. I really like that approach of having an annual EBITDA margin guide because it allows you to make investments on a longer time horizon basis versus having to manage to a given quarter in the same way. And I think that drives the right longer-term outcomes for our product and for our business and therefore, for our shareholders as well.

A few key growth areas that I've been very focused on to drive customer value. First and foremost, more rapid product innovation. We need to continue to accelerate our development cycles to leverage AI and data to improve the learner experience and continuously enhance our capabilities across all areas of the platform. Second, a faster, more agile content engine. So content is the fuel of our business. We need to keep expanding our catalog of branded career-focused content. We now have more than 12,000 courses that increased at 44% year-over-year, which is our fastest rate of increase in content in 5 years.

And then also continue to leverage our own IP. So we continue to create courses to fill in gaps in our platform and in our catalog but also to use them as test bets for how to continue to improve the learning experience. And so continuing to double down on our content engine overall, so making it easier for our content partners to produce content, easier for us to ingest that, easier for us to optimize that in partnership with them and then doing all of that in a very data-driven way.

And then finally, continuing to improve our go-to-market and our funnel. So improving search, discovery, merchandising while also optimizing our enterprise channels and continuing to recognize that on a regional basis, we have the ability to tailor content in a way that really works well for our learners, whether they're consumer learners or enterprise learners in a given region. And so I would say that generally, we're going to continue to focus on driving growth while continuing to deliver on our track record of improving profitability on an EBITDA margin basis annually year-over-year.

Obviously, our Coursera produced is one of the levers that we have because there's favorable economics. And so there's a lot of benefits for us from a consumer and enterprise perspective as well as a margin benefit. And then investing in multiple different opportunities to create and deliver more value within our product that really drive better engagement and better -- therefore, better conversion and retention of our learners throughout the funnel.

And so I would say that the first priority remains continuing to focus on driving growth because I believe that we are in the very early stages of a massive, massive opportunity at Coursera. There's never been a larger demand for learning than what AI is driving across the world right now. And so we're going to continue to focus on how do we invest to drive maximum long-term shareholder value through reigniting growth.

Yes. No, there's plenty of great initiatives there both on the product side and the go-to-market side. Maybe just a question, I guess, on strength of the macro. I mean, are you seeing right now within your base of consumer customers, in particular, like a strength in the consumer or sort of, let's call it, an ability of the end market to be able to consume the content from an affordability perspective? Are you seeing any pressures on the consumer as you think about how these growth drivers turn or translate to revenue?

Well, on the consumer side, I've been really pleased with the growth that we've shown in the consumer side, 2 really strong quarters of growth from consumer in Q2 and Q3. So we grew consumer at 10% year-over-year in Q2 and then at 13% year-over-year in Q3. And so really pleased with that acceleration versus Q1 and Q4, which were much, much slower from a growth perspective. I would say that, number one, we've done a couple of things to continue to evolve our approach to the consumer business and really be much more focused on those funnel economics. And so we've made a lot of good progress over the last couple of years on sort of top of funnel and really using marketing as a lever to drive growth for the business. I think we have an equal, if not larger opportunity to do the same on conversion retention and then ARPU.

We've also evolved our pricing. And so as I think we talked about a little bit on the Q3 call, we rolled out our freemium model over the course of Q3. So all learners have access to the first module for free. And then if they want to continue with the course, they need to become a paid learner. And so that, I think, is a good evolution. And then we also, at the same time, made pricing changes on a global basis in many markets to reduce the price of our offering because -- and we talked a little bit about this on the Q3 call as well, because it really was just not priced in line with purchasing power in a lot of countries around the world. So we lowered the price of Coursera Plus monthly and annual in 60-odd different companies or countries rather around the world. And we've been really pleased with the response that we've seen to that overall.

I think there's still a lot of work that we need to do to continue to improve the product experience. But I think there's an immense appetite from consumers. And you see that reflected in the fact that in Q3, we had 7.7 million new registered learners in the quarter, which is our highest number since, I think, Q2 or Q3 of 2020, the height of the pandemic. And so I definitely think there's a lot of appetite from consumers for online education and people are really recognizing the disruption that AI is causing and their need to really become sort of continuous lifelong learners.

Yes, makes sense. Yes. And maybe on that sense, so let's shift the conversation to AI a little bit. As -- from our work as we've kind of evaluated the market and sort of potentially this obviously major change that's being created by AI, there seems to be maybe 2 schools of thought on AI. In one scenario, enterprise organizations adopt AI, lay off staff based on productivity gains and that shrinks the overall workforce and it forces people to reskill themselves in an AI world.

The second scenario, enterprise organizations, again, still adopt AI, but more so instead of layoffs, slow the pace of hiring, invest more in their workforce to make them more productive with AI in which the next scenario, enterprise organizations invest more on AI learning content themselves for their employees. I'm curious, what camp do you fall in, in terms of, I guess, in those 2 scenarios? What do you think is more likely? And which scenario in your view, benefits Coursera the most over the next several years?

Well, I mean, I think, first of all, like the history of human progress is sort of irrevocably linked to the history of technological progress. And every single technology shift over time has historically changed the roles that are required. It doesn't mean that there are fewer jobs than there were prior to that. It just means the jobs that are required are different. So you saw that like in the industrial revolution, you saw that more recently as computers became a widespread thing in the '80s across all kinds of businesses. It simply changed the types of roles and the types of skills, therefore, that are required. I think that is playing out now with AI at a faster pace than any of those prior revolutions happened.

And the way that AI is really transforming roles is really unprecedented. I mean the World Economic Forum in their Future of Jobs report from earlier this year, they predicted that if the world were 100 people, if the global workforce were 100 people, 59 of them would need retraining by 2030. So that is a huge, huge percentage of the global population that needs to be retrained. And my personal opinion is that, that number is going to go up, not down over time just because of the pace of change that AI is creating.

And so that creates huge challenges for all parts of the system, right? It's -- AI is transforming what skills you need for the roles that are out there in the workforce faster than the existing educational systems can adapt. Employers are struggling to find the right AI-ready talent and to upskill their existing workforces. And then learners are overwhelmed by the pace of change and unsure where to begin and how to go about gaining the knowledge they need to be successful. So I think that creates incredible opportunity for Coursera.

And the real opportunity is rooted in delivering solutions that bridge that skill and educational gap. And I think that scale, which obviously we have, with the right technological platform, which we have, and then with the right ecosystem and the right content to reinvent how education can be delivered and how learning can be delivered. And I think that the mixture that we have with world-class content, like in a world where AI makes it easier than ever before to create content, the value of branded trusted content really elevates in my opinion. And so obviously, our relationships with some of the preeminent universities in the world, along with some of the preeminent industry partners who are creating content is a huge asset for us.

And then we need to keep inventing and investing to invent on the product platform to continue to enable us to take advantage of AI as a tool to deliver far better learning experiences that are more engaging, more interactive and deliver better outcomes for those learners. And ideally, that lead to verified skills that they can demonstrate to the workforce that they have. And I think we are uniquely positioned to execute on all that. So to me, this current moment is an incredibly exciting time for our company. And I think we're in the very early stages of how this is playing out.

And so those are a few of the thoughts I have. But my primary thought is we don't all yet fully understand or grock the extent of this transformation that we are going through. We are in such the early innings. I think this is going to be the most disruptive and most transformational technological change that the world has ever seen. Obviously, it builds on top of other large changes, mobile, the Internet, et cetera but it, I think, is going to eclipse all of those, both from a pace at which this happens and from an impact at which it happens. And I think we are looking to see how can we help people navigate through those changes.

Yes. That makes complete sense. One of our other analysts that I am here today or even earlier today, just was hosting a human capital management insights call with one of the largest survey collectors and it really speaks to across the enterprise, mid-market SMB that L&D remains a top investment priority for HR departments at global organizations. And I think what you just said there really speaks to why that is the case. So very much there's a huge opportunity here.

Moving into sort of recent announcements. You recently announced a partnership with OpenAI. Can you just talk and provide a bit more details about the relationship? Is this an exclusive partnership for Coursera? Obviously, ChatGPT has quite the dominant lead amongst consumers relative to its peers at the moment. But I think that gap is going to continue to narrow over the next couple of years. And just broadly, how you think about the LLM channel as an overall driver of traffic to Coursera sort of moving forward?

Yes. We're incredibly excited about the partnership and what it can mean for Coursera. It is very much in its early days, obviously. So it's not exclusive. We are the sole online learning partner that they included in their initial launch of the 7 first skills or apps that they integrated with their ChatGPT app API. They reached out to us. And I think they did in part because they recognized that, number one, learning is one of the most common use cases on ChatGPT. I think it's the #4 most common topic that people are asking about. And two, I think they recognize the value of our content, and they see that in some of the citations that ChatGPT will present.

And so then I would say that they wanted to find partners who could move quickly. And I think as soon as we started engaging with them, they were really impressed with the pace at which we moved. And I think also with the way that we provided them input and feedback on what they were trying to accomplish. And it's really interesting because it's the early days of this integration that we have with them. And I think the experience has a lot of ways in which it will continue to improve, and many of them are actually like exactly analogous to when I led Alexa.

And so when we launched Alexa, we very quickly announced the Alexa Skills Kit, which was an API that enabled any third-party developer to create a skill for Alexa and app. And when we first launched those and rolled them out, they were relatively sort of on rails, and they were a bit clunky, to be honest. And you'd have to say, like Alexa ask Uber to get me a cab. Alexa ask Spotify to play X. And I would say that, that broadly is where this first instantiation with OpenAI is as well. It's still relatively an on-rails experience. And I think where it will become even more magical over time is when -- and I know that they will solve this, given how quickly they develop things, it becomes even more contextual and leverages ChatGPT's long-standing interaction with a user to really understand when they can recommend the right content. And obviously, we want that to continue to be Coursera. We continue to be the only online educational partner. But I expect that they'll keep doing that over time across all of their app ecosystem partners.

I think -- we also -- we were founded obviously, by 2 AI experts, Andrew Ng and Daphne Koller were both AI professors at Stanford. And so I think that for us, because we've invested so much in AI from a product perspective from very quickly after the launch of ChatGPT with things like Coursera Coach, which I mentioned earlier, Course Builder, which is our AI-driven sort of instructional design tool that content creators can use to create better courses on Coursera much more readily, AI translations, AI dubbing, academic integrity features. We are going to keep investing on our ends to improve the learning experience when the learner comes through to Coursera.

In the same way, we are engaged in ongoing conversations with OpenAI about how they and us together are going to keep evolving that app experience to make it even better and even smoother. So I'm very excited for where this can go for us.

And maybe just like kind of the obligatory question here is like because obviously, these large language model companies have wanted as much content and data as they can to train their models over time. What protections can you put in place to sort of ensure or mitigate the risk of sort of disintermediation from an OpenAI or some of these other LLMs out there. So they're not taking your proprietary content at the end of the day.

Yes. Well, I mean, through this specific integration, it's just a preview. So they don't have access to the entire course. The user can ask questions within ChatGPT about the course that gets surfaced but they can't actually consume the course. If they want to enroll in a course, they have to come through to Coursera and then they'll benefit from our AI features when they do that and the full learning experience. The preview video that's in line in ChatGPT is a short snippet of the full learning experience. And so -- and they cannot train their models on our content. None of the LLMs can.

And so I'm not particularly worried about that. I do think that they are going to continue to want their experience to do a better and better job of helping to answer user queries generally but I don't think that they are trying to become a full-on education provider in the same way that Coursera is. I don't think that's what their primary focus is because I think if it were, they wouldn't have decided to reach out to us for this. So I would say that the value of the content that we provide being trusted and verified and from name brand institutions is absolutely a differentiator for us and will help us continue to be both relevant and also a leader in this space on a go-forward basis.

Makes sense. You also announced a different type of partnership with Anthropic recently. Can you just talk about sort of the value that bringing in another sort of LLM partner like Anthropic can have to your broader AI strategy and content strategy? And what should we expect in terms of sort of new content and learning experiences out of the partnership?

Well, yes, I mean, we're incredibly excited about the Anthropic partnership as well. One of the things that is really interesting about it is we see this content is coming on to the platform at a time when AI and learning about AI is the most in-demand skill in our history. So we are seeing 14 enrollments per minute in Gen AI-related content on Coursera. And that number -- that's the average year-to-date in 2025. That number has gone up as the year has progressed. So if we were having this conversation in the spring, it would have been like 11 or 12 enrollments per minute year-to-date, and now we're at 14. And so if you looked at like a trailing 30 days, that number would be even higher than 14.

And a year ago, it was 8. 2 years ago, it was 1. So we are just seeing this unbelievable rocket ship of interest in Gen AI learning generally. And so against that backdrop, who better to have create content for the platform than one of the world's preeminent AI research labs. And so we're thrilled to have Anthropic be on the platform. There are 2 aspects to the content that created -- they've created. So one is a specialization. That's a more generalized specialization that has 3 courses in it. That specialization was created by Anthropic in concert with Advancing Women in technology, AWIT. And the goal of that is to really help learners of all experience levels build practical fluency for using AI in their daily work. And it's really meant at helping to level the playing field.

And then we also offer 7 different modules in building with the Claude API. And so that is focused on teaching developers how to deploy Claude to build intelligent systems and streamline their workflows. So there are 2 sort of very different types of offerings. One is offered at people of all experience levels. The other is specifically targeted at developers who want to leverage Claude. I am really excited. Obviously, it's super early days for those things given that they just launched last week, but really excited to see how they perform and where that content relationship continues to go.

Awesome. Maybe the last one on AI is sort of your use of AI internally to improve the learning experience. You've done this in a number of ways, but I thought one interesting example was sort of your AI dubbed courses. You mentioned on the third quarter call that AI dubbed courses are going to surpass 1,000 offerings in 5 different languages by the end of this year. Can you just talk about what impact that's having on sort of course enrollments internationally? And how much room do you have for expansion into additional languages with these AI dubbed courses as you go into '26?

Yes. As background, we started years ago using AI before it was Gen AI, it was just sort of machine translation to translate the text of our courses into other languages and to provide subtitles for videos, which is a step in the right direction. And now we have more than 60% of our catalog is translated into 26 different languages. So more than half the world's population can now take courses in their native language, which is fantastic. But subtitling and text translation is not as effective as dubbing. And the beauty of AI dubbing is that the technology is now getting good enough that you don't have the feeling that you're like watching an old B movie that was dubbed. It actually -- the lip movements are synced to the sounds. The accents are realistic and real but they still have the voice of the instructor. And so it's really quite impressive.

And so we have about 600 courses right now that have been dubbed into 5 different languages. And by the end of the year, we're going to have more than 1,000. We're going to keep expanding from there. And so right now, the languages are Spanish, French, German, Brazilian, Portuguese. And then we also have, I don't think quite all 1,000, but Indonesian as well, a number of courses. The impact is substantial in the sense that we see relative to dubbing. If you have the option to use dubbing, 91% of the people are picking dubbing over just translation. And then for translation generally, the stats are really positive. And so 85% of our learners report benefits to learning in their preferred language.

None of these are really surprising when you think about them. We see 22% faster course completions and 59% of learners say that translations benefit their career. We haven't yet looked at the stats just because the number of courses is much smaller. So we don't have the stats on the dubbing specific pieces for those last 3 data points, but I would bet that it would actually be higher in each of those cases. The main -- I would say the main gate for -- because my goal is over time that everything that we have available on Coursera is available in every language, both text-translated/subtitled and AI dubbed. The main barrier to achieving that is on the text translation side, it's really just cost and time and time is less the issue than cost. And so it's just making sure that we see the right return on doing that.

On the dubbing side, the main barrier there is actually whether or not it's actually sufficiently high quality because the -- for dubbing, it's more complicated than just a text translation. And so we're really making sure that we're trying to maintain the right quality bar there. We're actually in the middle of a big effort to dubb a number of -- to both translate and dub a number of courses into Arabic. And the big thing there is making sure that we have the right quality bar on that. And so that's our eventual goal is to get to everything available in every language but that's our longer-term big her audacious goal. And so we're just going to keep making progress against both of those along the way. And as I mentioned...

Go ahead. Sorry.

