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Ladies and gentlemen, thank you for standing by, and welcome to Coursera's Third Quarter 2026 Earnings Call. [Operator Instructions] 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, and thank you for joining us for Coursera's Third Quarter 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 the prepared remarks, we'll 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 today's materials, including our quarterly shareholder letter have been posted.

During this call, we will present both GAAP and non-GAAP financial measures. Reconciliations of non-GAAP measures to the most directly comparable GAAP measure can be found in today's release and supplemental materials. Unless otherwise specified, all financial results discussed are presented on an as-reported basis and all growth percentages refer to year-over-year change.

As-reported results include Udemy only for the periods following the transaction closed on May 11. References to normalized performance include Udemy's pre-close results and are provided solely for illustrative comparability. All business metrics reflect a unified reporting methodology. Finally, 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 due to a number of risks and uncertainties, including those discussed in our earnings 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. We appreciate you joining us. Q3 was our first full quarter as a combined company, giving us a clearer view of both our progress and the work ahead. We delivered $377 million of revenue and nearly $62 million of adjusted EBITDA. Mike will walk through the details, but the results show 2 things. We are strengthening our financial profile as committed.

Reported adjusted EBITDA margin expanded by more than 800 basis points year-over-year, doubling to approximately 16%. At the same time, our top line trajectory, particularly in consumer, remains below our growth ambition. We are staying focused on what we can control, and that starts with the integration.

Since May, we have simplified the combined organization, integrated our go-to-market teams and aligned around a unified product vision and road map. The pace matters as much as the actions, and we are moving faster than planned. We now expect to have more than $150 million of annualized gross cost savings in place by year-end. Those savings underpin the transaction's $115 million annual run rate net synergy target, which we are on track to deliver just 8 months after close compared with our original 24-month plan.

As we have said, integration is the foundation, not the finish line. Its purpose is to create the operating discipline, focus and investment capacity to build what comes next. Improving our growth trajectory will require disciplined execution and products that create meaningfully more value for customers. That is where I want to focus today, the problems our customers face and the platform we are building to solve them.

We are in the middle of one of the largest technology build-outs in history. Goldman Sachs estimates global AI-related investment will reach roughly $1 trillion in 2026. That investment is moving far faster than workforce readiness. Earlier this year, Deloitte found that 43% of business leaders say their organizations are highly prepared on AI technology infrastructure while only 20% say the same about talent, a gap of more than 2:1.

That gap is why, as I said in our last call, AI raises the bar for learning. Infrastructure alone does not produce a return. Companies can deploy the technology, but people still have to redesign workflows, exercise judgment and know when to trust the output and when to question it. Investment in people now needs to catch up with investment in technology.

We recently published our 2026 Global Skills Report, now in its eighth edition. For the first time, it draws on learning signals from the combined Coursera and Udemy ecosystem, and our data shows how learners are already responding. Learners are not choosing between technical AI skills and human skills. They're building both.

Across our platforms, the GenAI enrollment rate increased from 25 per minute in 2025 to more than 40 per minute in 2026. At the same time, critical thinking enrollments grew over 100% year-over-year. That combination makes sense. As AI becomes more capable, people need the fluency to use it and the judgment to frame the right problem, evaluate the output and lead through change.

Learners and educators face a related challenge. AI is extraordinarily good at giving us answers, but getting an answer is not the same as helping us learn or build a durable skill. Research from the University of Pennsylvania illustrates why the design matters.

In a field experiment with nearly 1,000 high school math students, access to a standard chat-style interface improved performance on practice problems by 48%. But when the AI was removed for the exam, those students performed 17% worse than the control group. The encouraging news is that a tutor designed with learning guardrails largely mitigated that negative effect.

That distinction is central to our strategy. If the value of online learning is simply access to information, AI makes that value easier to replicate. The durable value lies in trusted expertise, effective practice and feedback and credible proof that people can do the work. We believe AI can strengthen each of those when it is grounded in learning science and designed to build real capability.

Coursera and Udemy's history is rooted in expanding access to learning at global scale. We now need to build on that foundation to address the tougher workforce questions businesses face. What skills do we need to achieve our business goals? How do we help each individual build and apply them quickly in the context of their daily work? And how do we know with verifiable evidence that capability has improved.

I believe solving these problems is one of the defining opportunities of the AI era. In September, at Forward, our annual customer event, we gave customers their first look at Project Helix. Project Helix is our adaptive AI-native skills platform that draws on the combined strengths of Coursera and Udemy to connect trusted learning to verified proof of skills. Helix is the clearest expression of the unified platform strategy I described last quarter.

The experience starts with the outcome a customer wants to achieve, for example, preparing a workforce for a new AI-enabled process or helping an individual move into a new role. From there, Helix is designed to identify the skills required, assess the learner's current capability and assemble an adaptive path through trusted learning and practice with credible evidence of what the learner can do.

Three capabilities make that possible. First, skills intelligence tied to business priorities. We are building Helix to translate a goal expressed in natural language into the skills and development path needed to pursue it. Second, personalized and applied learning. The aim is an experience that continuously adapts to the learner's role, goals, progress and organizational context, bringing relevant learning and practice into the flow of work.

Third, proof. Graded assessments, hands-on practice and recognized credentials provide evidence of demonstrated skills that learners and leaders can use. We believe connecting trusted learning, relevant context and credible proof at enterprise scale is what will differentiate Helix. The value of that connection can compound over time as the system learns which skills matter, how people build them and what evidence best demonstrates readiness.

How we build Helix is just as important as what we build. Our forward keynote was a preview. We are taking a phased approach, working with a select group of customers and partners to shape the experience and targeting broad enterprise availability in the first half of 2027. Helix has to earn the right to scale. That means putting new learning experiences in customers' hands, measuring whether they solve the problem better than what exists today and investing in what works.

Alongside that road map, we continue to invest in the Coursera and Udemy products customers rely on today. Many of the capabilities we are shipping this year deliver value to customers while laying the groundwork for Helix. Let me give you 2 examples.

First, moving from practice to proof. Completion and learning hours are easy to report. Verified skills are not. Created role play places a learner in a realistic scenario such as a tough negotiation and uses interactive learning with an AI persona to evaluate the learner against goals set by the course author.

Created Labs are built to do the same for technical skills, such as a developer deploying a web application in a live sandbox environment. The goal is evidence of what a person can do, not just that they finished. Second, learning in the flow of work. Employees increasingly turn to AI tools for answers, and those answers may not lead to trusted learning or practice.

Our integrations with ChatGPT, Claude and Copilot are designed to recognize a learning moment and point the learner to a relevant course, video or guided practice. On Udemy, connectors can also work in reverse. When a tool identifies that a sales representative needs coaching, they can send that insight to Udemy to create a ready-to-use role play.

Helix is being designed to connect these capabilities around the customer's goal so that learning, practice and assessment work together as one system that turns learning data into action, understand the goal, identify the skill, build it, apply it and prove it. That system is only as strong as the ecosystem behind it.

As AI makes access to information more abundant, we believe trusted expertise becomes more essential. Our ecosystem provides that expertise, along with the context, responsiveness and verification to keep pace as skilling needs change. Today, Coursera and Udemy have reached more than 310 million learners and serve more than 1.6 million paid subscribers and nearly 12,000 enterprise customers.

Our instructor and partner communities contribute complementary forms of a valuable asset, human expertise. Udemy brings a global community of nearly 100,000 instructors who can respond quickly as tools, roles and skills change.

Coursera brings deep relationships with more than 425 universities, leading companies and professional institutions that provide trusted instruction and recognized credentials. Together, they provide a broader, more responsive foundation for learning, practice and assessment that is central to Helix.

In Q3, we expanded our ecosystem and tested new ways to connect its expertise. At Forward, we announced 16 new university and industry partners and 25 new professional certificates. New partners included Harvard Business School Online in leadership and Business Strategy, GitHub in agentic AI and modern software development and the American Medical Association and Taipei Medical University in Healthcare and the Life Sciences.

Existing partners are moving quickly as well. Earlier this month, Anthropic nearly doubled its Coursera catalog with 10 new courses for developers, small business owners, creators and teachers. Anthropic plans to publish more courses each month to help learners stay current as AI tools and techniques evolve. We are also beginning to test how expertise can move across platforms.

Dr. Ryan Ahmed, a professor and Udemy Instructor, who has taught several hundred thousand learners, adopted a series of courses covering Claude into a specialization on Coursera. This is one of our first experiments bringing a Udemy Instructors expertise to Coursera's learner base, and it became one of our top new launches of 2026. A second experiment, AI Series, helps learners connect the latest AI skills to their roles.

These learning paths combine content from multiple partners and are reviewed by practitioners in each field. Learners receive a curated plan to track their progress with the right content in the right sequence for their chosen field. We started with AI series for data analytics, business leadership, software development and cybersecurity and plan to expand to more fields in Q4.

Both experiments are informing Helix, how expertise is best leveraged across platforms and how content from different experts comes together around the learner's needs. Today, we are using expert curation. Over time, we intend to make these capabilities systematic with Helix using stronger signals of internal and external skill demand to intelligently assemble learning, practice and proof around each learner's needs and each organization's goals.

The architecture is intended to be flexible enough to support that ambition as technology, the labor market and skills needs change at an increasingly rapid pace. Our instructors and partners are also helping shape that design. Earlier this month, at our first partner and instructor Forum in Madrid, more than 80 leaders from our university, industry and instructor communities work directly with our team on the future of AI-native learning.

They see real opportunity in the combination and several have already joined our design work. As Helix develops, we want to give these experts better ways to turn their expertise into adaptive learning, practice, assessment and proof and reach the right learner at the right moment. That combination, trusted institutional expertise, practitioner speed, broad distribution and increasingly intelligent orchestration through Helix is what we believe can make the ecosystem more valuable to all participants over time.

The progress this year sets up our next phase. In May, we closed the transaction. In June, we established the financial and integration framework for the combined company. Since then, we have accelerated integration and previewed the product strategy that work is meant to enable. As we look to 2027, our priorities are straightforward. First, complete the major integration milestones with speed and discipline, protecting continuity for customers, learners, instructors and partners while improving commercial execution.

Second, build Helix alongside our customers, progressing through alpha and beta programs toward our target of broad enterprise availability next year. Third, turn our greater scale, data and investment capacity into new products that drive stronger customer outcomes. Integration creates capacity. Product execution turns that capacity into customer value and customer value is what unlocks more durable growth over time.

With that, I will turn it over to Mike to walk through the financial results and outlook. Mike, please go ahead.

Thank you, Greg, and good afternoon, everyone. Q3 was a solid quarter. We delivered on our revenue and adjusted EBITDA goals, moved quickly on integration and continue to execute against the financial framework we established in June. We reported total revenue of $377 million, up 94% year-over-year, driven by the inclusion of Udemy's results beginning May 11.

On a normalized basis, revenue declined about 3%, consistent with the near-term revenue trends we outlined earlier this year. As we discussed in July, the drivers of our revenue performance continue to vary across our segments. Enterprise remains our most durable revenue source, anchored by multiyear contracts even as growth moderates.

At the same time, consumer revenue remains in transition. Subscription momentum continued, but softer leading indicators and pressure in onetime purchases and transactional offerings more than offset that growth. Even so, the mix of our revenue continues to shift towards recurring revenue. Enterprise and consumer subscriptions now represent nearly 90% of total revenue, up 500 basis points year-over-year on a normalized basis.

For the remainder of my remarks, I'll discuss our non-GAAP financial measures unless otherwise noted. Gross profit was $214 million, representing a gross margin of 64%, driven by the contribution of Udemy's higher-margin enterprise revenue and continued rate improvements. Operating expenses totaled $186 million or 49% of revenue, down 120 basis points year-over-year, reflecting sales and marketing efficiency and reduced duplication across corporate functions.

Net income was $57 million or 15.2% of revenue, and adjusted EBITDA was nearly $62 million or 16.3% of revenue. As a reminder, adjusted EBITDA includes a purchase accounting benefit of approximately $10 million per quarter in 2026. In June, we said this combination would produce a stronger earnings profile through higher gross margins, disciplined cost actions and synergies.

Only a portion of that early benefit is reflected in our reported results, but the work behind it is now well advanced. We conducted extensive pre-close planning. We moved quickly to simplify the combined company and remove duplication across overlapping functions, and we integrated our go-to-market organization, aligning global account coverage with customer continuity as the priority.

As Greg mentioned, based on the actions completed and underway, we now expect to have in place more than $150 million of annualized gross cost savings by year-end. As a reminder from our June call, our $115 million annual run rate net synergy target reflects those gross savings, less approximately $35 million of potential gross profit impact from revenue dis-synergies embedded in our 2-year framework.