I was just going to say just quickly on around -- to me, like when I think about how do we make Coursera as relevant to as many learners in as many different countries as possible. So obviously, language is a big piece of it. But also the pricing, which I mentioned earlier, the geopricing, payment methods. So we're continuing to expand the payment methods that we accept in countries around the world. And then finally, our promotional capabilities, making sure that we're able to run promotions in a way that makes sense in any given market, just given what consumers might be used to. And so our goal is really to continue to make Coursera as accessible as possible for all of our learners around the world.

Makes sense. As we think about potential economic benefit, maybe let's just call it on the AI dubbed courses of the translation. Is it something that's typically more of an immediate benefit where you have -- you want to sort of expand with the AI dubbed courses in a new language, a new region and you sort of see the more immediate like tail or I guess, uplift in enrollments? Or is this more of a gradual, hey, NPS starts to improve from the existing learners, word of mouth gets out and then you start to see sort of more of the positive impacts?

I would say it's a mix of both. And so sometimes on the enterprise side of the business, like there can be newly translated content into a language that's relevant for a given enterprise, whether that's a government customer or a business can definitely provide an immediate improvement or ability to win a specific deal. And so some of our road map for translations is certainly driven by where we see demand from our enterprise customers or prospects.

On the consumer learner side, I would say, broadly, it tends to be a longer-term benefit that we would see. For an individual learner, it might be immediate and instant. But broadly, I would say it tends to be a longer-term thing that plays out over time.

Yes, makes sense. As we shift to sort of now the Consumer segment, you talked about it earlier about the success you've had this year, the acceleration in the growth rate throughout the year. Obviously, ideally trying to sort of at least try to maintain, if not continue to improve upon that. Can you just talk about like where you think the major levers for continuing that positive trajectory as we head into '26? I imagine AI courses and expansion of that content is going to be a big driver. But you also mentioned localized pricing, better promotional spend as other factors there. Maybe just talk about what you think are the biggest drivers within the Consumer segment moving forward.

Sure. So number one, as I mentioned earlier, we are executing with sort of renewed pace and a growth focus. And so that was reflected in the Consumer revenue growth for Q3 and in the top of funnel on 7.7 million new registered learners in Q3. I think that -- both of those were driven by a combination of different factors, starting to better serve some of our international traffic. So the geo pricing was certainly a part of that. Obviously, the ongoing translation work is a part of that, the payment methods that I mentioned as well.

Then I think also we have a more responsive revenue model on the consumer side of the business, where it is faster to demonstrate the benefits of some of the investments that we've made. Just by its nature, consumer is more responsive from a revenue perspective than enterprise would be because of revenue recognition and the pace of those cycles. We are seeing some early improvements in paid conversion, also a little bit on retention. But I think that those continue to improve both of those remains our biggest opportunity. And so we've made some really good progress, I would say, over the last 1.5 years, so certainly predating my time here on top of funnel. and on really driving healthy growth overall at the top of funnel. We haven't made as much progress at a faster rate on conversion and retention.

And then as you make improvements to retention, that's obviously increasing your ARPU over time. And so I think we have a lot of opportunity there. We did mention the fact that on the Q3 call that Coursera Plus, our monthly and annual subscription now represents more than half of our consumer revenue. And so that certainly benefits lifetime value for each of our consumer learners on average. and forward-looking visibility into our revenue.

And as we make improvements, not just on conversion, but in particular, on retention, that will just sort of supercharge some of that. And so there's a lot of work that's going on right now that will benefit both consumers and enterprise around skills and career outcomes. And so we have just launched in September for our enterprise business, Skills Tracks. We have -- obviously, that content is also available to our consumers. One of the things that we're going to be focused on for 2026 is how do we package that for our consumer learners in a way that they can wrap their head around and that puts them into the right learning path for their specific career objectives.

My personal belief is, I think that the market opportunity that we have on the consumer side is going to continue to expand given the transitions that AI is driving and the need for different skills that we see in the workforce. And so we are going to continue to invest on the product side, certainly on our marketing side as well but increasingly on the product side and on our content initiatives to ensure that we are creating fantastic learning experiences that really drive better outcomes for our Consumer learners and help drive more durable growth for us. And then we'll keep experimenting with sort of different new ways to attract learners. So the Coursera integration with ChatGPT is a good example. Some of the things that we're doing on the marketing side with experimental marketing budgets and new channels is another example, and we're going to try and do all of that in a very data-driven way.

Awesome. Well, 40 minutes is cruising by faster than we expected. But before we let you go, I want to touch on enterprise just quickly. Obviously, that business segment has been a bit more in transition as you kind of come on post-COVID contracts in the Coursera for Business or government side. Campus has been obviously a much more attractive opportunity more recently. Can you just talk about how your -- what your approach is to sort of reaccelerating growth within that Enterprise segment as we kind of move forward? And within those 3 buckets where you see the most opportunity in the near term to really drive growth?

Sure. So first of all, we're not pleased with where our NRR has been over the last few quarters. We were at 89% in Q3, down from 93% in Q2, which had been a bit of an uptick in Q2 versus Q1. We've seen mixed trends between the different verticals. You mentioned Coursera for Government, C for G has been particularly challenged. We do see really promising momentum on Coursera for Campus. That was true both in North America and in APAC, in particular. And then C for B, which is our largest of those 3 verticals is -- has been more measured, I would say, and more muted. One of the first ways that we're focused on turning that around is bringing in the right leadership.

And so super excited to have Anthony on board. He's now been here for, I don't know, 1.5 months as our enterprise GM. He joins us after 25-odd years in the education space, 20 of those at Microsoft, leading their worldwide education efforts. So deep familiarity with the space. He's a very product-focused leader. And so he's partnering very closely with Patrick on how we continue to evolve all of our enterprise offering. And I expect that he'll bring both renewed operating discipline to the approach that we take with enterprise, sort of permeating throughout all levels of the organization as well as a better focus on how we make sure that we have all the right integrations with our enterprise customers, whether that's with LMSs or LXPs or with enterprises themselves.

And then on the product side, one of the things that we started and launched before Anthony joined but I think we'll continue to invest in and build out over time is Skills Tracks. And so there is a clear focus that we hear all the time from our enterprise customers on workforce upskilling and reskilling at scale as technology changes in the job market and therefore, the needs that they have within their organization. Skills Tracks are curated sets of content. We launched our first 4 in September. Those 4 are data, IT, software and product development and then finally, Gen AI.

And those are more curated groups of content where in each case, we've leveraged our career graph, which has over 2 million data points that brings in third-party data from organizations like Lightcast and combines that with global skills frameworks so that we have a map of all the occupations in the world, the roles within each of those occupations, the levels of each of those roles the skills that are required for each level and then the courses on Coursera that map to those skills.

And so with Skills Tracks, what we're doing is we're taking curated sets of content, and we are giving any employer a map for if you have this role and you want to provide this type of upskilling, here are the courses that do that. And we're building out verified assessments and credentials at the end of that so that the enterprise can be sure that, that employee has learned and mastered that skill, not just that they took the course and got a checkmark for taking the course, but they actually have demonstrated mastery through a verified assessment. And so that verified assessment work stream is in pilot right now for the data Skills Track.

We're going to expand it across all the Skills Tracks by the end of Q1. We're going to keep adding more Skills Tracks and more verified assessments as we go. And I think that is going to be an area that we're going to continue to invest in perpetuity effectively because I think it's just highly aligned with what the world clearly needs right now and what we're hearing from our -- both enterprise customers, existing customers and from our prospects as well. So it's still really early days for Skills Tracks but very excited for the potential that, that can create for us over time.

Yes, it's a really attractive opportunity, especially as you think about these enterprise organizations going from developing, let's call it, boardroom level AI strategy to actually then going out and trying to execute on that strategy. A big component of it within your workforce is identifying what skills you have and don't have and then sort of being able to then close some of those skills gaps so then you can actually execute on the strategy effectively. It sounds like Skills Track is really going to help to address that issue.

I think so. That's the plan. Obviously, that will play out over time. And so our near-term priority is just really improving our execution within the enterprise space, which obviously Anthony will be incredibly helpful in driving. And then he'll also influence certainly all of that road map as we continue to expand the Skills Tracks.

Awesome. All right. Well, we're up on time. I think I've just missed 4 calls from my wife tell me I got to go home and make a turkey and clean the house. So Greg, we're going to let you go. And thank you, everyone, for joining us today. Hope everyone has a great holiday rest of the week, and we'll leave it there. Thanks, Greg.

Thank you, Ryan. Have a fantastic Thanksgiving to everyone. Take care.

Bye.

Ladies and gentlemen, thank you for standing by, and welcome to Coursera's Third Quarter 2020 Earnings Call. [Operator Instructions]

I would now like to turn the call over to Cam Carey, Vice President of Investor Relations. Mr. Carey, you may begin.

Good afternoon. Thank you for joining us for Coursera's Q3 2025 Earnings Conference Call. Today, I'm joined by Greg Hart, our President and Chief Executive Officer; and Ken Hahn, our Chief Financial Officer.

Following their prepared remarks, we will open the call for questions. Our earnings press release was issued after market close. It is available on our Investor Relations website at investor.coursera.com, where this call is being webcast live and were versions of today's materials, including our quarterly shareholder letter have been published.

During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP measures to the most directly comparable GAAP measure can be found in today's earnings press release and supplemental materials. Please note that all growth percentages discussed refer to year-over-year change unless otherwise specified.

All statements made during this call relating to future results and events are forward-looking statements based on current expectations and beliefs. Actual results and events could differ materially from those expressed or implied in these forward-looking statements due to a number of risks and uncertainties, including those discussed in our earnings press release, shareholder letter and SEC filings. Please refer to today's earnings press release for more details on our forward-looking statements.

With that, I'll turn it over to Greg.

Thank you, Cam, and good afternoon, everyone. We appreciate you joining us. Today, Coursera is reporting a strong third quarter. Earlier this year, we set clear priorities to drive continuous improvements in our execution, build durable capabilities across our platform and invest in product-led innovation to create more valuable customer experiences that can fuel our long-term growth.

Our third quarter results reflect the early evidence of our efforts. We delivered revenue of $194 million, up 10% year-over-year. We increased our consumer revenue growth rate to 13% year-over-year, driven by 7.7 million new registered learners and continued strength in our Coursera Plus subscription offering. Coursera Plus is large and growing at scale and now encompasses more than half of our consumer segment revenue. We also demonstrated our commitment to operational discipline generating $27 million of free cash flow, which was up 59% from the prior year.

As a result of our progress and momentum, we are once again raising our expectations for full year revenue. We now expect to deliver revenue in the range of $750 million to $754 million representing 8% to 9% growth from the prior year. The midpoint of this range is a $10 million increase from the annual guidance provided last quarter and a $27 million increase from our expectations in April, effectively doubling our full year growth rate from 4% to 8%.

Before discussing the updates across our ecosystem and product experience, I'd like to address two recent changes to the Coursera leadership team. First, I am pleased to announce the appointment of Anthony Salcito, as the new General Manager of our Enterprise segment. Anthony is an established leader in global education transformation with over two decades at Microsoft, where he served as Vice President of Worldwide Education.

His experience in leveraging technology to develop skilled talent in the evolving workforce will be critical in supporting our customers and accelerating our enterprise initiatives over the coming year. I also want to take a moment to recognize and thank Ken for his excellent service as Coursera's CFO over the past 5.5 years. I am personally grateful for his partnership since I joined as CEO.

This year, his expertise has provided stability and continuity to the entire organization and his tenure has shaped the long-term trajectory of Coursera from guiding our IPO to strengthening the financial performance and position we operate from today. We appreciate the important role he has played at Coursera.

As this is his final call, I will provide our updated financial outlook in my closing remarks. With that, let's turn to the ongoing expansion of our ecosystem. Upon joining Coursera, one of my earliest observations was recognizing the untapped potential of our extensive data across one of the largest and most globally distributed learning platforms. Leveraging these insights allows us to drive continuous improvements in all aspects of our business from accelerating product innovation, to enhancing the speed and agility of our content engine. Most importantly, our data offers a deep understanding of our primary customers. the learners.

In September, we published our 2025 learner outcomes report conducted in partnership with Harris Poll, reflecting feedback from over 52,000 learners across 179 countries. The report found that 86% of learners joined to build new skills and transform their careers. Career Advancement is the top motivation for learning on Coursera and we continue to drive meaningful and measurable career outcomes for learners. 91% reported achieving a positive career outcome after completing a course on Coursera. Encompassing salary increases, skill development, higher job levels and personal benefits.

As individuals increasingly seek the skills necessary to adapt and thrive in today's evolving job market. Coursera continues to strengthen its position as the world's trusted source for verified learning. The quality of our content and the scale of our ecosystem are foundational assets we intend to increasingly differentiate and enhance through rapid innovation in how content is created, delivered and adapted for the unique needs of every learner.

Over the past year, our catalog has expanded by 44% and now includes more than 12,000 courses developed by world-class instructors trusted for their expertise and career relevance. As demand for career aligned education grows, we continue to expand our collection of job-focused micro credentials. We now offer nearly 100 professional certificates and have recently added new titles for Microsoft, AAPC and EC Council.

Additionally, we welcomed 12 new content creators to the Coursera community, including world-class universities, industry experts and learning providers like Pearson and Skill share. Many of our partners view Coursera as a strategic platform to extend their global reach, create more personalized and interactive learning experiences designed to keep pace with the fast-changing education landscape and expand access to the emerging skills that are rapidly reshaping the requirements for individual jobs, business models and global labor markets.

In 2025, AI skills are becoming essential and demand has accelerated. We are now seeing 14 enrollments per minute in our catalog of more than 1,000 generative AI courses, up from 8 enrollments per minute last year. Generative AI is the most in-demand skill in Coursera's history, which is why I was thrilled to recently announce our content partnership with Anthropic, welcoming one of the world's leading AI research companies to our platform.

As the need to develop new skills progresses at an unprecedented rate, Anthropic, like many of our partners, shares our commitment to helping learners and institutions everywhere apply the latest advancements in AI safely and effectively, unlocking new ways to learn, teach and work.

Let's turn to our recent product updates. AI is transforming the way learners discover Coursera, engage with our content and verify their skills for career advancement. This year, we've been focused on accelerating our ability to deliver more value to learners and enhance the value of our business by driving improvements in our conversion, engagement and retention metrics over time. Our team has made remarkable progress developing new capabilities to enhance our customer experiences and strengthen our role in the future of learning.

In September, our early efforts were on display during our annual conference. Coursera Connect. The event brings together our global ecosystem of learners, customers, universities and industry innovators to address evolving trends in education while introducing our latest features tools and experiences.

To start, I'll share three enhancements. First, Coursera Coach, our in-course GenAI tutor is now integrated into 97% of our courses and available in 26 languages. We have added persistent memory and contextual understanding, delivering smarter, more relevant responses to drive better outcomes. Over 90% of learners reported an improved learning experience and more than 60% said Coach has benefited their career.

We also continue to make Coach more personalized and interactive. Dialogue is now available in over 1,200 courses, enabling instructors to build and scale one-on-one immersive socratic learning. We also introduced Role Play which takes this level of interactive engagement even further through AI-driven simulations, allowing learners to apply their knowledge in real-life scenarios and receive real-time actionable feedback.

Second, AI translations. Since 2023, advancements in machine learning have enabled us to rapidly expand access to text-based translations across our platform. We now offer more than 7,500 courses in up to 26 languages. In April, we introduced AI ebbing to bring native language learning to Coursera, starting with 100 courses.

Today, AI dubbing is now available for more than 600 courses in five languages, and we expect to surpass 1,000 courses by the end of the year. As improvements in the speed and quality of this technology continue, we're excited to invest in bringing this experience to more learners in more languages with the goal of driving higher engagement and better outcomes.

Third is Course Builder, our AI-powered authoring tool. In 2023, Course Builder was initially launched as a feature for our enterprise customers interested in creating custom private courses. What makes it distinctive is its ability to blend the best of Coursera's catalog with internal context-relevant materials. At Connect, we announced that Coursera Builder will soon be piloted with our university and industry content partners, featuring new AI-powered content generation and catalog ingestion capabilities that are designed for speed, simplicity and flexibility. Most importantly, it is all backed by Coursera's learner data and design with pedagogical best practices to deliver high-quality courses at scale.