Those revenue dissynergies are ultimately an estimate. Our focus has been on what we can control, executing the cost actions required to deliver our gross savings commitment. As I've said, synergies are table stakes, and I'm pleased with the team's speed and discipline in compressing a 24-month plan to 8 months, particularly while the top line remains under pressure. Our primary goal for 2026 has been to move through the most disruptive parts of integration thoughtfully and quickly so we can increasingly focus on commercial execution, product delivery and the most important driver of future revenue, customer value creation.

That shift is critical to improving our growth trajectory over time.

Turning to cash performance and capital allocation. We reported nearly $5 million of free cash flow, which included approximately $28 million of merger and integration-related costs, consistent with the onetime cash expenses outlined in our July outlook. We ended the quarter with approximately $776 million of unrestricted cash, cash equivalents and marketable securities with no debt.

The lower balance reflects repurchases, our strategic investment and onetime cash expenses. Our capital allocation priorities remain the same: complete the integration, fund Project Helix and our product road map and return capital when we see attractive value. In Q3, we repurchased approximately 18 million shares for just over $100 million. Through today's call, total repurchases under our $500 million authorization now stand at more than $215 million.

Turning to Enterprise. Enterprise revenue was $201 million, up 214% year-over-year as reported and 2% on a normalized basis. We ended the quarter with 11,897 enterprise customers, down 4% year-over-year. More than 90% of logo churn was concentrated in accounts with less than $50,000 in annual contract value. Our net retention rate was 93%, a slight improvement from last quarter, but still well below our long-term ambition.

Demand varies by use case and region, while customer continuity remains the priority following the integration of our go-to-market organizations in July. Segment gross profit was $163 million, and segment gross margin was 81%, benefiting from stronger content economics. As we look to Q4, our enterprise priorities are executing the year-end renewal cycle, working with our early project Helix design partners to incorporate customer feedback directly into what we build and making it easier for our sales teams and channel partners to bring the complementary offerings of Coursera and Udemy to customers around the world.

Turning to Consumer. Consumer revenue was $176 million, up 35% year-over-year as reported and down 9% on a normalized basis. Consumer gross profit was $116 million and segment gross margin was 66%, driven by stronger content economics and subscription mix. Consumer subscription revenue was approximately $131 million, representing more than 70% of segment revenue. That includes Coursera Plus, which continued to perform well across monthly and annual offerings as well as Udemy's early but fast-growing subscription mix.

We ended the quarter with more than 1.6 million paid subscribers, up 30% year-over-year. Subscriber growth continued to outpace subscription revenue growth, largely reflecting the geographic mix of new subscriber additions. Core subscriptions remain in our growth engine, but that growth is more than offset by pressure in individual certificate subscriptions and Udemy's transactional offerings.

Leading indicators remain softer than we want, and our outlook does not assume an immediate rebound. As Greg discussed, we are advancing an ambitious product road map. That ambition comes with trade-offs, and we're making them deliberately guided by 2 principles: First, pace milestones with proof. Project Helix will roll out in stages through 2027, beginning with enterprise, and we will invest behind each phase as evidence from customers and learners supports it.

Second, growth with returns. In consumer, we continue to hold paid marketing to a strict return threshold rather than pursuing volume without attractive economics. As positive signals emerge, we will be in a strong position to invest behind them while remaining within our margin framework.

Now moving to our financial outlook. For the fourth quarter, we expect revenue of $358 million to $366 million. Consistent with the slowing top line trends we've discussed throughout the year, we expect enterprise growth to be approximately flat and consumer to decelerate further given softer leading funnel indicators.

For adjusted EBITDA, we expect between $55 million and $59 million, achieving the 16% Q4 margin target we established in June. For the full year 2026, we're narrowing our as-reported revenue outlook within the prior range, now anticipating $1.229 billion to $1.237 billion, equivalent to $1.503 billion to $1.511 billion on a normalized basis. We remain confident in the approximately 14% full year adjusted EBITDA margin target, which we raised last quarter.

As a reminder, this as-reported margin is higher than the normalized equivalent and it also includes a meaningful purchase accounting benefit that will moderate in future years. Today's shareholder letter provides the corresponding normalized view and additional modeling considerations.

Before I close, I'd like to share a few directional points on 2027. Consistent with our usual cadence, we're not providing formal 2027 guidance today. We will provide it on our Q4 call after completing our annual planning process and executing the year-end enterprise renewal cycle. But with the integration progressing faster than planned and Project Helix beginning to roll out next year, we want to provide a directional baseline.

For modeling purposes, our starting assumption is that each segment's fourth quarter revenue trajectory is broadly representative of its normalized full year 2027 growth rate. For Enterprise, that implies approximately flat to modestly declining revenue. For consumer, a low double-digit year-over-year decline.

These assumptions account for potential revenue dis-synergies as overlapping customers combine over time and do not rely on any cross-sell contribution. Importantly, they also do not rely on a material revenue contribution from Project Helix. We expect Helix to begin rolling out in 2027. Our initial focus will be getting it into customers' hands, learning quickly from feedback and establishing clear adoption usage and commercial trends.

Said differently, we're not assuming a Helix-driven growth contribution before the evidence supports it. But we are investing and operating with the expectation that Helix will strengthen our offerings and expand the value we deliver to customers through a more integrated and capable skills platform. On profitability, we will remain highly disciplined and provide our full year 2027 adjusted EBITDA margin target next quarter after completing our annual planning process and getting better visibility into the top line.

There are a few important considerations to keep in mind. Transaction timing, along with the seasonality of adjusted EBITDA will place approximately 1 point of pressure on the reported annual compare. Additionally, our early revenue assumptions, together with the moderation of the approximately $10 million per quarter purchase accounting benefit included in 2026 adjusted EBITDA will be a headwind to adjusted EBITDA dollars in 2027.

We intend to offset those headwinds through the integration and synergy actions we've accelerated and the cost discipline we've demonstrated in 2026 and prior years. Coursera has expanded its full year adjusted EBITDA margin every year as a public company. We're proud of that track record, and we remain committed to strengthening the earnings potential of the business. We're funding Project Helix along with continued investments in our existing offerings within that margin framework.

Over time, unifying our platforms and a more efficient AI native architecture creates further opportunity for leverage. Finally, as we establish the compensation framework for the combined company, our objective is to significantly reduce stock-based compensation as a percentage of revenue and make meaningful progress lowering our annual dilution rate.

Future share repurchases are incremental to that work, not a substitute for addressing dilution structurally. Let me close with 3 priorities we have asked investors to measure us against. First, execution, protect customer continuity, complete the major integration actions with discipline and deliver the full synergy target by year-end. Second, financial quality, translate that execution into stronger margins, cash generation and disciplined management of dilution. Third and ultimately most important, product and commercial execution, turn the scale, data and investment capacity of the combined company into a more valuable platform for learners and customers through Project Helix.

I'm pleased with the speed of the integration and the accelerated delivery of synergies. The next phase is proving that this stronger foundation can translate into better customer outcomes and over time, more durable growth. Let's now open the call for questions.

[Operator Instructions] We will now take our first question from the line of Ryan MacDonald with Needham & Company.

Maybe to start, Greg, with just the commentary around the consumer segment and what you're seeing. Maybe just provide a bit more color in terms of the breakdown of maybe where you're seeing some of the softer demand as you think about relative to sort of the core subscription business within consumer relative to the one-off transactional in the Degrees business? And then sort of how you're thinking about sort of magnitude of investment within your framework and how you're allocating across those 3 components of consumer as we look to try to maybe get that business back in the right direction.

Thanks, Brian, for the question. So a couple of thoughts. First, I think -- and all businesses are seeing this in different ways in the consumer segment. You've got 2 things going on, one that's been happening for longer, one that is more recent. First one is ongoing changes in traffic patterns and SEO and discovery that all consumer businesses are seeing. Second one is worsening consumer confidence amid high inflation environments and what that does to discretionary spending.

And so I think we are subject to those things like other consumer businesses. For us, we continue to focus on the transition to an increasingly subscription business. You saw that in the shareholder letter and in Mike's comments as well. C+ and the Udemy Personal Plan are where both of those individual platforms are focused. We expect that to continue.

We will, in Helix, combine the offerings. We have not yet shared exactly what that will look like, but subscription will obviously be the primary focus of Helix, and we expect to continue to do that. Some of the changes that are happening within subscription on the Coursera side are a decrease in subscriptions to individual courses, what we refer to as terminal subscriptions where you subscribe to a specialization that you pay for until you complete the specialization, while Coursera Plus continues to grow.

We expect that, that trend will continue. It's been going on for many quarters. It's sort of been a structural change in the business for quite a long time, and we see that continuing to trend in that direction. It's -- C+ is a better value for customers, and we have higher LTV with C+ as well. So we are supportive of that trend. Overall, with Helix, we're really focused on investing in a platform that we believe will do a much better job of delivering for both our consumer and enterprise segments.

Appreciate the color there. And then maybe just touching on the enterprise. Obviously, Helix being the focus in the near term. I'm curious, as you think about with the early customers that you're implementing Helix at, can you just talk about some of the deliverables or sort of points you're focused on in terms of what -- how you're measuring success there and sort of delivering an ROI and then how you think about packaging that up in the sales motion within enterprise?

Because it feels like at least from the HR Tech Conference last week where we were at that L&D seems to be sort of a lower priority within the enterprise right now. Just curious how you're thinking about positioning Helix and sort of the ROI you're looking to generate there.

Well, one of the core principles of bringing Coursera and Udemy together was you have 2 very complementary platforms that are investing in a lot of the same things. And you have 2 content catalogs that have amazing instructors, both from universities and industry partners, but then obviously from working subject matter experts on the Udemy side.

By bringing them together, the goal was not just to create sort of a better content catalog, but to create an experience that delivers a much better job of what enterprises really want, which is not just a check box that an employee completed of course, but proves that they've gained the skill that the employer is trying to develop in that specific area, that team, et cetera.

And so we see our strongest engagement with our enterprise customers when it is an engagement that is much more focused on what we would call a functional buyer than just a general L&D benefit. Workforce transformation is an underinvested thing. You see stats on the level of investment that's going into AI infrastructure, and those are massive amounts. But then you see in parallel, people saying that, well, we're confident in our tech stack with AI, but we're not confident in our workforce's ability to actually leverage that successfully, and that's where the skill delivery is really important.

And so Helix is focused around that, a personalized and adaptive learning path that does a much better job of delivering skills in a verified way that enterprises can trust. And so a lot of the engagement with our design partners has been around that theme. They are very positive on the things that we're building in Helix and show higher willingness to pay in all the research that we've done on the things that we're building into Helix. We don't have anything to share on sort of pricing and packaging yet for Helix. There's a lot of work obviously going on around that. But until we actually roll that out, we'll be keeping that to ourselves.

Our next question comes from Brian Peterson with Raymond James.

So I wanted to ask about some of the dissynergies that you guys have mentioned. I know you guys have sized that. But I'd love to understand the timing of those and how those may have come in relative to your expectations? And is that something that's mostly expected in 2026? Or is that something that's contemplated in some of the initial commentary that you gave for 2027?

Yes. Thanks, Brian. This is Mike. So the original kind of modeling for dissynergies really contemplated where customers are purchasers of both platforms today. And we did some modeling around that. So far, frankly, we just haven't seen any revenue dissynergies come through, even with renewals of those types of customers. We're sort of building in some expectation for that for next year in the sort of broad indications we gave you for 2027.

But frankly, it still remains kind of a theoretical calculation. We're not seeing it in practice from a revenue dis-synergy perspective. So nothing really in 2026. And again, sort of theoretical calculation for it in 2027, but it remains to be seen if they actually play out.

Got it. And just as a follow-up, I saw that the enterprise NRR ticked up a couple of hundred basis points sequentially. I'm sorry if I missed this. Could you talk about what drove the improvement this quarter?

Sure. Yes. So it's up a couple of points. It's -- we don't consider it a trend as yet. I think there's a lot of room for improvement there clearly. Just a couple of piece of color that might help. If you look at the NRR that we have on our larger enterprise customers, it's significantly higher than the average of [ 93 ] in particular in North America is very considerably higher on the larger enterprise. And equally, it's quite a bit lower on the mid-market customers and geos outside of North America. So I think that speaks to the opportunity in NRR around execution through 2027 as we bring those teams together and start to execute as one team. But I wouldn't point to anything major for the uptick for this quarter as a trend just yet.

Our next question comes from Stephen Sheldon with William Blair.