Next, our newest product offering, Skills Tracks. From our customer conversations, we know that most organizations struggle to measure training impact and identify skill gaps particularly as job needs rapidly change. For individuals, the motivation to learn is focused on building skills that can make them more productive in their role or open new career opportunities.

Skills Tracks are designed to address both requirements, keeping learners focus on essential skills through custom paths and content discovery, while enabling admins to track progress and better align learning objectives with company business goals. Compared to existing courses and certificates, Skills Tracks offer a more structured and interactive approach to skill development built on our proprietary career graph and data-driven personalization.

By focusing on rural specific competencies, practical, hands-on applications and features to assess, track and verify proficiency, learners and businesses can better measure learning impact and ROI. We started with curated learning paths for data, IT, software and product and, of course, GenAI, with more fields to come next year.

For our final product update, I'd like to focus on our efforts to reimagine the learner journey on Coursera, encompassing improvements in search, discovery and onboarding. This quarter, we enhanced our site experience with a redesigned homepage to better guide learners through our funnel. We also made meaningful progress in our efforts to serve our growing population of international learners. Launching new geo pricing and promotional capabilities to make our marketing activities more effective and ensure Coursera is accessible in emerging markets. From the early results, we're seeing positive signals in our new paid learner conversion.

However, our efforts to attract, convert and retain learners more effectively through our funnel extend well beyond our platform. Search is fundamentally changing. And we intend to be at the forefront of understanding, experimenting and shaping how learners discover and start their journey, leveraging the strengths that have drawn 191 million learners to our platform over the last decade.

On October 6, we were proud to announce Coursera as the first online learning platform to be embedded directly in chatGPT. In a new partnership with OpenAI, we launched one of the first generation of apps in chatGPT, putting our trusted world-class content directly where hundreds of millions of people are going to get answers related to education, skills and jobs.

Learning is one of the most common use cases for chatGPT and OpenAI shares our commitment to broadening access to high-quality education and essential skills. We're excited about the partnership and the innovation it will enable. Positioning Coursera at the forefront of AI native learning experiences and strengthening our ability to help learners master the right skills to grow and advance in their careers regardless of where their learning journey begins.

Our third quarter performance marked another step in laying the foundation for Coursera's next chapter of growth. And our progress is reflected in our financial outlook for the remainder of the year. For Q4, we anticipate revenue in the range of $189 million to $193 million, representing 5% to 8% year-over-year growth, primarily driven by our consumer segment. Our assumptions on the more muted enterprise environment have not changed.

For adjusted EBITDA, we expect a range of $7 million to $10 million leveraging the flexibility and capacity of our annual operating framework to fund our most productive growth initiatives. As I highlighted before, we are raising our full year 2025 revenue outlook to a range of $750 million to $754 million, representing 8% to 9% growth from the prior year.

For adjusted EBITDA, we continue to target an annual adjusted EBITDA margin improvement of approximately 200 basis points to 8%. As a reminder, this reflects an additional 100 basis points of anticipated improvement from our initial full year target of 7%. This year has clearly demonstrated the value of our annual operating model as it relates to EBITDA. This long-standing framework has enabled us to assess our growth opportunities allocate capital toward our most productive priorities, demonstrate our long-term commitment to operating with financial discipline and driving consistent scale in our model, and ensure we are making the right long-term decisions on behalf of our learners, customers and shareholders.

As we approach the end of the year, I am pleased with the strong progress our team has made across our three key growth priorities: delivering rapid product innovation, building a faster, more agile content engine, and ensuring we are well positioned to meet and serve customers globally no matter where their learning journey begins.

Our early achievements in 2025 are just the beginning of what I believe Coursera is capable of solving in the massive skilling opportunity that lies ahead of us. By continuing to invest in AI-driven innovations and personalized learning experiences, we are uniquely positioned to meet the evolving needs of learners and organizations worldwide. I am confident in our clear direction and excited for what we will build next.

Now I will hand it over to Ken to discuss our financial performance in more detail. Ken? Please go ahead.

Good afternoon, everyone. Thank you, Greg, for the kind words. It has been a pleasure working with this team, particularly around growth enablement. Over the course of this year, we've made consistent progress through a focused effort to bolster Coursera's return to higher growth.

In Q3, we generated total revenue of $194 million, an increase of 10% from the prior year period. Leading us to raise our expectations for full year growth, as Greg just outlined. Please note that for the remainder of this call, I'll discuss our non-GAAP financial measures while reviewing our business performance unless otherwise stated.

In Q3, gross profit was $108 million, up 10% year-over-year. This represented a 56% gross margin, which was consistent with the prior year period reflecting improvements in our consumer gross margin rate, offset by other cost of revenue and the greater mix of consumer revenue driven by the segment's faster growth as compared to our yet higher-margin enterprise segment.

Total operating expense was $98 million or 51% of revenue, consistent with the prior year period. We deployed targeted investments in growth initiatives while demonstrating our long-standing commitment to operating with discipline and scaling annual profitability each year. Net income was $17 million or 8.6% of revenue and adjusted EBITDA was $16 million or 8% of revenue. Since the start of this year, we have delivered over $52 million of adjusted EBITDA putting us well on track to achieve our increased annual margin target of approximately 8%.

Turning to cash performance and the balance sheet. Q3 marked another strong quarter of cash performance, generating $27 million of free cash flow, including approximately $2 million in purchases of content assets treated similarly to other categories of capital expenditures.

Year-to-date, we've delivered more than $80 million of free cash flow, representing 55% year-over-year growth and reinforcing our strong financial position. As of September 30, 2025, we had approximately $798 million of unrestricted cash and cash equivalents on the balance sheet with no debt.

Now let's discuss the results of our operating segments. As you know, we've evolved our operating model over the course of this year by implementing new capabilities under Greg's leadership, adding product and data expertise to our team and making investments across our platform from product to content and marketing, to create and deliver more valuable experiences for our learners over time. Our strong consumer performance shows promising signs of our renewed focus.

In Q3, we delivered consumer segment revenue of $130 million, up 13% from a year ago. Growth was driven by two primary factors. First, we welcomed 7.7 million new registered learners expanding our total base to $191 million. We've maintained a strong top of funnel by broadening our global reach diversifying our marketing channels and experimenting with new opportunities to reach and attract new learners including directly embedding Coursera in chatGPT as one of open AI's first generation of apps.

Second, we've seen strong reception to Coursera Plus. As you know, our subscription efforts in the consumer segment are not new. In 2021, we recognize that the rapid pace of skills transformation, combined with our growing catalog of career-focused education would naturally benefit from a bundled subscription offering that creates more value for our learners, content partners and ultimately our business.

Over time, we have continuously enhanced that value with the introduction of new content, product features and localized pricing, promotion and payment capabilities. As Greg highlighted, Coursera Plus has grown to become a majority of our consumer segment revenue providing important visibility with more predictable recurring revenue streams. Consumer segment gross profit was $80 million, up 16% from $69 million in the prior year period.

Segment gross margin was 61%, an increase of 180 basis points from a year ago. The expansion in our gross margin rate has been driven by increased learner demand and engagement with content created under more recent production arrangements. As we have discussed, this new content typically includes a lower revenue share and associated content costs, reflecting the increasing value of Coursera's ecosystem and platform capabilities from AI native authoring, production and ingestion tools for our partners to Coursera Coach and other learner enhancements to our large, growing distribution channel.

Now moving to our Enterprise segment. Enterprise revenue was $64 million, up 6% from a year ago. Growth continues to be driven by our campus and business verticals including a 10% increase in the total number of paid enterprise customers to 1,724. As we've discussed in the past several quarters, customer demand and budget trends continue to vary by vertical, region and use case, which is reflected in our net retention rate of 89%. Our team will continue to monitor the dynamic corporate spend environment and remain focused on go-to-market positioning and enterprise-focused product enhancements to reignite more significant long-term growth under Anthony's new leadership.

Segment gross profit was $45 million, up 5% from $42 million in the prior year period. And segment gross margin was 70%. The margin rate was in line with the prior year period, which included a onetime revenue share benefit of approximately 150 basis points disclosed during third quarter 2024 report. Without that historic onetime benefit, Enterprise segment gross margin would have expanded year-over-year driven by the same content production and engagement trends contributing to the ongoing improvement in our consumer segment margin.

Before we open the call for questions, I want to reiterate what a rewarding experience has been to serve as CFO during such a transformative chapter for Coursera, the industry and the broader technology landscape. I'm deeply proud of our achievements over the past 5.5 years, and I'm grateful for the continued support of our shareholders and analysts.

Having partnered closely with Greg this year, I have full confidence in the leadership team's clarity of direction. It is a privilege to leave Coursera in such a strong financial position. To serve as a bedrock for Greg's vision, the catalyst to accelerate the next phase of innovation, growth and impact for the millions of learners our platform serves. Now let's open the call for questions.

[Operator Instructions] We'll take our first question from Josh Baer with Morgan Stanley.

Great. Thanks for the question. And Ken, it's been great working together over the years. I know it's early, but I did want to ask about any takeaways you have from the start of the open AI embedded app and the integration there. Just anything around usage and engagement or expectations. And then the follow-up is on the financial side. What is the economic arrangement there? And how are you thinking about potential financial impact?

Thank you, Josh. Good questions. This is Greg. First of all, we're incredibly excited about the partnership. Obviously, OpenAI is a place that people go to ask about basically everything, 800 million weekly active users. So an incredibly popular destination and learning is one of the most common use cases. And so the fact that OpenAI reached out to us to invite us to be one of the first 7 launch apps is incredibly exciting.

Very, very early days on that partnership, obviously. So I don't have anything to share yet on what we think that might look like and what that might do for the business over time. But I would say that given the traffic that chatGPT sees and the fact that search is fundamentally changing, we're very glad that we're at the forefront of some of that change and being in the place that is driving a lot of that change because I think that gives us a real opportunity to understand and shape how learners can discover and to start their journey with Coursera.

On the financials, there is no economic arrangements between OpenAI and Coursera, this is really a top of funnel opportunity to get in front of people as they start their learning journey by asking questions in chatGPT. And then the appropriate course will get surface so they can preview that content and then come through to Coursera to enroll and benefit from the full rich learning experience that we offer across the world-class content with, as well our AI-driven features on Coursera, Coursera Coach and Role Play, Dialogue, some of the things that I mentioned in my scripted remarks, and we're excited to see how it develops.

All very helpful. And on sales and marketing, the percentage of revenue increased year-over-year. Just hoping you could walk through some of the top priorities on sales and marketing investments and how you're assessing the returns on that spend.

Thank you, Josh. The sales and marketing has been a very efficient and effective tool for us for a number of quarters. We continue to see really good results as we've scaled our marketing in terms of return on ad spend. And the model we use is really wherever we see efficiency at the right levels, we will continue to invest.

One of the benefits of that is that often that it's driving a subscription not just a single course purchase. And so Coursera Plus, as we mentioned, has now crossed 50% of our consumer segment revenue that gives us a lot of visibility into forward-looking trends. And so when we find marketing channels that are effective at driving that, we will continue to invest in that. You see that reflected in the 7.7 million new registered learners and also in the 13% year-over-year revenue growth the Consumer segment had this year this quarter.

We'll take our next question from Bryan Smilek from JPMorgan.

Thank you, Ken, for the great partnership throughout the years. Just curious more so on the 4Q revenue outlook, totally appreciate consumer continues to grow well and really unchanged macro outlook for enterprise. Just curious, looking ahead, what drives the durability of the consumer growth here, perhaps around the double-digit percent? And I guess, like, can you just give a bit more color on what drives the declines more near term in terms of growth deceleration into 4Q?

A couple of things that I'd comment on. Great question. So first of all, as we've mentioned on the scripted remarks, we're raising our full year revenue from $738 million to $746 million was our prior guide now to $750 million to $754 million, so representing 8% to 9% year-over-year growth. That, again, is up from a projection of 4% year-over-year growth back in April, an incremental $27 million at the midpoint. That is driven by our confidence in our very strong top of funnel, 7.7 million new registered learners also the fact that with Coursera Plus, we get better visibility into the forward-looking revenue trends, we're also seeing a more responsive revenue model, driven by a combination of the marketing that I just mentioned and also some of the early efforts that we've made on the product side, learner journey, geo pricing, things like that.

On the quarter, specifically what I would remind folks have you've seen this in prior years is that there's definitely a seasonality impact in Q4, traditionally, Q4 is not as large a quarter as Q3 is. And so that is also part of what it's been playing out in the forward-looking guide.

Great. And then I just had a quick question just around CapEx overall. I believe a few quarters ago, really entering 2025, we had discussed about up to $20 million in purchases of content assets and the free cash flow clearly has come in nicely, and I imagine some of that is also driven by just AI content gains in terms of production. But just curious how will you balance free cash flow growth going forward with incremental content investments and is there anything just to keep in mind from a free cash flow perspective?

At a high level, we've been very pleased with the impact of the content investments that we've made. You see that reflected in two stats. One is the growth of the catalog. So we now have more than 12,000 courses, that's up 44% year-over-year. The second is the gross margin expansion. And that is driven by both Coursera produced content and also a bit of a mix change to newer content that is at lower revenue share rates.

We anticipate that both of those things, we will continue to invest in. We really like the appeal of the Coursera produced content. One of the reasons that we like it is that as AI gives us better and better tools, we're able to bring down the cost of creating each piece of that content so we can expand the catalog at potentially a faster clip while doing so with a lower per course spend.

Our next question comes from Stephen Sheldon with William Blair.

So maybe for either Greg or Ken, just can you just talk some more about the factors driving the continued consumer acceleration this quarter. And on the international side, it sounds like you're starting to find the right localized pricing versus volume mix. Is that fair? And if so, could that be a factor kind of supporting continued strong growth in consumer over the coming years as you optimize that balance and monetization?

Great question. I'll start, and Ken, feel free to obviously to add. On the consumer side, I mentioned marketing being one of the things that we've continued to improve. So that's certainly a factor. I would say also, it's just responsiveness in the course offering that we have and our efforts to improve the product experience as well. And so the expansion of the catalog, a lot of that is coming in areas and it's certainly being targeted areas where we see a lot of demand.

And so in GenAI, as I mentioned in the scripted remarks, we've doubled the size of our GenAI catalog year-over-year from 500 courses to more than 1,000 courses. Again, we've come from leading industry partners and profit being one that I mentioned in the scripted remarks as well and our academic partners in higher education, in some of the leading universities around the world. That's driving incredible interest on the consumer side, as well as the enterprise side. So that's certainly a factor.

On geo pricing, you mentioned we lowered the price across a range of countries earlier this year in the quarter. And the rationale for doing that was really that when I arrived, one of the things I observed within my first few weeks with our pricing internationally just simply didn't make sense for consumers in those markets. It was priced out of reach of most of those markets.

And so we lowered our pricing substantially in those markets. up to 60% in different geographies. And the goal of that was to both ensure that we were able to reach the broad market of consumers that we aspire to serve with a more attractive price and also, of course, to drive higher overall revenue growth.

And we've been pleased with the results so far of that. And we continue to believe that we will look at pricing as a tool within our toolkit to continue to fuel better growth and also make sure that we're serving our mission overall of enabling learning to be accessible to as many people around the planet as possible.

Very helpful. And then just following up in enterprise, NRR moved back to touch this quarter after a few quarters of stabilization. So just curious how do trends look across the different end markets there between business, government campus and how is overall corporate spending towards learning played into that? Has there been any additional softening there in recent months where it's getting hard to retain existing and sell now? I guess, what are you seeing on the kind of budgetary side?

Well, first of all, we're not pleased with 89% NRR. We also weren't pleased with 93% NRR last quarter. We won't be happy with NRR until we get that north of 100%. I would say we've seen mixed trends between our different verticals. So Coursera for Campus is a brighter spot. Coursera for government is more challenged we're not factoring in any material improvement right now, just given what we're seeing across the market. So the diversification is certainly helpful across the different segments. But Coursera for business remains the majority of our enterprise segment, it remains a muted environment, as we've communicated on past calls. And so we're not forecasting any change in that as we look ahead.

One of the things we are trying to do through the conversations that we're having with our enterprise partners is really make sure that we're very responsive to their needs. And so one of the things that we heard consistently from enterprise partners was the need to have an offering that is more tightly attuned to the challenges they are seeing in their workforce. And so they all face a need to upskill and reskill their workforce, given how much AI is changing the rules of roles across their companies.