Just one for me. I know there are a lot of moving pieces as we think about the setup for next year. But just on free cash flow generation, I'm just curious, I guess, how you're thinking about that with all the moving pieces. Should we still expect relatively healthy levels, I guess, of free cash flow generation or conversion from EBITDA? Maybe just help us think high level about free cash flow generation next year.

Yes, sure. I'll give you some perspective on that. One of the differences, of course, between the EBITDA line and the free cash flow line has for the last couple of quarters and will continue to a lesser extent, the purchase price adjustment that we've talked about, which is really around the capitalized commissions. So that will continue to be a difference, which makes free cash flow lower than adjusted EBITDA. We also, of course, have some expected ongoing merger-related costs into at least the first half of next year.

And then the final piece I would point to is just just by nature of our business, which is relatively cash upfront on both enterprise and also to some degree in consumer. As we face the revenue headwinds that we are anticipating on the current platforms for next year, I do think there'll be some structural difference in there as we can see this quarter on the working capital side. So essentially, bridging between EBITDA and free cash flow, we expect free cash flow to be somewhat lower. We still do expect to be significantly cash generative next year, all of that said.

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

So first, Greg, just curious to understand, you mentioned SEO and inflation as headwinds for consumer. Are you also seeing any early evidence to suggest that AI will ultimately reduce the amount of traditional skills where training is required? Like is there any difference in the popularity of your courses over time with AI? And then I have another question I'll ask later.

Yes. Great question, Nafeesa. So a couple of thoughts on that. One, I think there is less demand for some skills that had been very popular on Coursera and Udemy a few years ago. There is still demand for them. So like a good example would be there was a lot of interest on both platforms 3 or 4 years ago in Python -- in learning Python. That is still a popular topic on both platforms, but not as popular as it had been previously.

And so I think that a natural part of the evolution of AI and the technical skills that it can do is going to naturally change the types of skills that people learn. I am not as concerned in the long run about people learning those skills directly from AI. I mean there's a lot of evidence. I cited it in my scripted remarks that just using an AI chatbot actually is harmful for learning and mastery of the skill. And we think our differentiated content and certainly the pedagogy behind all of that is a real differentiator for us, particularly since it also comes from very trusted human educators coming from top universities, industry partners and subject matter experts on the Udemy side. So hopefully, that's helpful there.

Yes. And the second question is, how should we think about magnitude and trajectory of Helix investment? Does the investment peak around the 1H launch next year? Or it will continue ramping as adoption grows?

Well, the investment is already baked into all of our operating -- our OpEx and all the metrics that you see. So we're not growing -- we're not expanding the team between now and when we roll it out.

And so the rollout, as Mike mentioned in the scripted remarks, will be on a measured basis. So in the first half of next year, we will launch a wide basis to our enterprise customers. Consumer will follow later. And then that -- particularly on the consumer side, but also on the enterprise side, that rollout will really be measured and pace based on the signals we're seeing in the metrics. But I want to make very, very clear that we are not anticipating increases in OpEx due to Helix. It is already contained within the business today.

Our next question comes from Brian Smilek with JPMorgan.

This is Vignesh on for Brian. I guess across the different initiatives you guys laid out, Project Helix [indiscernible], Learn Vector and others, I guess, where are you most focused on today and see the biggest opportunities kind of to drive incremental growth over time?

Project Helix, absolutely. I mean that is the future of the business and the future of the 2 platforms. Right now, we have Coursera and Udemy as individual separate platforms. We have purposely not poured energy into bringing content from one to the other because we want to do that in a platform that we believe is better suited for what our customers need on both the consumer and enterprise side. That is Project Helix. And so that is the #1 priority for the business. We're continuing to invest in Coursera and Udemy, as we referenced in some of the remarks, both because we want to continue to improve the customer experience there, but also because we're building things that we will then leverage within Helix.

Our next question comes from Devin Au with KeyBanc Capital Markets.

I just want to follow up on the better enterprise performance in the quarter. I don't know if you already talked about this, but could you kind of speak to how the different segments, business versus campus versus government have kind of trended in the quarter? And can you also just kind of speak to how your conversation with the business customers and how are you thinking about maybe like R&D budget and spend intentions for next year?

So a couple of thoughts. One, CC, as we call it, Coursera for Campus, Coursera for Government, but both of those continue to be smaller parts of our enterprise business, but growing at nice healthy rates in both cases in the quarter. We believe that we have a very differentiated offering for each of those segments relative to others, particularly on the campus side. Enterprise is still the majority of our enterprise business, so CP as we would call it.

As Mike mentioned a little bit earlier, NRR up slightly sequentially from 91% in Q2 to 93% in Q2. Both of those figures are well below where we want them to be. We don't view that as a trend that we're banking on right now. We think that the right thing to get NRR to where it needs to be is really going to come as we roll out Helix and as that does a better job of addressing our enterprise customers' needs. L&D budgets, I think, still are pressured broadly, particularly as enterprises invest in -- but we also believe that enterprises, as they invest in AI need to make sure that their workforce investment keeps pace with the technology investment in the AI itself so that people are actually able to take advantage of that AI. And as Mike also mentioned, we do see some good signals.

Mike mentioned that our large enterprise NRR is substantially higher than that 3% -- it's actually very much a latter. So the larger the enterprise, the better the NRR. So the lowest NRR that we have is our SMB segment. And the highest NRR that we have is the large enterprise segment. So I think that speaks to the value that we provide to large complex organizations that are trying to do a lot. And then you also mentioned that we had really positive NRR for Americas large enterprise in particular. And so my viewpoint is we are still underpenetrated in pretty much every sector but there's some interesting positive signals in some of the largest potential opportunity spaces out there.

Great. I really appreciate the details there. Maybe just a quick follow-up on enterprise again on the initial guide for flat to down slightly that you haven't really seen any revenue dissynergies yet. It seems like that segment on a normalized basis in 3Q is still up a little bit. But I guess you're maybe taking in some conservatism? Or is it mostly just kind of expecting the R&D budget and the overall environment continue to maybe soften in '27?

Well, yes, on a normalized basis, the enterprise business was up 2% year-over-year. The from the NRR at 93%, overall growth at 2% churn from a logo perspective, Mike mentioned this in the scripted remarks, 90% of the logo churn that we saw in the quarter was from accounts with an ACV under $50,000. So we really see strong retention across our larger segments, which ties back to the NRR comment I made. I don't know that there's anything that we would say that would draw a trend overall, but we sort of expect the same type of performance that we saw in this quarter to continue on a forward-looking basis. We haven't -- to the point that Mike also made in the scripted remarks, we have not baked in any upside from Helix into our 2027 forecast.

Thank you, Devin, and thank you, everyone, for joining today's call. A replay will be available shortly on our Investor Relations website. We appreciate you joining us.

Hello, everyone, and welcome to Forward 2026. I'm Anthony Salcito, Global Head of Enterprise at Coursera and Udemy. I'm super glad to have you with us today. We've had over 12,000 people registered for this event, representing more than 100 countries around the world. Welcome to all of you.

It's awesome to see so many countries represented today. Thank you very much for joining us in the chat. Today marks an important milestone as we bring Coursera and Udemy customers together for the very first time since we combined our company in May.

But this event is about you, the leaders, the innovators and the individual learners that are helping shape the future of work. At Coursera and Udemy, every step we take starts with understanding what organizations like you and individuals need to succeed.

Across global markets, navigating AI and rapid tech adoption requires 2 things at once, both broad practitioner-led agility and deep certified domain expertise and experience. Bringing our platforms together will give you the complete coverage you need paired with the innovative tools to help organizations build a resilient workforce capable of leading through these shifts. We know your time is valuable and leading workforce transformation today comes with real complexity.

That's why we've designed today's event to give you immediate and actionable value. You'll gain perspective on the future of learning and how our joint capabilities create new opportunities for your organization while helping you plan your talent road map.

You'll also learn real-world strategies from learning leaders who are driving measurable business impact and navigating AI transformation inside their teams and organizations.

And lastly, you'll get an exciting preview of our combined platform experience that we're building to help you accelerate enterprise-wide skill adoption and drive meaningful business outcomes.

We'll also have an opportunity to recognize organizations that -- and leaders that are achieving exceptional results through our global Outstanding Achievement awards.

Before we begin, though, let's have a little bit of housekeeping. Close captioning and live audio translations are available in the drop-down directly below the video window if you need. We also encourage you to share your experiences and questions throughout the session in the chat so we can continue to learn together.

Now to kick off our program, there's no better person to discuss the technology and learning shifts ahead than Andrew Ng, Coursera Co-Founder and Chairman.

Andrew is one of the world's foremost AI experts. He cofounded and led Google Brain, served as Chief Scientist at Baidu, directed Stanford University Artificial Intelligence Laboratory and most recently founded LearnVector, an AI learning company, and we're excited about that.

He also cofounded in Coursera in 2012 and since then has taught AI to millions worldwide. What truly sets him apart though, is his dedication on making education more accessible and using AI to benefit humanity. So with that, I'm super thrilled to have him join us today. Andrew, over to you.

Hi, everyone, and welcome to Forward. I'm excited to kick off Coursera and Udemy's first flagship event as a combined company. Having cofounded and worked on or with Coursera for many years, I've long admired and been a huge fan of Udemy for a long time.

I've actually personally been a user of Udemy and enjoyed taking lot of courses there. And to see these 2 institutions come together, both committed to serving learners, serving businesses, helping people gain the skills they need has been a unique privilege in my career and to see the great work that the Coursera and Udemy teams are now coming together to do to serve learning brings me a lot of joy and makes me feel like together, we can help make a lot of people's lives better off.

We live in the age of AI, and AI is progressing rapidly. So what is the role of learning in this exciting world? One of the things that a lot of people still ask is, will AI lead to a job apocalypse or job pocalypse.

One narrative is that will AI becomes so smart that no humans are needed to do any work, maybe 50% of people end up not needed for work and there's rioting in the streets, I don't know. it's very clear to me that there will be no AI job-pocalypse.

A lot of the hype around AI job-pocalypse was kind of PR to drive hype or to try to make technology sound more powerful than I think it actually is. But I want to share with you as one example, one data point on how much AI actually is and is not displacing jobs.

In a lot of headlines, there are a lot of supposed AI layoffs, but I was speaking recently with Denis Machuel, who is CEO of a large workforce company, Adecco, and he ran a study where people that were recently laid off were asked, were you or is your work actually replaced by AI.

And with all of these headlines saying AI is causing all these layoffs, what do you think the percentage of people that are actually laid off will say the job was actually replaced by AI? Is it 50%, 40%, 20%, maybe 10% if there's a bit of hype? The data came out 1.4% people that were recently laid off self-reported that their work was actually replaced by AI.

And so I actually feel a lot of sympathy and I'm moved by every individual and every family affected by layoff. I think these are very serious matters that we owe to society to give people a safety net.

At the same time, AI is leading people to be laid off is mostly AI washing of other things that are causing companies to change the headcount. One thing that's happening with the rise of AI is all of us need to develop new skills.

And if I look at what's happening in jobs, it turns out that maybe the sector that AI has affected the most by far is software engineering because it turns out AI is writing software.

So do we see a shortage of software engineering jobs. It turns out. Software engineering job postings are higher than ever before. And frankly, we just can't find enough good software engineers that know AI can use AI to work in this highly transformed workflow.

And because AI has entered software so strongly and is now entering other sectors as well, AI is becoming increasing useful for sales, for HR recruiting for back-office operations for finance, for marketing and on and on and on, as AI starts enter these are the job functions, I think what we saw in software engineering will be early signs or be halving of what we'll see in all of these other job professions as well.

And what has happened in software engineering and what happened in other disciplines as well is that we have to learn new skills. But when we do so, we become more productive, often have more fun at work, sometimes even get paid more.

It turns out that a software engineer that still writes code like 2022 before ChatGPT , that is just not how any of us should build software anymore. But a software engineer that's mastered AI tools are incredibly productive.

The other interesting trend I've seen is that software engineers, and I talk about this not because I want everyone to do software because I want you to see the signs I'm seeing that I think will affect other knowledge work as well. But the trends are that software engineers are now playing much broader roles.

For example, there are a lot of people that were previously playing a narrow, say, front-end development role, so building, say, the part of the website. Many of these engineers are now playing what's called full stack development roles where they built the entire application rather than just one piece of it.

And that's because if they start from their deep front-end engineering skills and use AI to help them with the parts that they may not be as good at, they can take on this much broader job scope. But this required 2 things. One, it requires learning AI skills to how to use apply or understand the latest AI techniques and tools.

And then second, they needed to learn more software engineering to learn more things about how to do these adjacent -- and I think this will be a trend that we'll see in a lot of other job roles as well. In fact, take marketing, I'm seeing early signs of this happening in marketing as well, where some of it previously was a marketing coordinator.