And so we launched skills tracks at Coursera Connect. I mentioned that in the scripted remarks as well. That's a curated set of offerings. We launched with four different areas: data AI and software and product development. Those each encompass a whole host of job families and roles within those job families, and the goal is to give enterprise the ability to create tailored learning paths for specific rules they have at specific levels that give their employees at -- in those roles and at those levels, the right skills to adapt to how technology is changing. Their work that they do every day. And it measures impact and the ROI. And so we're rolling out verified credentials for those skills paths. And we'll continue to expand both the number of skills tracks that we offer, as well as the verified credentials that go with them.

And that's something that it's still early days, obviously, because we just launched this at Connect in September, but we've seen a very positive response in our conversations with our enterprise partners. And I'm also very exciting just to add on to have Anthony on board, Anthony Salcito, our new enterprise GM, his experience at Microsoft leading their worldwide education business in two decades doing that brings a wealth of expertise and highly relevant skills.

He also has an energy and a strategic vision for where we can go that is incredibly exciting. So I'm really looking forward to seeing what he delivers in the business. Obviously, it will take time for that to take effect just because of the nature of an enterprise business model, but very excited to have him on board as well.

Our next question comes from Ryan MacDonald with Needham.

Ken, best of luck. It was great working with you. Greg, maybe to start on the fourth quarter implied EBITDA guidance for margin. Can you just talk about sort of the key areas where you're investing here and then -- and how maybe investors should think about sort of the framework between balance of growth and margin expansion, what that looks like heading towards '26 without giving guidance.

Is there still an intent to sort of expand EBITDA margins while trying to grow? Or is fourth quarter more of '25 more indicative of how we should think about sort of the margin profile heading into '26?

So first of all, we've had, for a number of years, a framework of providing an annual EBITDA margin guide. And the rationale behind that is we want to make sure that we're demonstrating both revenue growth and operating leverage every year, year-over-year. So improvement on both of those things. the annual framework gives us flexibility to invest as the year progresses in the things that we think are going to be most effective at delivering against those two things.

And so that's no different for our full year guide for this year as well. The key things that we are going to focus on within Q4 that will help drive growth not just in Q4, but also next year and beyond are first of all, continued investment in marketing efficiency and ad spend where we see an opportunity to do that, also experimenting with new channels.

And so one of the reasons that we fund sales and marketing in Q4 is because that will then translate into revenue that persists into the following year. Second, continued investment in product. And so Patrick Supanc, our Chief Product Officer, who joined in the summer is certainly still coming up to speed.

Q3 was one of the largest quarters for launches of new features that Coursera has had in its history. We're really excited. It's still early days on many of those features, but we're really excited directionally by the metrics that we're seeing those features deliver for us. And so we're going to continue to invest in that area as well.

And so those are a few of the things that we're doing. But over the long term, just to circle back on that piece of your question, our goal is to continue to provide annual revenue growth and annual EBITDA margin leverage.

Super helpful. I appreciate the clarification there, Greg. Maybe on just sort of the broader sort of AI upskilling, reskilling initiatives. Just curious to get your comment on the news from a couple of months ago about Google and Microsoft committing, I think it combines $5 billion plus on sort of AI skills gap closures and sort of skilling initiatives with AI.

Given both companies are Coursera partners, is there a role for Coursera to play in these initiatives? Can either company sort of route learners to the platform or sponsor learners to be trained sort of on their content through the Coursera platform? Or are these sort of completely separate from the existing relationships you have there?

So Google obviously does route learners to Coursera for learning on a very regular basis. Our partnership with who goes back many years. They're a very important partner for us. Microsoft also is an important content partner for us. I think it's still early days for both of those specific initiatives that you mentioned that they announced a little bit ago.

We obviously are in an ongoing dialogue with both of them on continuing to strengthen the partnership and look at ways that we can add value to the things that they're trying to accomplish and vice versa. I think that one of the benefits that Coursera offers is in addition to just content on GenAI, there's obviously a huge range of content beyond just general AI learning.

Certainly, there's things that are specific about how GenAI can be applied to a given type of role in GenAI for finance as an example, et cetera, but also a much broader catalog of learning in a whole host of other areas. And so we believe that's a benefit that we can bring to any one of those partnerships or future efforts that develop.

Our next question comes from Rishi Jaluria from RBC.

Nice to see continued momentum in the business. And Ken, let me echo my colleagues. It's been an absolute pleasure working with you since IPO over the years through all these earnings calls, the analyst Days, you name it. So wishing you the best for the next shop and again, really appreciate the partnership.

Maybe I wanted to ask two AI questions. First, I want to go back to the OpenAI and Anthropic partnerships. I understand these are really new. You talked about kind of some of them as being pipeline generation and you have these 1,000 AI courses on Coursera today, which is great to see that sort of growth.

Over time, can these partnerships and other future contemplated ones, right, whether it's Google AI or other AI native companies, where -- there's not only those courses and for of those tools in there, but also the opportunity for there to be actual certifications, right, whether it's an anthropic certification or an open AI certification and maybe the newly announced Anthropic course is exactly that. It was on to me just going to the website.

But maybe just walk us through what does that opportunity look like to create these AI certifications attached to courses similar to what you had with Google and Facebook and IBM and Salesforce over the years? And then I've got a follow-up.

I do think that's absolutely an opportunity for us, and that's something that I think is going to be increasingly important on both the consumer and enterprise side of our business. We see on the enterprise side of the business, a need for enterprises really to ensure that they have verified skills.

And so the certificates are a way of ensuring that it's not just taking the course in gaining knowledge, but actually gaining mastery of that material in a way that you can demonstrate within a rule in the workforce. And so that's one of the reasons that we launched Skill Tracks with the verified credentials that I mentioned a bit ago.

We certainly see the world moving in that direction, the importance of being a lifelong learner and continuing to develop new skills as the world around all of those changes at an increasingly rapid pace is unbelievably important, and that's where those certificates are really critical about demonstrating that it's not just that you've taken, of course, that, again, you have demonstrated master that you can apply in the real world. We certainly see that happening in the future with a number of our partners. Were in active conversations to do exactly that. And I would not be surprised at all to see that happen within the AI space as well.

Awesome. That's really helpful. And then you alluded to this in the prepared remarks, talking about leaning more into AI search. And obviously, it's a huge debate that we're having in software and Internet of just the shift from traditional SEO to AI search and it's obviously caused a lot of controversy out there. Can you talk a little bit more specifically about some of the early signs of success that you're seeing in that shift? And how you intend to invest and measure success there?

Because look, I understand even if overall raw traffic to the Coursera website is down, having -- you go to ChatGPT and you say, I need courses for advancing my career. Coursera is going to be the #1 with an explanation versus going to Google and you have to sort through a bunch of different similar sounding things before realizing Coursera is the best option. So the industrial logic makes sense to me. But maybe can you just walk us through what you've seen so far and how you expect to invest against that opportunity and measure success there?

Yes, great question. Obviously, search is fundamentally changing, as you just referenced. It used to be that people would do a web search and then they get a list of links and they would click on one, see if it was a fit, go back to the search, click on the neck, et cetera. And so you sort of [ pogo ] in and out potentially.

Now with LLM, both chatGPT and others, you can get much richer information right upfront. And so we're incredibly excited about the integration into OpenAI because we get a chance to learn along the way as user behavior continues to evolve. I would imagine that over time, that integration, both for Coursera and for the other partners that chatGPT has in their launch set of 7 will continue to improve. It will become more contextually aware it will become better for the user, and it will become better also for the partner because they'll do a better job of identifying through the context of what the user has prompted chatGPT on when to route them through to Coursera.

You'll get more highly qualified traffic as a result of doing that. I also think that people will get more familiar with, for example, the Coursera integration, the video will come up, you can start playing the video, but then you can really assess by asking chatGPT that will then basically query our -- the information we provide on that course to get more information upfront. Is it the right fit? Is it not the right fit?

You can come through Coursera, you can enroll in that. or you can obviously look at other courses that might be a better fit. And so one of the things that we are investing a lot in is continuing to evolve our course detailed pages, to make sure that they do as good a job as possible at arming the user with education, the learner, the prospective learner with information they can use to decide if it's the right course for their goals.

It's also why we're investing in onboarding and making sure that we do a good job at the start of that learner journey on Coursera and gathering information from the learner that we can use to help guide them to the best content for them, which is generally what is the career goal you're trying to accomplish. We just did our learner outcomes report 86% of learners come to Coursera to advance their career. And so the more that we can know about what that career is, what job they're in and what their goals are. the better we can match them to the right content and start them on what is hopefully a very successful learning path to them.

Our next question comes from Taylor McGinnis with UBS.

This is Claire Gerdes on for Taylor. I just wanted to ask on the 4Q revenue guide. You mentioned a couple of things before that might affect that with seasonality, but it does imply like a sequential decline in a further decel year-over-year. So can you just unpack the moving pieces there? And as we think about heading into fiscal '26, just any thoughts you can provide on trends that you're seeing that we should keep in mind as we look into next year?

Well, we'll provide our formal 2026 guide on the Q4 call in February after we've gone through the remainder of the year and completed our full planning process. In terms of Q4 itself, one of the things that you saw in Q3 was consumer growth of 13% year-over-year and enterprise growth of 6% year-over-year. So the businesses in Q3 performed a little different than they had in Q2 when both of them grew at 10% year-over-year.

Our expectation on enterprise remains muted. It has not changed from what we've communicated over the past few quarters. given the uncertain spending environment within business. We are seeing some bright spots in parts of the enterprise business, but overall, our expectations are unchanged.

And then on the consumer side, we have a lot of visibility into that, given by the fact that we now have more than 50% of our consumer segment revenue that's coming through Coursera Plus. So that gives us a lot of visibility into what that will be in Q4. And then we continue to invest in marketing where we see opportunity to do so efficiently to drive a really good return on that investment and to drive revenue growth. And so those are some of the things that are behind the Q4 guide overall.

Raising the guidance to $750 million to $754 million for full year growth of 8% to 9% year-over-year. And again, I'd reiterate when we gave that guidance for the full year for the first time, on our April call, we expected $720 million to $730 million of revenue, 4% year-over-year. So we're taking that up from 4% year-over-year growth to 8% to 9% year-over-year growth.

We'll take our next question from Nafeesa Gupta with Bank of America.

My question is on the Coursera Plus doing really well. It's been growing consistently and you've been talking about it for the past couple of quarters. What do you think has led to this uptick in consumer subscription increase in paid subscription conversion I know you're doing a couple of things on pricing, product updates, but what do you think is driving this mostly?

I think it's a combination of factors. One, I think on the consumer side, there's obviously clear demand for educating and learning how to adapt in the world of AI. And we see that reflected in the incredible pace of enrollment for GenAI-related content, 14 per minute.

As I mentioned, earlier, which is up from 8 per minute last year. Our GenAI catalog has doubled in size from 500 to 1,000 courses. We now have more than 10 million enrollments in GenAI content on Coursera. Second, I would say is the overall improvement in both our marketing and our focus on our consumer business. And so one of the things that I observed when I joined Coursera was a real opportunity to get sharper on our funnel.

And to do that in every stage of that funnel and through how we adapt our product experience to do a better job of taking learners through that funnel from prospects to paid learner. And so you're seeing some of that play out and some of the things that we launched during Q3. You mentioned some of the pricing changes that we made. That's one reflection of that. We also have updated and really evolved our approach to our home page, and we're starting to do that across other parts of the site as well.

You should expect to see an ongoing cadence of things like that play out on the site. As Patrick and the team continue to move at a faster and faster pace. Product innovation was one of the main priorities that I had when I joined moving at a faster pace to innovate the product. I think you're starting to see some of the early green shoots of that, but that's something we're going to keep focused on.

And I also think, frankly, one of the things that you see reflected in the Coursera Plus now representing more than 50% of our consumer segment revenue is that, when we have an unbelievably rich catalog of content that represents an incredibly compelling value for somebody. We now have more than 12,000 courses and across all kinds of different domains, not just GenAI, certainly, but of course, a broad range of tech, we've got health care-related material finance business, marketing, et cetera. And so it's a phenomenal deal.

And so I think that's one of the other things that consumers are increasingly recognizing. And I think in the international markets, we made that deal much more accessible through the pricing change that we made. And so I think those are a few of the things that are driving the momentum we're seeing in the consumer business.

We'll take our final question from Ryan Griffin with BMO Capital Markets.

This is Ryan on for Jeff Silber. I appreciate the question. Just wondering if any changes to the sales motion that you can speak to on the enterprise segment that the last few years have been plagued by a challenging macro, but wondering if you're thinking about anything differently, whether that's the pricing or the go-to-market strategy.

Apologies, but we -- for whatever reason on our end, we could not hear you on that question.

Ryan, would you mind repeating that one?

Yes. Sorry about that. Can you hear me now?

Yes, we can hear you. That's better. Thank you.

Okay. Great. Great. I was just wondering if there's any changes to the sales motion that you can speak to on enterprise. I know the last few years, have been plagued by a tough macro, but wondering if you're thinking about anything differently, whether that's the pricing in enterprise or just your go-to-market strategy?

Well, I'm sure that as Anthony, he's in only his third week here, as Anthony gets up to speed, I'm sure he will have a number of recommendations on how to evolve our overall go-to-market pricing, packaging, et cetera. One thing that I would mention is that Skills Track is not just a curated catalog offering, it is for new SKUs for our enterprise partners with their own pricing, of course.

And so we built Skills Tracks based on direct feedback that we have received from our enterprise partners on the need to have more curated offerings, not just an entire catalog license. And so they are curated, tailored to very specific areas and to job families within those areas. I would imagine that as Anthony comes up to speed, he will continue to present new ideas for ways that we can help drive stronger growth within the enterprise business by making it more responsive to the needs of workforces and institutions. And so I would expect continued innovation on product, on packaging, on our go-to-market, on all of those things.

Great. Thank you, Ryan, and thank you, everyone. That wraps today's Q&A session. A replay of the webcast will be available shortly on our Investor Relations website. We appreciate you joining us today.

This concludes today's conference call. You may now disconnect.

Awesome. Good morning, and welcome, everybody. I'm Bryan Smilek, JPMorgan's Internet and Online Education Analyst, and I'm really excited to host two of Coursera's newest leaders for today's webcast conversation. As a reminder to all listeners, this webcast is being conducted in listen-only mode and is scheduled for the next half hour or so. As such, if you have any questions, feel free to reach out to either me or the team after today's event.

So let's kick it off. Let's start by introducing today's speakers. First is Greg Hart, who became CEO of Coursera earlier this year. Greg, so we've had 2 quarters to follow some of the really early changes you've been making since taking the reins at the helm of Coursera. But for those that are mostly relatively new to the story, could you just share a little bit about your decision to join Coursera?

Happy to. So I joined Coursera at the start of February this year, and I was attracted by two things. First, obviously, the mission of the company. I think the mission of educating the world and giving people the skills that they need to compete in the global economy, particularly as it rapidly shifts has never been more relevant. And second, the business opportunity. I think Coursera has had healthy fundamentals for a long time, but I think there was a real opportunity that I saw in enabling the company to accelerate the pace of growth and to do that through product-focused innovation and ensuring that we were centering everything we did around equipping whether they're individual learners or companies with the skills they need in today's rapidly changing world.

Awesome. And shifting over to Patrick Supanc. Recently joined Coursera and welcomed you as a Chief Product Officer in June. Could you just give us an overview of your background and what excites you most about the role?

Sure thing, Bryan. I've been building customer-focused technology products for a couple of decades now, but I've always been interested in the intersection of education and technology. That started back with Blackboard when it was a start-up and later at Pearson and then ultimately brought me to Amazon, where I worked on education at Kindle. And so over 10 years at Amazon, worked on a lot of technology products that we brought to global scale. And when I looked at Coursera's history and what it's achieved so far, I also saw enormous potential, the potential to impact the lives of millions of learners globally. It has a unique and growing ecosystem of customers and partners. And just joining a talented team with those foundational assets was super appealing to me as a builder, someone who wants to continue to build great products at scale and innovate at scale. So that rapidly evolving innovation experience ahead of us is ultimately what drew me and was excited to join Greg's team.