They kind of program manage or coordinated marketing campaigns. With AI assistant, a number of them I see growing to be full cycle marketers to run campaigns end-to-end, even analyze data and drive much more value. I see early signs of this in recruiting as well, where the -- we have had a lot of people that do sourcing, kind of looking for candidates. But with AI assistance, many of them are now stepping into the full cycle recruiter role. And it turns out the job market can't seem to find enough. We can't seem to find enough of these people that are highly AI-enabled software engineers or marketers or recruiters or sales professionals and what have you.

And what I see is that businesses that hire and upskill as well as individuals to gain these skills will do well. One unfortunate thing that's happened is the hype around the AI job-pocalypse has led a number of CEOs to underinvest in hiring and also to underinvest in training because if AI will do everything, then why would you hire more people? And I think in this fog of war in which all of us operate a little bit, uncertainty about the future has led CEOs, and I know personally to, I think, underinvest in what have been very productive growth.

And 2 great ways to invest are to hire AI native teams to really get a lot more work done. So it's not just cost savings, but business growth. And then also to give the teams the new skills, both in their discipline and also to learn the AI skills relevant to discipline to allow them to do a lot more great work. Now how do we enable our teams to do all of these wonderful things that I think they should be doing. I'm going to say something that may be controversial to this audience, but is very obviously true and very backed by data, which is that chat is terrible for learning. So chatbots in general are just not good at learning.

Mind you, I think AI chatbots are wonderful. I love them, use them all the time, and they're amazing at getting things done. So by all means, encourage your teams to learn to use them, boost productivity. But many studies are coming out that show that while chat is great for getting things done, they are terrible for learning.

For example, there was a recent UPenn study that showed that when students have access to chat, they have a significant improvement in their homework scores, like a 40% improvement in grades, but a significant reduction in learning, 17% reduction in learning. And the author is actually wrote, unfettered access to GPT-4, the model they use can harm educational outcomes.

And this study and other studies are frankly showing just what all of us have known informally already. If you give a learner access to chatbot, they can do the homework or do the work much more quickly, which is important. We want -- in businesses, we want work done quickly. But cognitive offloading to chatbot, it harms learning. And so you end up with more work done, but worse retention and worse educational outcomes.

And while it is possible in theory, I think there are ways to use all of these resources to learn just like I think there are ways to use social media. You can learn stuff from Instagram. You can learn stuff from TikTok. But the vast majority of ways -- the vast majority of people use chat results in not so good learning.

And I think this is why using AI technologies, it is incumbent on all of us that work on and care about training and education and learning to work on creating the next generation of educational products using AI, but it's actually helpful for learning because I think we owe our teams to give them skills to function well in the AI world.

And for what it's worth, I know businesses that train subsets of employees, which is fine. But I personally really believe in training every single employee. So on my teams, every single person on my team, so once they're on my team, I want to bring them with me. The future is uncertain, but I personally think we owe our teams on every one of them with the skills they'll need to evolve in the future, even if there's a small subset of them that may end up leaving for whatever reason in the future. So my teams, I actually ask everyone, including recruiters, marketers, front desk receptionist, operations people, everyone participate in upskilling.

And I hope that many of you that lead organizations or lead teams will consider that approach too, even if you maybe take a few steps to get -- let's bring everyone with us. But in terms of how to create this future together, about 15 years ago, I was privileged in the early days of Coursera to participate in creating online courses that change how education is delivered.

And so one of the things I'm excited about is at LearnVector, which is funded by Coursera to build Agentic AI, they can change how learning happens. So rather than the one-to-many model of education that we've worked on for many years, and it works well, but with one instructor delivers really the same course to a lot of people.

I think we have an opportunity to evolve learning towards a much more of a one-to-one customized experience. So working hard on that, and we'll have more to say on that by early next year. And the Coursera Udemy teams are also working hard on many new Tech innovations as well to improve learning for everyone.

And more broadly, the challenge and opportunity that this changing world, especially driven by AI brings us means that I think all of us here at this conference have an important role to play to shape learning, to help others, to help ourselves gain the new skills to let all of us do really not just important work, but fun and exciting work as well.

So to share how Coursera and Udemy are approaching this moment and what this expanded Coursera Udemy community can accomplish together it is my pleasure to welcome our wonderful CEO, Greg Hart. Greg, over to you.

Thank you, Andrew, and welcome, everyone. As you all join from around the world, I can't think of a more important topic than the one that we're here to discuss today, unleashing the combined power and promise of human and AI potential at a global scale. As we all know, AI has extraordinary potential, but realizing that potential depends on equipping people everywhere with the skills to use it effectively. And that's why I am so thrilled to be with you today. It's the first time that we are coming together as an expanded community across Coursera and Udemy.

We have leaders from organizations around the world, all working at the forefront of one of the most consequential shifts of our time. You're navigating rapid advances in AI, changing workforce needs and an urgent demand for new skills.

My hope is that Forward 2026 gives all of us a chance to exchange ideas, learn from one another and collaborate on the opportunities ahead.

So thank you all for joining us. I'm incredibly excited about what we can build together. There are 3 main things that I want to cover in the next half hour or so.

First, the scale of the problem in front of us as AI completely transformed businesses and the skills that people need. Next, how both Coursera and Udemy are responding to that opportunity as a combined company.

And finally, how our customers who are the real heroes are leading this change, turning skills into real outcomes for their organizations. We are meeting at a critical time in history. AI is reshaping nearly every job across every industry.

Currently, there are 3.7 billion people in the workforce who will need to upskill and reskill. And in the next 4 years, 1 billion more people will enter the workforce, needing the skills to compete in an economy that looks very different from the one that we know today. This is a skilling challenge that traditional models of education alone cannot solve.

And that creates both an urgent global need and an enormous opportunity for all of us. As I talk to leaders across businesses, campuses and governments around the world, one of the questions I hear most often is this. How can we keep up with the accelerating pace of technology? It's easy to see why that's the question everyone is asking.

AI is projected to generate trillions of dollars in economic value over the next several years, but that economic value will not be gained equally by everyone. Today, 74% of AI's economic value is being captured by just 20% of organizations. And we are seeing this trend reflected as we talk to our customers.

Simply providing access to AI won't help capture that value. We have to equip people with real skills that enable them to entirely reimagine their workflows. When BCG studied the companies getting real value from AI at scale, they saw a clear focus on people.