So Patrick, you mentioned it, and we'll touch on it a little bit, too. I think many of the listeners will find it interesting that both of you spent a pretty significant chapter of your careers, respectively, at Amazon. Could you just talk about anything from the experience that has shaped your approach to leading Coursera coming from Amazon, particularly around product innovation, just seeing Amazon's proven product strategy and parlaying that into Coursera's execution as well? And then more specifically for Greg, last time we talked at earnings, we discussed product, but also content and go-to-market as primary focuses of growth areas. Could you just share progress as you get further into the seat of CEO against those three objectives?

Sure. So maybe I'll start with what I took from Amazon that I think is highly applicable here. So for those who aren't familiar with my background, I spent 23 years at Amazon, led the creation and launch of Alexa and Echo, and then scaled Prime Video into a global streaming leader. The things that I thought were really applicable from Amazon to Coursera, first of all, obviously, a strong grounding in e-commerce fundamentals is applicable to the model of what Coursera sells, even though it's a digital product, not physical products with a lot of Amazon.

Second, a focus on product innovation and innovating around product to solve customer needs. And so one of the first things that I did when I joined Coursera was focus on what are the durable customer needs that we believe will be true forever. And then how do we pour as much energy as possible into improving those on a day-to-day basis.

And so coming to your second sort of question about content, content is the engine of the business. And I think historically, Coursera hadn't invested sufficiently in our content engine. And so we've increased that investment. Well, that's one of our three primary focus areas. And I think you're starting to see that with some of the things that we're doing, both in terms of improving the performance of content on the platform and in terms of the new partnerships that you're seeing. We just announced Anthropic yesterday at Connect. And so obviously, that is a highly relevant new set of content to bring to the platform in the current day and age.

And then in terms of go-to-market, I think one of the things that Coursera has done a very good job of over the last probably 1.5 years or 2 years is doing a very good job with external marketing, but I don't think we were matching that with performance on the platform in terms of necessarily converting or retaining all of the customers who came. And so that's been a big focus for us since I joined and certainly since Patrick joined as well.

Great. And we'll touch on Anthropic in a bit. But before we get there, I just wanted to level set with everybody. So this week is obviously Connect, which is Coursera's annual conference, customer and partner event. For everybody that may not be as familiar with Connect, could you just give a brief overview of what's taken on during the event throughout the week, some good product announcements through Skill Tracks, which we'll talk about, Anthropic, others as well, too. But just more at a high level, what is the overall feedback from Connect over the past 2 days?

The feedback has been fantastic. So Connect is our annual event where we bring together all parts of our ecosystem. So our content creator partners, our industry partners who also create content and then our enterprise customers. And the enterprise customers span both businesses, universities and government. So I think it's a really unique gathering in the sense that it brings together these three very different sectors that all are focused on the same primary objective, which is how do we ensure that we're able to deliver the right skills to people to help them be effective in today's economy, whether that's a university, how we augment the degree that we offer as a university with courses from Coursera to give our students the right skills they need when they enter the job market, an enterprise that's looking to upskill or reskill their workforce to ensure that they can remain competitive as AI changes jobs or a government that wants to enable their citizens to be more productive.

And so it's a phenomenal gathering because of that multidimensional aspect of it. And we use it to both connect with all of our constituents, all of our different customer sets as well as to unveil new product offerings. And so the response has been fantastic so far. Skill Tracks has been incredibly well received by folks across those three different groups. Some of the improvements that we're making as well to Course Builder and Role Play are also really positive developments as well. I'll let Patrick talk about Skill Tracks because he and his team were obviously deeply involved in the launch of that.

Yes. And Bryan, I'd just add, if I may, the -- one of the things that I think you really, really focus on at Amazon is being very, very customer-focused and very customer obsessed. And for me, as a relatively new member of the Coursera team to have Connect happening this week and meeting that diverse range of partners, and being able to both share what we're launching, which I'm happy to talk about, but also get their feedback, which, as Greg said, has been extremely positive. And they're excited about where we're headed, they're excited about what we're launching. And they're looking to us to move as quickly as the world is moving around them in terms of the demands for their business or for their learners. So it's been an amazing week. From a product perspective, it's been a firehose of learning, which is what you want for your team.

No, definitely. And sticking on that theme, too, I mean, the clear catalyst across the industry is really just the proliferation of generative AI and really enhancing skills-based learning through an AI lens. So Greg, I mean, you raised that important point during the keynote yesterday about not only the Gen AI shift, but the upskilling and reskilling demand as jobs are changed and the workforce has reshifted over the next few years. Could you just talk a little bit more about how the skills in industry overall is changing and particularly the impact of AI that you can leverage at Coursera, not only on the product, but on the content and on the ecosystem more broadly to really cater towards the needs of consumers, but also your enterprise partners as well?

Absolutely. So AI, obviously, is written about all the time in the media, and people are using it at an unprecedented pace. I mean I mentioned in the keynote yesterday, the fact that ChatGPT became the fastest adopted technology to get to 100 million monthly active users, which it did 2 months after it launch. And in July, they passed 800 million weekly active users. So it's incredible the adoption that we've seen. And I still think we are very much at the beginning stages of this tidal wave in terms of the impact that AI will have on every single job and on the way that we accomplish everything. And so how exactly that plays out, no one knows. But I think what is critical is that people are going to need to learn new skills, and they're going to need to get good at learning new skills continuously to stay in front of AI as AI's capabilities become better and better and it's capable of doing far more things.

And so what are the implications of that? Well, first of all, like continuous learning is obviously going to become critical, and Coursera is well positioned to help people with that. And that's true whether you're an individual learner thinking about, okay, how is my job going to change? Or how is the career that I want to go into going to change? And how do I develop the right skills that I can demonstrate in a verifiable way to prove that I can go into this job or advance in my career. I think that's going to become increasingly important, verifiable skills. So that was a big portion of what we talked about with Skill Tracks.

Second, for businesses, how do I improve the performance of my organization and remain competitive in the age of AI? How do I upskill and reskill my workforce? How do I apply people and move them from mundane things that AI can now do very proficiently to higher-value things, to increase ROI on that human investment. And then for universities and for academia, how do we evolve to make sure that we're giving our learners the right skills they need as they enter the job market. That's why everything that we're doing at Coursera revolves around skills, which I mentioned in the keynote. Skill Tracks is a great example of that. It's about giving focused ways for people to learn the right skills in given fields. We'll continue to expand the number of Skill Tracks that we have. We'll also continue to expand the verification of those skills as well, which I think is increasingly important.

Definitely very impressive announcements yesterday, and we're going to get into a couple of the content investments before we get to Skill Tracks. So I mean, I think many listeners have obviously seen Coursera is best known for its content across universities and industries as well, including many of the world's technology companies. So yesterday, you announced new industry certificates as well as 10 new global partners. More specifically, you also highlighted Anthropic. So really a two-parter for you, Greg.

Why do these partners continue to choose to work with Coursera? And can you elaborate more on the dynamics of the new content partnership with Anthropic from yesterday? And then number two would be just how do you think about the balance of content investments across categories like certificates, Gen AI and other areas as well? I mean you mentioned in your opening remarks too that you felt Coursera was underinvesting in content in the past and really is turning up the dial in terms of personalization and meeting learners where they are in their journey. So just really curious on your insights to the content strategy overall.

Absolutely. So one of the things that I mentioned, and I'll start with the last part of your question first and then go in reverse. One of the things that I mentioned in the keynote yesterday is with AI, we now have the capability to create a much more personalized and dynamic learning experience than ever before. So we can start the learner at the right place. And whatever scale they're trying to acquire instead of everybody starting in the same place and going through the same course material, we now have the ability to start people in a specific place that is appropriate for them. That is where we want to go with our learning experience. We're not there yet, but that's where we want to go.

Second, we have the ability to tailor the pace that they move at whatever is appropriate for them. We already do that through Coach. And Coach and Role Play and Dialogues and other AI-driven features are going to be one of the primary ways that we continue to invest in improving that experience for them and ensuring that, that experience is always paced at the appropriate level for their learning. And then also, we want that to be in the appropriate learning modality. So based on whatever their preferred learning style is, some people learn better by watching things, other people learn better by reading things, other people learn better by doing things. And so we want to make sure that there's a combination of learning by doing and learning by consumption, whether that's audio or video or reading and enabling learners to tailor that to their own preferred learning style, both generally and in the moment.

And then finally, content is going to become far more modular. And so instead of having only really long courses, we grew, obviously, out of the MOOCs and out of the course that Andrew and Daphne created at Stanford. And so the model at the start of Coursera's history was either a semester or quarter-long course. And that was true with a lot of the content that we had over the first decade of Coursera. Increasingly, we are seeing both university partners and our industry partners create courses that are shorter and more tailored to very specific skill objectives. And we want to make sure that to enable that, content becomes much more modular. So it's easier to stack. It's easier to configure. It's easier for our partners to reuse. It's easier for enterprises to reuse, and it's easier to tailor to individuals as they go on their learning path journey.

That's super helpful. And could we dig a bit deeper, too, on just the dynamics of the Anthropic partnership from yesterday as well and how you'll partner with Anthropic to really just drive innovation, leveraging AI as well?

Yes. We're very excited about the new Anthropic announcement. It's the start of our relationship with them. I believe that hopefully, it will expand over time. Obviously, they're one of the preeminent AI research companies in the world. And the demand that we're seeing for AI content is tremendous. I mentioned that in the keynote yesterday as well. So back in 2023, we saw an average of 1 enrollment per minute in Gen AI content on Coursera. So far this year, we're at 13 enrollments per minute. And that number has kept going up as the year has gone on. Earlier in the year, it was a little bit over 10 and then it was 12, and now it's 13 enrollments per minute on average across the entire year. And so we're not at the peak yet. I think we're very far from it.

Part of that is the fact that we've expanded our Gen AI catalog tremendously. So we now have 1,200 different courses on Gen AI on the platform. Anthropic is our most recent marquee addition in that space. I think it will be immensely popular for our learners, both because of the fact that many of them are already using Anthropic and will be familiar with Anthropic, but also because of the fact that they bring such credence to the space and have such a deep set of expertise. And so the focus is on ensuring that people can learn how to use AI safely and effectively and just become more skilled in leveraging AI in their jobs and in their careers.

Definitely. And for Patrick, just based on your early assessment, too, I mean, what are some of the ways that you believe these product capabilities can really speed up or evolve the content engine, whether that be leveraging Anthropic or some of these other early professional certifications just across the content stack more broadly?

Yes. As Greg said, accelerating our content engine is a critical element of our long-term road map and certainly what we're doing in the very near term, enhancing the value of the brands that we work with, allowing partners to be more agile and move faster. Because we know as learner skill needs change, our partners need to move just as fast in terms of developing great new content that aligns to the skills as those skills and application of those skills evolve quickly in the workplace. So we're very focused on equipping instructors and authors with the tools they need to move quickly to both -- either create new courses or to optimize the courses that they've just launched even within months. Sometimes they need to go back and optimize that.

So we're doing that in a few different ways. Course Builder, which we launched back in 2023, has been a tremendous asset, especially to our enterprise customers. They've created 4,000 new courses, leveraging that, and I'm hearing a lot here at our conference that this has been a game changer for them. And we understand that because it's -- we see in the data, they're completing courses, course building 87% faster than they were prior to launching this. So clearly, the AI tools that we've built into Course Builder are making that process more efficient for them and ultimately creating higher quality courses as we're able to provide suggestions on how to optimize for engagement and learner progression, and they're finding that to be very, very helpful in terms of driving course retention and completion, which is especially for our enterprise customers, that's where they're really focused.

The other one -- the other example I'd point to is how we're leveraging AI around translation. We have translated -- especially this year, we've been focused on AI dubbing. Back in April, we had 100 courses that were dubbed via AI. By the end of the year, we'll be at 1,000 courses across five languages. And the reception around that has been tremendous as well. We see higher engagement. We see that absolutely as a way to engage very directly with students in the language they're most comfortable with and an experience that feels very natural. So our instructors and our course builders love it, but especially our students love it. So we're really focused on AI driving both of those experiences in course building and accelerating translation in a very natural way to support our content growth.

So you mentioned it as well too between Course Builder, Coach, as Greg mentioned before as well, and Role Play and Dialogues rolling out. I mean, to me, some of these are the key product initiatives, and we'll get to Skill Tracks in a minute as well, too. But what would you highlight across whether it be Role Play? I mean, we hit on Course Builder as well. But are there any other key areas of innovation across the AI product stack that you think will really resonate with not only consumers, but enterprise and industry partners overall going forward?

Absolutely. So a few thoughts. One, we started to invest in AI-driven products long ago. And so some of the things that you just mentioned, we have been working on for years. And so after ChatGPT launched, in November of 2022. Very quickly after that in the spring of 2023, we launched Coach, we launched Course Builder, and we've continued to improve those and innovate in those areas. And you're seeing that reflected in things like Coach Dialogues, which launched earlier this year, Role Play, which we just announced yesterday.

To spend a little bit more time on each of those, and then I'll pass it over to Patrick so he can expand on this. So Coach is an AI-driven tutor that sits alongside every course and it's grounded in the material of that course. And so learners can use Coach to get help with any part of the course. They can ask any question that they have. They can use it to sort of prep for tests. They can use it however they want. It's going to be -- it's a very familiar interface because it operates just the same as like ChatGPT would or any other AI interface would. And we've seen incredible adoption from our learners, and we see that it boosts their learning efficiency, quiz pass rates, et cetera.

Course Builder applies AI to the act of creating content. So as Patrick mentioned, it's been available for our enterprise partners. We're now rolling it out for our university and industry partners as they create content. And it makes it incredibly easy to create content effectively from scratch, using whatever materials you have on hand and then leveraging AI to make the act of creating a course far, far simpler.

Dialogue is an embedded activity that an instructor can put into a course where it leverages AI to create sort of one-on-one immersive learning and scaling socratic dialogue. And then Role Play is based off of the principle that one of the best ways to demonstrate knowledge and test your knowledge is to actually go through a role play simulation. AI obviously enables that. So those are some of the things that we've done more recently on top of that foundation, but we're applying AI throughout all areas of what we do, and that will continue to be a focus for us. We're increasing our investment in AI in the product, and I anticipate that, that will continue in perpetuity effectively. And Patrick, please.

No, absolutely. I would just -- I would say it's a major focus for us because what is so exciting about the advancements in AI is that it can deliver very personalized and very contextually relevant learning experiences. And especially as we're focused on skills development and the application of knowledge, those kinds of practice experiences or test experiences require a much more involved, engaged experience where a student is building, they're getting feedback, they're learning through the process of building often. And AI is absolutely perfect for that in terms of creating those experiences. So I see Dialogue and Role Play as foundational experiences, but we're going to continue to expand the number of experiences that are powered by AI and also just continue to focus on how those can be applied to create very realistic skills development scenarios because that's how skills are ultimately attained and mastered.

And maybe just actually to circle back on one thing that I mentioned a little bit earlier that we're also leveraging AI to do. So in an age where AI makes it easier than ever to create content, I think two things are really important. One, the value of trusted content increases in that environment. And so our relationships with top universities and top companies in our industry partners who create content, whether that's Google or Deep Learning or Microsoft, Amazon, now Anthropic is incredibly powerful and helpful for learners.

And then the second piece of that is that demonstrating not just that you've taken a course, but that you have verified mastery of the skills that the course is teaching becomes incredibly important in the age of AI. And we've invested a lot in AI-focused authentic verification of skills. So we have a whole suite of academic integrity features where we use AI to verify an authentic learning experience and mastery of skills. So we have course proctoring. We have academic integrity check. We have a bunch of different AI features that ensure that the people are not sort of skating through and just sort of watching a video and then saying, "Oh, yes, I took this course." But actually, we're testing their skills, and they have to demonstrate those through verified assessments. And I think that's very important in today's world, and that's going to be a continued area of investment for us as well.

I definitely agree. And in this age of AI, not only content generated by university partners that are trusted brand is going to become an increasingly important part of that equation. And Patrick, layering in the Skill Tracks that you mentioned yesterday, I mean, can you just elaborate on the launch? What makes it different from Coursera's existing products? And really, how does it tie together the value creation of having a verified skill for that select upskilling or reskilling case that, that learner wants?

Yes. We're incredibly excited about Skill Tracks because we see it as a turnkey data-backed learning solution that enterprises, in particular, can use to skill or upskill specific teams across their enterprise, across their workforce. And it really brings together three things that it really pulls together in many ways, a lot of the direction of where we're looking to go as a company. One is alignment of that modular content that Greg referenced, two our Career Graph. So we have a highly detailed skills-based Career Graph informed by over 2 million data points that really allows us to map specific content experiences or assessment experiences down to the skill level, down to the task level. So down to what actually learners are going to be expected to do in their place of work. And that's really important to get that alignment between learning and skills and actual application.

And so we do that in a couple of key ways. First is really building in lots of those interactive AI-powered experiences that I mentioned before that enable a learner to have personalized practice of that skill through realistic scenarios, whether it's through Role Play or Dialogue or Labs that are AI-powered, all of those things allow them to very much practice those skills in a very applied way.

Then as Greg referenced, we've now developed a series of verified assessments. And these assessments are very distinctive in that they're focused on actually validating that you can apply your learning in a task that's going to very much mirror what you're going to do at work, so that these assessments are focused on actually using AI. We actually monitor how a student works their way through a number of tasks. Again, these could be tasks related to using an LLM or putting together a report leveraging various tools and technologies or doing statistical analysis. It could be a number of different tasks that you may have to do in your specific job and these assessments capture your work, assess that, and give you very immediate feedback, you've mastered these skills, but you still need to work on those skills. And you can keep working on those through your Skill Tracks until you ultimately pass that verification and gain a credential.

So one of the key things about a Skill Tracks is that when you've actually completed a series of skills and assessments and you earn a credential, that credential means you actually know how to apply those skills in very realistic ways. So we think this is a real game changer in terms of just validation of skills, not just knowledge, but application being demonstrated before we say you've earned a credential. So we're incredibly excited about that because I think it will give both learners confidence that they've managed to attain and master those skills. And importantly, it's going to provide employers with a lot of confidence that if they've actually earned that credential, there's a very strong correlation to their ability to go do that at work, which is ultimately what they want to drive better business outcomes.

Excited by the launch. And I believe Skill Tracks will be sold as an enterprise offering, but a lot of your work that you're building also applies to the consumer learning journey, right, build once and leverage over the consumer and enterprise journey overall. So I mean, with that being said, right, Coursera has recently made enhancements to the consumer site experience, career-based discovery in over 500-plus roles, enhanced course preview and geo pricing more recently as well. So Greg, as you think about the pillars of growth of product content and go-to-market, could you just touch on the indicators and funnel metrics that you're tracking to see improvement in ROI on some of these investments, including Skill Tracks which just launched?

Happy to do so. So on the last call, I think I described our business as a relatively simple one. We have top of funnel, we have conversion, we have retention, we have ARPU. A lot of businesses have those same different things in their funnel. And to bring much more of a data-driven focus on each one of those different stages of the funnel and then figure out, okay, how do we drive product innovation that improves our performance at each one of those stages.

And so you mentioned the career-based discovery. Career-based discovery is sort of an underlying approach that helps take people when they arrive on the -- not even just when they arrive because we can also use the things that we know about learners as part of our marketing efforts off platform as well. But certainly, when they arrive to help tailor the experience to what they're looking for, because a lot of learners arrive at Coursera with a relatively high-level view of what they might want to learn, but not really a detailed specific knowledge of what they might want to learn.

And oftentimes, they're interested potentially in multiple different roles or they don't even understand the specific roles in an area. They might just think, I think I'm interested in data. I like numbers, I'm interested in data. What can I do with that? And so the goal of career-based discovery is to help guide them to the right content for what they're looking for. And so it starts with a short onboarding quiz and then we use that information to then put them on the right start to the learning path that seems appropriate for them.

Over time, I imagine we will continue to evolve both the way that we do that as they onboard, but also how we feed signals back throughout their learning journey with Coursera back into that. And so you may start down a particular course. You may realize, oh, actually, maybe I'm not quite as good as numbers as I thought, like or I don't like them as much as I thought, maybe I should look at something else or I like numbers, I'm just not as good. I need to like go brush up on this. Here are some courses that we think might help. And so Coach could recommend those. We can point them to other courses. And so we'll continue to invest in that.

And then in terms of -- you mentioned our preview model and our geo pricing. So historically, Coursera had sort of one U.S.-based price all around the world. Obviously, purchasing power in different countries around the world is very different than in the U.S. and GDP per capita is very different. And so we recently rolled out region-specific pricing that much more aligns the offering that we have to purchasing power in countries around the world. And so we've been pleased with the response to that. I think we'll continue to iterate on that over time just to ensure that we're always providing a product at the right value for consumers in any given market.

And then the preview model really enables us to give every single learner the option to go through the first module of any course with all of the features for that course, including Coach and all of our AI features, graded assessments. And those things had not previously been available in our former audit experience. And so it really improves the learning experience as you go through that first module and gives you a much better picture because it's the entirety of the offering of what the rest of the course will be like and the learning experience will be like.

We're pouring substantial investment into continuing to improve the learning experience through things like Coach and Role Play and Dialogue, et cetera. And so we wanted to make sure that all of our learners were able to experience that in preview. And so that helps us with conversion and also ensures that people are really motivated as they continue through that process. And that, in turn, ties to the verified outcomes as well.

It's been very impressive to obviously see this all roll up into the numbers as well, whether that be registered learner growth, revenue growth as well. So as you continue to expand and go and capture rapid product innovation, do you think you have the right capacity at Coursera to invest in talent, technology and the tools? Or do you need to move quicker? And I guess, conversely as well, I alluded to it before, but strong recent performance in the front half of the year, how should investors measure the success of these continued efforts as we go through not only the back half of this year into '26 and beyond more fundamentally?

Well, I think certainly, we have the capacity to continue to invest. It's been really good to see the fact that we accelerated our growth in Q2. We grew at 6% in Q1 and then 10% in Q2 with that growth evenly balanced across consumer and enterprise. Investors, of course, will assess our performance based on every single future quarter. And our goal is to continue to grow at a faster and faster pace and to do that while demonstrating operating leverage. And we believe that we can continue to invest to help fuel that growth while continuing to demonstrate operating leverage, which is sort of what we showed with our updated guidance for the year. We increased our revenue guide $742 million at the midpoint, and then also increased our EBITDA guide from 7% for full year EBITDA margin to 8%. So demonstrating that we believe we can both accelerate growth but also be responsible stewards of our capital and demonstrate operating leverage.

I think one of the things that we are going to increasingly focus on because Patrick has only been here for a few months. I've only been here for 7 months. So we're still in the very early days of actually helping the business and the organization execute in a way that I think we're capable of doing. And we started doing that by updating our operating model, really focusing on some core capabilities from a product perspective that will deliver better business outcomes by delivering better learner experiences. And I'm a firm believer in tying business outcomes to improve customer experiences.

Just based on my time at Amazon and my time as a customer of different products, if you're able to deliver a great customer experience, you should be able to deliver a great business. And so we're still in the early stages of that. And I'm really confident that we are headed in a positive direction and looking forward to hopefully demonstrating that for the Street quarter-after-quarter for many years to come.

Definitely encouraged by the early signs here and looking forward to the future as well. So I guess with that, we're approaching the end of our session here. I'd just like to leave it by asking each of you a few questions. If we could fast forward 3 years from now or so, how do you expect Coursera's performance in platform and product innovation and experience more broadly to be different? Patrick, we can kick it off with you and close with Greg.

Yes. Thank you. And I would say, one, expect bolder, more rapid product innovation. We feel a lot of urgency to meet the needs of learners, which are changing rapidly and to serve our enterprise customers and our partners as skills needs change and evolve rapidly. So we're driving with a similar sense of urgency. So I see clear opportunities to accelerate how we build. I see opportunities to create a deeper, more personalized learning experience. That's ultimately going to drive better outcomes for learners and ultimately, better outcomes for the businesses and organizations in which they work.

If we do that well, if we stay focused on that, that's going to drive value for them and value for our business and shareholders. So for me, I'm very focused on the pace of innovation and innovating at scale as we continue to grow and bring these experiences to learners around the world.

Maybe to build on that, I think in 3 years' time, pick your time horizon, but I believe that Coursera can become the destination for the world, both individual learners and enterprises to enable either themselves as individuals or workforces to discover, master and verify the skills that they need to advance their career and for enterprises to remain competitive and improve their competitiveness. I think that need has never been more urgent with the way that AI is reshaping the labor market and what's required in any given job. And I think that we are uniquely positioned to address that need.

We've got a deep history of investment and innovation in AI. We see and are leveraging our Career Graph to demonstrate our understanding of the way that skill and job requirements are changing. And our ecosystem across university, industry and government gives us unique windows into how we can help people reshape their careers and their lives through learning and how we can do that in a fashion that is ever more personalized and more interactive through the investments that we're making in product innovation.

And so I would expect that in N years' time, Coursera will be an even more personalized interactive experience that the learning journey will be far smarter about you as a learner and what you're trying to accomplish, and it will be far more engaging and effective. I think we already have a very engaging effective learner experience, but I expect that we'll just continue to improve on that with a specific goal of delivering skills that help you advance your career and delivering skills that help enterprises ensure that their workforce is positioned really well to compete in their space and outcompete competitors there.

Awesome. Well, I'm looking forward to following the progress in the coming quarters and years. So Greg and Patrick, I really appreciate the time to discuss Coursera's latest announcements and focus areas. And to our audience, thank you for joining. Everybody, have a great day.

Thank you, Bryan.

Thanks, Bryan.

Ladies and gentlemen, thank you for standing by, and welcome to Corsera's Second Quarter 2025 Earnings Call. [Operator Instructions] And this call is being recorded. [Operator Instructions]

I would now like to turn the call over to Cam Carey, Vice President of Investor Relations. Mr. Carey, you may begin.

Good afternoon. Thank you for joining us for Coursera's Q2 2021 earnings conference call. Today, I'm joined by Greg Hart, our President and Chief Executive Officer; and Ken Han, our Chief Financial Officer. Following their prepared remarks, we will open the call for questions. Our earnings press release was issued after market close. It is available on our Investor Relations website at investor.corsera.com, where this call is being webcast live and were versions of today's materials, including our quarterly shareholder letter have been published.

During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP measures to the most directly comparable GAAP measure can be found in today's earnings press release and supplemental materials. Please note all growth percentages discussed refer to year-over-year change unless otherwise specified.

All statements made during this call relating to future results and events are forward-looking statements based on current expectations and beliefs. Actual results and events could differ materially from those expressed or implied in these forward-looking statements due to a number of risks and uncertainties, including those discussed in our earnings press release, shareholder letter and SEC filings. Please refer to today's earnings press release for more details on our forward-looking statements.

And with that, I'll turn it over to Greg.

Thank you, Cam, and good afternoon, everyone. It's great to be with you all. Coursera delivered a strong second quarter. We are executing at a renewed and rapid pace, delivering revenue of $187 million and increasing our growth to 10% year-over-year. We also drove strong bottom line performance, generating $29 million of free cash flow, which was up 68% from the prior year.

Given the early momentum we demonstrated in the first half, I am pleased to share that we are raising our expectations for full year revenue and adjusted EBITDA. We now expect to deliver $738 million to $746 million of revenue, raising the midpoint of our range by $17 million. We are also increasing our annual adjusted EBITDA margin target to 8%, delivering 200 basis points of year-over-year improvement, while deploying investments intended to unlock more durable growth.

As the pace of technology reshapes the labor market, I believe Corsera's market opportunity continues to expand, fueled by the global demand to embrace new technologies and skills. In Q2, we attracted 7.5 million new registered learners. This was the largest number of quarterly new additions since 2020, growing our total cumulative base by 18% year-over-year to 183 million. We also grew the number of paid enterprise customers we serve by 12% year-over-year with 1,686 customers spanning businesses, governments and campuses.

As one of the largest and most globally distributed learning platforms, our data is becoming an increasingly powerful asset that provides us with a unique lens to help our learners on the consumer side, discover and master skills that can advance their careers, to support our enterprise customers looking for the best way to upskill their workforces at scale, while navigating rapid changes in the labor market and to draw insights that inform our content strategy, skill assessments, recommendation engine and product development cycles as we begin to transform the learning experience.

As part of my initial observations last quarter, I shared that we were in the early stages of implementing thoughtful changes to our operating model, focused on driving more innovation and engagement throughout our learner experience, more rapid product development cycles, more speed and agility in our content engine and a data-driven approach to continuous improvement in all aspects of our business.

To support these efforts, I was excited to announce the appointment of Patrick Supanc as Chief Product Officer; and Grant Parsamyan as Chief Data Officer, welcoming them to my leadership team. Both are seasoned leaders with deep expertise in building customer-centric products, scaling data transformations and driving rapid innovation. They have hit the ground running, working alongside our teams to shape our next chapter of innovation, unlock new avenues for growth and build new operational rigor that can accelerate our progress.

Coursera's ecosystem is built on a strong foundation of assets, which I believe will help us shape the future of learning by in reinventing how skills are developed and reimagining how education is delivered at scale. Our branded content is one of those assets. Our catalog now includes more than 10,500 courses, having expanded by more than 36% over the past year.

Learners come to Coursera to discover and master in-demand skills taught by world-class instructors trusted for their academic rigor, industry expertise and career relevance. To meet the growing demand for AI skills, our generative AI catalog now includes more than 925 courses, having tripled over the past year. We recently surpassed 10 million enrollments in generative AI courses seeing 12 enrollments per minute so far in 2025.

In connection with this milestone, we were proud to announce new courses and certificates focused on job-specific generative AI skills, featuring offerings from AWS, deep learning.ai, Google Cloud, IBM Microsoft, Snowflake and more.

Earlier this month, Corsera was named to the Time 100 most influential companies list for our efforts in expanding access to generative AI skills for learners around the world, helping the global workforce better understand and apply this new technology. We will continue to work closely with leading AI companies as well as our world-class universities who share our commitment to broadening access to job relevant education, so that learners can navigate and succeed in a fast-changing labor market, businesses can strengthen their workforce to remain competitive and campuses can better prepare their graduates.

As part of this commitment, we also continue to expand our catalog of industry micro credentials. In July, we announced 5 new entry-level professional certificates from existing partners including ADP, IBM, Microsoft and SAP as well as our first certificate from Zoho. These certificates provide the necessary skills to start a career in various roles from AI product manager to sales representatives. Increasingly, they are also eligible to earn college credit enhancing their value to our learners and opening new more affordable pathways to college degrees.

Earlier this month, we were pleased to share that 17 additional professional certificates from Meta, Microsoft and IBM were awarded ECTS Credit Recommendations in Europe along with 5 from ACE here in the U.S. We now have more than 30 micro credentials with ECTS Credit Recommendations with approximately 40 from ACE.

As demand for career line education from industry grows, we believe top universities will also view Coursera as a strategic platform to extend their reach. Last week, we were pleased to announce that the University of Cambridge is now collaborating with Coursera. For the first time, the university will bring a series of professional education courses to our platform. The first of these courses is now live, with more expected to launch in the coming weeks.

To summarize, we will continue to invest in building a faster, more agile model that enhances the value of our brands, meets the rapid pace of skills development and empowers our instructors with new tools to create and augment courses that deliver a more engaging, personalized and impactful learning experience for the millions of learners and customers our platform serves.

Turning to our product updates. Our team continues to make strong progress in developing new products and capabilities across our platform. And I would like to highlight a few notable recent innovations focused on delivering more value to learners and driving improvements in our conversion, engagement and retention metrics over time.

First, an update on Coursera Coach. Coach is our AI-powered tutor designed to support and enhance the learning experience on Corsera. To date, more than 2.6 million learners have exchanged 36 million messages with Coach, with the highest usage in the U.S., India and Colombia. From our early data, we see that learners using Coach are 10% more likely to pass a quiz on their first attempt. Additionally, learners starting their careers are 40% more likely to use coach than those working to advance their careers, demonstrating the potential impact of providing a more personalized interactive engagement across our platform.

In June, Coach was recognized by the 2025 Newsweek AI Impact Awards, winning for AI education, best outcomes for its ability to adapt to the needs of individual learners. By combining trusted content with AI-enabled guidance, Coach is becoming increasingly powerful at providing a more personalized and interactive experience, grounded in the expertise of our instructors and Coursera's deep data-driven understanding of learning progression and skills development.

Our team continues to build upon the initial tutoring use case, testing new capabilities in discovery and onboarding, career guidance, interactive role play and customer support. We are excited about Coach's potential to drive stronger engagement throughout our platform and, most importantly, to deliver better outcomes for our learners.

Next is AI Translations. Coursera has been leveraging AI to broaden access to our high-quality catalog, starting with text-based translations in 2023. Today, our platform offers more than 5,500 courses and up to 26 languages. In April, I highlighted that the next phase of our translation efforts, AI Dubbing, would begin to bring native language learning to Coursera featuring the voices of our expert instructors. We started with an initial 100 courses from 3 partners at launch.

Over the past few months, we have tripled the number of available courses, including many of our most popular titles from Google and have added support for a fifth language Indonesian. To date, more than 120,000 learners have utilized AI Dubbing to complete more than 400,000 learning hours with the strongest engagement coming from our Spanish-speaking markets.

Preliminary feedback from our learners highlights improved focus and understanding as well as the time-saving benefits of remaining on platform for translation capabilities. We will continue to expand access to the world's best instructors with added support for more languages and content creators in the coming months. It's a prime example of harnessing advancement and technology that leverage the scale advantages of our global reach.

These efforts expand our market opportunities and rapidly build on the foundational assets that have propelled Coursera's growth into one of the largest learning platforms in the world. Third, our efforts to better serve our growing population of international learners go beyond reducing language barriers. Last quarter, I highlighted the global rollout of our career-based discovery experience.

As a reminder, this includes more than 60 role description pages that utilize Coursera's career graph to provide credential recommendations across different levels of career progression and skill mastery, as well as localized salary and job data for approximately 40 countries. This was one example of our broader efforts to reimagine the learner journey on Coursera, encompassing improvements in search, discovery and onboarding.

The scale and data of our platform create powerful opportunities for personalization and localization, enabling us to tailor content, language, recommendations and experiences to meet the needs of individual learners and labor markets in different regions. This quarter, we started experimenting with preliminary enhancements to our go-to-market capabilities, aiming to guide individual learners more effectively through our funnel with an improved site experience, new promotional and geo pricing capabilities and better merchandising that articulates a clearer value proposition across our courses, certificates and subscription offerings.

The early results are promising. We are seeing positive impacts in our new paid learner conversion, including in international markets that drive substantial top of funnel activity and provide meaningful opportunities for us to deliver more valuable experiences, which can improve our paid conversion over time. I'm excited about our product road map for the rest of the year, and look forward to providing updates on our momentum in the coming quarters.

Our second quarter performance marks an important step in laying the foundation for our next chapter of growth. As a reminder, our efforts will be focused on 3 priorities: first, product-led growth is key to our strategy. Our team is making strong progress in enhancing our platform's capabilities and I am confident in Patrick's and Grant's ability to accelerate our product development life cycles, leveraging advanced AI and data-driven insights across all aspects of our business.

Second, we will accelerate our content engine, the breadth and quality of our catalog enable us to serve both upskilling and reskilling use cases. I expect course builder, academic integrity features and more AI production and ingestion capabilities will allow us to build a faster, more agile content model, while preserving the value of our credible high-quality brands and meeting the rapid pace of skills development required by a real-time learner and business needs.

Third, we will continue to improve our go-to-market capabilities. Our efforts to reimagine the learner journey are early and promising. By creating a more unified and integrated experience across our platform, we ensure that our investments in marketing and discovery deliver a more personalized, engaging and valuable experience for the broad audience of learners and customers that we serve. I am excited to build on our momentum as the year progresses.

Now I will hand it over to Ken to walk us through the financial performance and outlook in more detail. Ken, please go ahead.

Thank you, Greg, and good afternoon, everyone. We delivered another solid quarter, generating total revenue of $187 million, up 10% from a year ago, driven by growth in both our consumer and enterprise segments. As Greg mentioned, our expectations for full year growth have improved as we begin to implement new operating capabilities and execute on a focused set of initiatives.

Please note that for the remainder of this call, as I review our business performance and outlook, I'll discuss our non-GAAP financial measures unless otherwise stated. In Q2, gross profit was $105 million, up 13% year-over-year with a 56% gross margin, up 180 basis points from 54% in the prior year period.

The expansion on our gross margin rate continues to be driven by increased learner demand and engagement with content launched under our more recent production arrangements, which, as we've discussed, commonly include a lower revenue share and associated content costs.

Total operating expense was $93 million or 50% of revenue, an improvement of 150 basis points from the prior year period on continued operating discipline. Net income was $19 million or 10.3% of revenue, and adjusted EBITDA was $18 million or 9.6% of revenue.

I remain pleased by our strong bottom line performance as we leverage our annual operating framework to enable the right long-term growth decisions over the course of the year. It is a strong indication of our operating discipline and a reflection of our capacity to invest in unlocking our next chapter of growth.

Turning to cash performance and the balance sheet. Q2 marked our strongest quarter of cash performance to date. We generated $29 million of free cash flow, which included approximately $2 million in purchases of content assets treated similarly to other categories of capital expenditures.

As Greg outlined, we continue to enhance our content engines capabilities with new partnerships, production arrangements and learning experiences that we believe will deliver increasing value for our customers over time. We also expect these investments to produce longer-term benefits to our business model and economics, including the recent expansion in our gross margin.

Our cash performance enhanced our already healthy balance sheet. As of June 30, 2025, we had approximately $775 million of unrestricted cash and cash equivalents with no debt. Our capital allocation framework prioritizes the strategic optionality afforded by our strong financial position. We believe this current prioritization is particularly valuable given the industry's rapid transformation and our ambition to grow and enhance our leadership position.

Now let's discuss the results of our operating segments. As a reminder, we now report results in 2 operating segments: consumer and enterprise. At the start of 2025, we refined our segment reporting structure by integrating the Greece product results into our other consumer segment products, including courses, specializations and subscriptions. The simplification was straightforward and reinforced our commitment to building a more unified end-to-end platform experience to benefit the broadest audience of global learners. This simplification has no effect on the reporting of our Enterprise segment or consolidated results.

All consumer segment results that refer to year-over-year change are comparable based on the reclassified historical results that we shared in connection with the transition last quarter.

With that, let's discuss our strong Consumer segment performance. In Q2, we delivered Consumer segment revenue of $123 million, up 10% from a year ago. Growth was driven by top of funnel activity as well as Corsera Plus subscription offerings. As Greg highlighted earlier, we added 7.5 million new registered learners bringing our total base to 183 million. Additionally, we saw strong receptivity to our Coursera Plus subscription offerings and marketing campaigns, including localized promotions and pricing that benefited our paid conversion rate.

Consumer segment gross profit was $75 million, up 13% from $67 million in the prior year period. Segment gross profit margin was 61% and up 160 basis points from a year ago as learners engage with more recently launched content created under production arrangements that provide more favorable revenue share economics.

To summarize, our consumer trends are stable, and progress is promising. We are operating with a renewed level of prioritization and focus demonstrated by our execution this quarter. As we seek to drive more significant growth, we're in the early stages of deploying investments across product, content and marketing that can create more valuable, and engaging experiences for our individual and enterprise learners over time. I'm pleased with the early indications offered by a more responsive consumer model and look forward to sharing updates on our ongoing progress.

Moving to our Enterprise segment. Enterprise revenue was $64 million, up 10% from a year ago, driven by growth in our business and campus verticals. Our second quarter performance was solid. And like all companies, we continue to monitor budgetary trends amidst the backdrop of a dynamic macro environment.

Segment gross profit was $45 million, up 12% from $40 million in the prior year period. And segment gross profit margin was 70%, an improvement of 170 basis points from a year ago driven by similar content engagement trends benefiting consumer. The total number of paid enterprise customers increased to 1,686, up 12% from a year ago, and our net retention rate for paid enterprise customers was 93%.

Finally, turning to our financial outlook. For Q3, we expect revenue to be in the range of $188 million to $192 million, representing growth of 7% to 9% year-over-year weighted towards our Consumer segment. For adjusted EBITDA, we're expecting a range of $10 million to $14 million. As Greg highlighted, for the full year 2025, we are raising our expectations for both revenue and adjusted EBITDA, given the solid first half we delivered.

For revenue, we now expect a range of $738 million to $746 million, representing growth of 6% to 7% year-over-year. The midpoint of the range is a $17 million increase from the annual guidance provided last quarter with the improvement concentrated in our Consumer segment by nature of its more responsive revenue model. As highlighted earlier, consumer growth has been driven by strong year-to-date top-of-funnel activity as well as Coursera Plus subscription receptivity, providing greater visibility into the back half of the year. Our assumptions on the trajectory of our enterprise segment have not changed as we continue to monitor and assess the current corporate spend environment, which could remain challenged for any macro uncertainty.

For EBITDA, we are now targeting an annual adjusted EBITDA margin improvement of 200 basis points to 8%. This reflects an additional 100 basis points of anticipated improvement from our prior full year target of 7% or said otherwise, an incremental $9 million adjusted EBITDA dollars implied by the midpoint of our current and prior revenue guidance ranges.

We believe our long-term operating framework as it relates to EBITDA, which enables us to pace our investments over the course of the full year versus optimizing for any single quarter has been particularly helpful in 2025. It has provided the opportunity to assess our business and identify top investment priorities to drive growth, the capacity to deploy capital toward our most productive near-term growth opportunities as well as strategic long-term initiatives.

The ability to track and demonstrate our commitment to delivering scale and financial leverage in our operating model over time, and most importantly, the flexibility to make the right long-term decisions on behalf of our learners, customers and shareholders.

To close, I'm pleased with the solid execution our team has delivered year-to-date, giving us the confidence to substantially raise our annual revenue and growth guidance. While at the outset of many of our efforts, we are demonstrating progress in implementing new operational capabilities across all aspects of our business, while deploying targeted investments we believe can differentiate the value of our platform and reignite more significant, durable and long-term growth.

I'll now open the call for questions.

[Operator Instructions] Our first question will come from Stephen Sheldon with William Blair.

Great to see the revenue growth acceleration this quarter. And for the guidance, I think the guidance would imply about 8% year-over-year growth at the midpoint in the third quarter, I think below 4% growth in the fourth quarter. So effectively, deceleration against easier comps. Is there anything specific driving that assumption, as you did see acceleration this quarter in both segments. Or is it more about just factoring in that continued macro uncertainty, especially in the Enterprise segment?

Stephen, thanks for the question, firstly. So what drove the improvement in the forecast is primarily the consumer business? The macro trends in enterprise, we don't think we're getting any better visibility, which is something affecting broadly the market. So it's the Consumer segment. And if you look at the core consumer item as it relates to the future quarters, we see strong growth going into next quarter as well. We see a little bit of a pullback seasonally, about 100 basis points for the traditional consumer. And as we mentioned before, we collapsed the Degree segment into consumer, degrees will decrease this year. So the core Consumer segment is rolling along at exactly this improvement and anything less than that from a rate standpoint going forward is a kind bit of seasonality in Q4 and our degrees product, which is partly Consumer segment.

Got it. That makes sense. And then maybe just a follow-up. What are you guys seeing in terms of big tech making AI skills education a bigger priority? We saw the Microsofts $4 billion pledge, I think announced earlier this month. And then how are you thinking about positioning Corsera to be a key cog in Big Tech's plans there? You already have a lot of them as content partners. So is there more you can do there?

Great question, Stephen, it's Greg. Maybe I'll start with a little bit of context overall, now that I've just gone through my first full quarter in the CEO role. So obviously, it's still very early days, but I'm very pleased with the progress we're making. I am even more confident than I was a quarter ago on the massive opportunity in front of us for some of the reasons that you just mentioned.

The pace of change is accelerating around the world and with it, the need for reskilling, upskilling really continues to increase for both individuals and for companies, as you mentioned. And so meeting that need really requires a scale global technology leader in education I think we are very well positioned with all the right foundational assets. We've got amazing, trusted content from the best universities and industry partners in the world. We have an AI-enabled learning platform. You've heard me talk in the scripted remarks about some of the ways that we leverage AI to continue to improve that platform.

We have global reach with 183 million registered learners. And then finally, we've got a very healthy and improving fundamentals to the business. We're growing at an accelerated pace, generating positive EBITDA, free cash flow. We have a very strong balance sheet, no debt, $775 million of cash or cash equivalents. So that's a phenomenal set of assets.

What we are seeing in our conversations with enterprise partners is that they all recognize that the pace of change is accelerating, and they need to make sure that they are adapting their companies to meet that pace, that requires thinking about what are the types of roles that they need and what are the types of skills that the people in those rules will need both today and tomorrow.

So I think there is a large opportunity for us to play an important role in helping them address that shift that they're going through. It's something that we focus on internally here as well, at Coursera. We're making sure that we're not just leveraging AI to offer it as courses on AI and not just use it within the platform but also use it to improve the productiveness and efficiency of everything we're doing across the business. And so I think we absolutely have a role to play in that transformation.

Good to hear. Greg and Ken, and nice results.

We will take our next question from Taylor McGinnis with UBS.

Can you hear me?

Yes.

Yes.

Okay. Perfect. Congrats on the quarter, maybe just on like the consumer outperformance. So if I look at the sequential dollar growth, I think it was the strongest that we've seen in some time. And typically, for you guys, 2Q tends to be the lightest quarter. So when we look into 3Q, I guess is there any reason why sequential dollar growth could it be stronger kind of -- I think you made some comments earlier about some lighter seasonality. So could you just elaborate on that?

And then the second part to the question, maybe you could talk about where you see in terms of rolling out the product and go-to-market changes in consumer and what's left to come as we think about the growth trajectory and catalysts from here?

Sure, Taylor. Yes, so the -- as we mentioned before, the total increase was $17 million, of course, top line, almost all of it focused on consumer. This is the forecast for the year, of course. We expect Q3 to be similar to Q2 from a growth standpoint for consumer. And then to slow a little bit in Q4 with typical seasonality as well as some pullback on degrees. So that's how that $17 million spread across the rest of the year.

Maybe I'll add just a little bit to what Ken shared to address the second part of your question, Taylor. First, we saw growth accelerate in our consumer business in every region across the world. So in North America, in Latin America as well in EMEA and APAC. And so that was really good to see that it was a broad-based acceleration.

In terms of the capabilities that we're focused on, when we talk about really driving more rapid product development, and focusing that in a data-driven way to deliver improvements to the learning experience that drive better conversion, better engagement and better retention, we're still in the early stages of rolling out the product that will flow from all of that focus.

So I think what you'll see is -- we're going to continue to have a very dedicated focus on continuous improvement across those metrics. But we are going to not get ahead of ourselves and get over our skis in terms of how we think about the business benefit that, that can drive until we actually start to see it. We started to see some of those things in Q, we talked about that. Consumer business obviously has a more responsive revenue model. Some of the things that we're doing from a geo pricing perspective and from a conversion perspective are helpful. Obviously, the fact that we increasingly have a subscription-driven business, Coursera Plus monthly, Coursera Plus annual, we're seeing more and more shift to that, that's helpful for our forward-looking revenue visibility, but it's still early days in terms of what we aim to accomplish on the platform. So that's a little bit behind how we think about it.

Our next question will come from Bryan Smilek with JPMorgan.

Shifting gears a bit to enterprise, good to see the NRR improve as well sequentially. Can you just talk about what you're seeing across government, business and campus? I believe you called out business in campus as brighter spots. But just curious on trends across each subvertical. And then, Greg, just shifting gears towards AI engagement with content up 36% year-on-year, 10 million plus AI enrollments. Can you just talk about monetizing AI tools as you drive deeper engagement across both consumer and enterprise longer term?

Bryan, this is Ken. I'll take the first part of your question, which is the relative performance, the verticals. So C4C has been a particularly bright spot for us. We have a particularly good product market fit, and we've seen nice growth there over time. As it relates to NRR, the government business, we lapped some contracts this last year, so that helped in the calculation and C4B hasn't had a Coursera for Business is much improvement, which is the largest vertical, of course. As we've talked about, the visibility there is a little harder to see as many have seen across other industries as it relates to corporate spend with uncertainty. So that's how the NRR breaks out. And the 93%, just for clarity, we're pleased it improved from last quarter. But until we get to 100-plus we are not going to be satisfied with that.

Yes, I would certainly echo the last part of what Ken said. We still have a lot of work that we need to do on that front to get it to where we're happy with it from an NRR perspective. In terms of the catalog and its growth, as you mentioned, 36% growth in the catalog to more than 10,500 courses now. Phenomenal interest in Gen AI. We are seeing that reflected both in the number of courses that we have because, obviously, we have partners who want to meet that interest by creating new content. And so we've seen that triple the size of our course catalog in Gen AI over the past year. And then we're also using Gen AI, obviously, as a tool to drive better engagement with that content.

And so continuously looking to optimize the performance of our courses. You see that with things like Coach Dialogues, which is our AI-driven tool that enables in structures to deliver socratic dialogue in the course based off of their course material. So there's a lot of continued effort on that.

And I would say, broadly, what we want to do with content is make our content engine more responsive both in terms of the breadth of catalog content that we can bring in across different subject matters in terms of the duration of that content catalog, the modality in which it's offered, the languages in which it's translated. And we believe AI is a phenomenal tool to help us with all of that.

Our next question will come from Ryan MacDonald with Needham.

And congrats on a great quarter. Maybe just starting on the consumer gross margins a bit. It's great to see the continued improvement there, particularly on a year-over-year basis. Can you talk about how sustainable some of these improvements are and maybe how we should think about gross margins in that segment structurally now as you continue to see more demand maybe beyond some of the largest content partners moving forward?

Sure, Ryan. This is Ken. Thank you. So as it relates to consumer gross margin, what we're seeing the benefit of a lot of the investments we've made in content is one key area, which we've talked about a fair amount historically. That has been very helpful in driving consumer margin and should continue. We also, with a lot of our newer content partnerships have better revenue share.

So as we've evolved the model and as we have a more substantial presence in the market, we're able to -- we help produce -- we're able to secure better economics. And so we expect those trends to continue. It will vary always a bit quarter-to-quarter depending on the mix, I wouldn't say every single quarter. But by and large, we've improved the operating model around consumer, and if anything, I think over time, we're going to see additional upside there as we continue to invest and make product changes, product investments, including just the core of the learning experience itself.

And just to build on what Ken shared. Like one of the reasons that we are really focused on building out our capabilities for the content engine is, obviously, it fuels the entire business. But also as we enable content to be created more rapidly and for the cost of that creation to come down and for content to be optimized more readily across all of our courses, that gives us not only the ability to drive a better learner experience to drive higher conversion, higher engagement, higher retention, all of which translates to faster growth. As we do all of that, that also puts us in a stronger position over time to get a larger share of that value creation and that economics.

That makes complete sense. Greg, maybe as a follow-up. As you think about sort of learners on the platform, I continue to be impressed about the magnitude even at the scale of net new learners that you drive. If there's a few things you could pinpoint of what's really driving that or maybe demographically or geographically like where you're seeing sort of the greatest unlock. Are there a few things you can point to other than maybe just continued demand for Gen AI content? Is it this new AI translation that's unlocking you regions or are the career academies now starting to sort of unlock a different segment of the population. What do you think is the greatest contributor there?

Great question. So from a growth percentage perspective, we're seeing the fastest growth percentage come from APAC, not surprisingly, just because it historically was a smaller part of our business. But it's also big in large numbers. India has our second largest number of registered learners after the U.S.

I would say broadly, certainly, AI is a tailwind for us, both in terms of interest in Gen AI content and obviously, from the perspective of how we leverage that to deliver that content and deliver a better learner experience.

I think also as more and more of the world uses Gen AI to learn anything, whether that's learning with a lower-case L or upper case learning with a capital out, they become far more familiar with it, and then they want to learn more, and they understand the implications that might have for them as an individual, that certainly is true at the corporate level as well, obviously. So I think that tailwind is not going to go away for the ad tech sector, and certainly, our content gives us a differentiated advantage there, particularly in an era when AI makes the creation of content far easier.

So having trusted content from the best universities and industry partners in the world is a very differentiated asset in our perspective and one that we intend to continue to build on. I would say other than that, there isn't a specific thing that I would call out other than the fact that I think our team is doing a really good job on top of funnel. I think they're doing a good job also on looking at promotions and pricing and how we can use those levers to drive better growth in the business. I still think we're early days in that. And so you can look to see us do more on that in the back half of the year. On the enterprise side, I think you can also look to see us do more with what we've done in the past with academies, that's an active area of investment. So stay tuned on that front as well.

Congrats again.

We'll take our next question from Jeff Silber with BMO.

I wanted to focus a little bit more on Corsera for business. Maybe you can talk generally about [ LND ] budgets. Are companies holding back because of the uncertainty out there? Are they opening up a little bit more? Any color would be great.

Maybe I'll start, and then, Ken, you can add in as you see fit. I would say, obviously, there's a lot of macroeconomic uncertainty, not just in the U.S. but around the world. And in those environments, that tends to lead to caution from a corporate spend perspective. At the same time, that is balanced against an increasing recognition from companies in all sectors that AI is going to have a major impact on their business and their workforce and that they need to be ahead of it to ensure that they're not left in the dust by their competitors and that one of the ways that they can stay ahead of it is by finding the right ways to upscale and/or rescale their workforces to have the talents that they're going to need for the way that work will change.

So I think you have those sort of balanced things happening. I would argue that some of the more forward-looking enterprises are the ones that are really leaning in. And so those conversations are a lot of fun because we get to spend time with those customers and talk about what might be possible and how we can help them achieve that. And obviously, your best customers always push you to be better.

And so those are conversations that I really enjoy having. But I would say you're seeing those 2 things sort of happening and playing out in different ways at different companies. So there's definitely still a lot of caution out there, but then there are companies that are taking advantage of this time to really lean in.

All right. That's really helpful. And if I could shift gears and maybe get into the weeds a little bit. The tax bill that was signed earlier this month opened up something called the Workforce Pell. You've allowed use Pelgrants for what they call short-term, high-quality workforce align programs. It's got to be a credit, so I realize that your corporate partners is probably not going to be eligible for it, but is it possible to see some of those funds being used through programs at university partners?

I won't be able to answer the specifics of that question, but all I will say is we believe that, that generally is a move in the direction that we see ourselves going anyway, which is really focusing much more on skills. We view skills as really the atomic unit that we are trying to provide on the platform. That's the reason that people come to Coursera to learn skills to help them grow their careers. That's the reason that enterprises work with Coursera to help their workforce gain the right skills that they need for whatever vertical they might be in and whatever their job needs are.

And so I think broadly, that is a move that will benefit us and that we're 100% aligned with. I would expect that over time, just given the direction that policy is moving in the U.S. in the very least, we see that having other benefits for us. It's too early to forecast exactly how that might play out. But certainly, it's one of the reasons that we are very focused on working with bodies like ACE here in the U.S. or ECTS in Europe or [indiscernible] in India to really take the micro credentials that we offer the industry certificates and work to get those to be credit carrying.

We think that, that is good for learners. It's good for universities that can augment their existing curriculum with industry-driven credentials that are highly relevant for the jobs that are being hired for the workforce today.

We'll take our next question from Brian Peterson with Raymond James.

I'm sorry, guys bamboozled by that mute button there. But congrats on the strong quarter. Just a couple for me. Is there anything that you can kind of share on the linearity of what you saw at the top of the funnel over the course of the quarter. And then some of the efforts that you're working on, on the conversion side, do we still feel like there's more room to gain there? And then Ken, maybe just a follow-up. How should we be thinking about the trajectory of the NRR on the enterprise business?

Sure, Brian. So there wasn't a notable difference in linearity during the course of the quarter. We've been improving steadily on the conversion side, and there is room for more. So we're excited about the direction that's taken. And -- yes, so we're not done with improvements there yet. And there's been a lot of specific focus on conversion, and I think we'll enjoy enhancements along the way as the product as we enhance the product as well.

With regards to NRR. We're not forecasting improvements going forward, not yet. We don't, again, have enough visibility. This last quarter was, again, particularly good partially because of some mechanical lapping in the government business. But it's an area we need to improve upon and upon which we're pretty focused.

And I might just add a little bit on the -- on the consumer side, but it applies to enterprise as well, which is we don't have a complicated business. It's top of funnel conversion than getting those converted learners to engage. And then as they engage, you retain them for longer and you drive higher ARPU.

We have not historically been nearly as focused on the relationship between what we do in product and on the platform and those metrics as we have the potential to be. We are only a quarter or so into reorienting everything we do around that. How do you drive a better platform and a better product experience, how do you deliver that product faster? And how does that product delivery translate into improvements in every single one of those metrics.

And so my goal is for us to continue to improve over time on those things. The pace at which we do that, what moves in any given quarter, we're not going to be able to forecast, but by bringing more rigor to that approach by having it be very data-driven and by speeding up our pace of execution, I'm hopeful that we can deliver that over time and see that reflected in our results in future quarters.

Our next question will come from Yi Fu Lee with Cantor Fitzgerald.

Congrats on the strong executed quarter. So my question revolves around the pay new hires, most recently with Chief Data Officer, Grant and Chief Product Officer, Patrick Greg, previously, you talked about using a more data-driven approach to national business. I guess, can you help us elaborate on what are the points, concrete data points you are looking to monitor to understand, hey, the business is going better fundamentally. And I also have one more follow-up for Ken on the financial side.

Sure. In some ways at a macro level, I sort of just mentioned them, like what traffic are we getting? How good a job are we doing at converting that traffic from a visitor into a paid learner? How good a job are we doing at engaging that paid learner, helping them complete courses and then retaining those learners for longer. And as you do that, obviously, that increases the revenue you received from those leaners. And that is also broadly true on the enterprise side, although the mechanisms might be somewhat different.

And so what we are really focused on doing is making sure that every single aspect of what we do is instrumented, so that we understand the relationship between all those things. And so if we make this change to the way that the first module of a course gets consumed by a learner, does that increase engagement. If we do that, and it does increase engagement, does it actually lead to higher retention. Does it lead to better outcomes for that learner. And so that's a really high-level way of thinking about everything we're doing.

But my belief is you can't improve what you can't measure. And if you're not paying attention to the measurement, you're not going to improve it. And so we need to make sure that we're doing that across all of our platform. And that's what's behind the focus on our content engine because that is the fuel of our business behind our learner journey, which is all the ways that people interact with and engage with Coursera outside the specific act of learning itself and then workforce learning at scale, building better integrations with LMSs and LXPs, better tools for enterprise admins, better dashboards, all of those types of things to really make sure that enterprises that leverage Coursera are getting the right outcomes from their perspective. My belief is all of that starts with data. All of that starts with really rapid product development cycles, hiring Grant on the data side, hiring Patrick on the product side are both meant to really accelerate our progress on those fronts.

Greg, can you just tease us on that? I understand that Coach and Translation is a hot product you guys are focusing on. So like in terms of Patrick, right, what are the -- like in terms of the road map the things that you might have to focus on. And then can I just squeeze one for Ken, can gross margin side, 61% of the consumer. We've seen infection enterprise size for 70%. I was wondering to help us on the modeling Ken like what -- what should we expect on the optimization like going forward? When the sale is improving, it's going more positively. And there's more to go. We just want to like make sure our models are unreasonable going forward.

Sure. On -- you mentioned a couple of type things, Coach, AI Translations, AI Dubbing, et cetera. So broadly, we are going to be investing in Coach forever because it is the way that we can make every single course on Coursera since it is an AI-driven tutor. A more personalized, more interactive, more engaging experience. And so we want to pour as much energy into that as we possibly can because we see that the learners who engage with Coach have higher completion rates. They have higher quiz pass rates, and it leads to better outcomes for those learners.

The same was also broadly true and not surprising on AI Translations and AI Dubbing. We now have 5,500-plus courses that have been translated into 26 different languages. We have 350 courses that have been dubbed into now 6 different languages. The cost of translating and dubbing is unbelievably cheaper because of AI. And also the outcomes are better. Not surprisingly, a learner learns better in their native language than they do in English. And so we see that when we translate content into more and more languages, we get better engagement and better completion rates from learners in those geographies and in those languages. And so those are just 2 examples of some of the things that we're going to continue to invest in.

Andy, this is Ken, specifically on the consumer gross margin. We do -- for all the reasons Greg just mentioned, we do expect that to expand over time. There's no near-term improvement we're going to forecast for the coming quarter. We have increased the forecast, of course, for the EBITDA margin for the year, which is pretty significant and up a couple of hundred basis points over last year, which follows on a 760 basis improvement the year before and 550 the year before that. You're newer to the story, but it's something that we've kind of pledged to improve every year. And then we invest the access into more growth. We were a little overwhelmed with the improvement in the gross margin in total in absolute dollars and couldn't -- when we have a $17 million increase in the outlook that flows down to a gross margin in a fashion. We were able to reinvest some, but not as much.

So we expect that trend to continue on the EBITDA margin line, again, a couple of hundred basis points. But in this current year, we don't have an increase in the consumer margin that we're planning, but we do expect it, again, to continue to increase over time.

Our next question will come from Josh Baer with Morgan Stanley.

Great. Wanted to dig into the Consumer Plus subscription that was called out several times. Can you kind of generalize the user or the subscriber just as far as what stage of life or stage of career, geography and then the behavior like once turning on that subscription, what courses and content are they gravitating to? Is there a way to generalize some of those behaviors.

I don't know that there's a great way to generalize that just because learners come in all different flavors from all over the world. But I would say broadly, you have kind of starters, switchers and advancers, right? So people who are at the very beginning of their career and looking to gain skills that help them be better prepared for the first job. You have the advances, the people who are already in a role and are looking to build their skills in that role. Oftentimes, they might come to Coursera because their company actually like has a program with Coursera and wants them to get upscaling. But oftentimes, that will then lead to potential exposure to the platform that leads them to become an ongoing consumer learner outside of whatever their work might be asking them to get upscale on. And then you have the switchers, the folks who are in our career, but they want to -- they realize they want to do something else.

I would say that you have differences geographically around types of content. And so -- but not radical differences. India is one of our fastest-growing locations for interest in Gen AI content. I'm not super surprised by that, just given the industry -- India has a strong emphasis on education and obviously has a strong tech background from a workforce perspective. And also, it's a massive country from a population perspective. So it's not surprising that you would have more enrollments coming from there given that it's our second largest registered learner base.

Beyond that, I think it gets really hard to make generalizations. Obviously, broadly, we see the most interest in courses that are in AI, tech, data networking cybersecurity business, and that's sort of been our historic sweet spot.

And any update on scale, size of the subscription or growth?

Just we haven't broken down the consumer product like that externally.

Okay. Great quarter.

Thank you.

Thank you.

Our next question will come from Sarang Vora with Telsey Advisory Group.

Great quarter as well. from my side. My question is on the Coursera produced content. I know a lot of professional certificates came into this quarter and a lot of branded content came as well. But -- just curious on how is that pipeline developing on the Coursera produced content. And how do you see that scaling, are there any specific areas as you have progressed over the past couple of months? Are there any areas you have identified for CPC? Just any color over there would be helpful.

So at a high level, one of the things that was really clear when I came into the role was we need to make sure that we're investing more into our content engine, both creating Coursera-produced content, but also just all of the tooling that both we use to create content, but also all of our partners use to create content to enable better agility, faster production cycles, more format flexibility.

And obviously, on the Coursera produced content, that provides some good economics for us. Generally, there's exclusivity as well on that. We have better control over it. And also, we use Coursera produced content as a test bed for things that we can apply across all of our content and all of the platform.

And so we've invested $17 million last year in Coursera produced content. We recognized $6 million of investment in the first half of the year. Our goal is to increase our year-over-year investment overall for 2025. We haven't sat down and gone through the forecast for 2026 yet. But I would expect that, generally, given that we're seeing success and that we like the dynamics of that aspect of the business that is going to continue to be an investment area for us.

That's great. Good luck ahead.

Thank you.

Thanks, Sarang.

That wraps today's Q&A session. A replay of this will be available on our Investor Relations website in the next 24 hours. We appreciate you joining us.

This concludes today's conference call. You may now disconnect.