Companies capturing value are upskilling their workforce and are much more likely to have structured learning programs. To speed up business transformation and unlock real value of AI, BCG introduced a 10/20/70 rule.

70% of your strategic focus should be on the people and process, 20% on tech and 10% on algorithms. And yet most organizations have this inverted. Right now, we are in the middle of one of the largest technology build-outs in the history of mankind.

Companies are making outsized investments in AI tools and technology, but the investment in people isn't keeping pace. More than 40% of leaders say that they're highly prepared when it comes to their technology infrastructure.

But when it comes to talent, that number falls to just 20%. While technology may power AI infrastructure, it's people that will determine its impact and how we address the 2x gap between deployment and talent readiness will determine the winners and losers in the AI era. And that is why I am so excited about the Coursera and Udemy combination.

Not only have we created one of the most comprehensive skills platforms in the world, we now have more reach, more resources and more talent to scale the impact of our mission, solve real customer problems and deliver even better outcomes. Our combined ecosystem and trusted content is a true differentiator. Together, we serve 300 million learners and 12,000 enterprise customers.

That incredible scale attracts trusted partners and content creators who have produced more than 335,000 courses across both platforms. AI acts as both an enabler and an accelerant across our ecosystem. It's the underlying infrastructure that enables us to drive new innovations and new experiences at a faster pace, allowing us to dramatically increase the impact of our content by connecting learners to the right skills at the right time.

But bringing our companies together is about much more than just creating a bigger content catalog. It's about becoming a true skills delivery platform. That is a fundamental shift. Historically, learning platforms focused on content on courses, videos, quizzes. And while content remains foundational, it's no longer sufficient.

We need to do much more. Outcomes matter more than content completion, and that's where we need to focus. Ultimately, we want to become the skills foundation of the modern world. One of the most in-demand skills today is, of course, generative AI. And across both platforms, we are currently seeing 45 enrollments per minute in Gen AI content. That's up from 25 enrollments per minute last year.

And our ecosystem is moving just as quickly to meet that demand. In the last year, our combined GenAI catalog has grown from 5,200 courses to nearly 10,000, covering everything from AI fundamentals to vibe coding and loop engineering.

This tells us 2 things. Gen AI skills are essential for learners and organizations and what people need to know is changing incredibly fast. As demand for Gen AI skills accelerates, we are seeing a new trend emerge among our learners and customers.

They're pairing AI skills with human skills. As AI takes on more complex and high-stakes tasks, human judgment becomes that much more important. We see that learners who are building skills in areas like Gen AI, machine learning and agentic AI are also building skills in critical thinking, communication and strategic decision-making.

Businesses need employees who can ask the right questions, evaluate what AI produces and make decisions, all while communicating and leading effectively. This is exactly what our upcoming global skills report will examine. It launches on September 29, and we're excited to introduce the world's first-ever AI human skills Synergy Index.

The report reveals where AI and human skills are advancing fastest and how learners are combining them, so institutions, businesses and governments can shape their workforce strategies.

One thing is very clear, the workforce of the future will not be defined by AI skills or human skills. It will require both. Another major trend is the growing demand for micro credentials, which are shorter programs focused on a specific skill or job. Enrollments on Coursera are up 33%, and our catalog has grown by over 90% year-over-year. A big reason for that is their impact.

Micro credentials are becoming an important currency in a skills-first economy. For employers, they provide a powerful signal of verified job-relevant skills, which helps you identify the right talent. And data from Coursera's Microcredentials Impact Report 2026 shows these hires perform better on the job.

Increasingly, universities are also providing credit for these programs. And something we are really proud of is our partnership with the American Council on Education. We offer more than 50 ACE credit-recommended professional certificates and specializations.

And recent data shows that these programs on Coursera have generated nearly $60 million in estimated tuition savings by helping learners apply eligible learning toward college credit.

That's a powerful example of how skills-based learning can make education more flexible, more valuable and more affordable amid rising tuition costs. And that's why we continue to invest in these programs. Today, I'm excited to announce more than 30 new professional certificates and specializations on Coursera. -- all from leading partners like Microsoft, Google Cloud, the University of Michigan and many more. And what is striking is the breadth and relevance of these topics.

As you can see, highly technical skills like Agentic AI and engineering alongside communication and leadership. And that goes back to my prior point, preparing people for the AI economy requires both technical fluency and durable human capabilities.

Our partners are helping us deliver both. And the need for these skills is becoming even more urgent. As we talk to customers around the world, we are hearing a similar story. Organizations have invested heavily in AI.

And in many cases, they've reduced headcount, expecting AI will deliver the necessary capacity. However, that promise is yet to be realized at scale. That puts pressure on existing employees to do more with less.

One of the fastest paths to unlock AI value is to start with the people who know the work best, equip your subject matter experts with the right AI skills to solve problems in their functions and then scale that across the organization. On the left side are the latest AI and business skills that employees are asking for.

On the right side, you see learner demand reflected in searches across our platform, and that helps our instructors respond quickly. When a new cloud model launches, your employees can enroll in a course in days, not months or they could learn cloud from the Anthropic catalog right on Coursera.

But content is only part of the equation. It also has to fit into how your organization delivers skills. And that means mapping learning to specific roles and your internal skills frameworks, delivering employees the stackable credentials they want and ultimately turning learning into organizational transformation.

Delivering on these priorities requires the right content, and our expanded catalog gives you access to the best learning from across our combined ecosystem.

Your workforce can learn from world-class universities like Stanford, Yale, Penn, Johns Hopkins, alongside companies that are defining the future of technology and work from Google and Microsoft to Anthropic, Meta and more. while still having access to the freshest content from our trusted instructor community, practitioners who deeply understand how to apply these skills on the job.

That's where the strength and breadth of our combined ecosystem becomes a major advantage. You'll have the speed and practical know-how of Udemy instructors with the trust and rigor of our university and industry partners on Coursera.

Expanding our ecosystem of trusted content creators continues to be an important priority for us. Today, we're excited to welcome new university partners like Harvard Business School Online, Texas State University and ESSCA School of Management in France as well as new industry leaders like Perplexity and GitHub.

And over the last year, more than 5,000 new instructors in domains like AI, IT and project management have joined the Udemy platform. Each brings something different. And together, they give us the ability to combine trust, expertise and speed so we can deliver the right skills as you need them.

Now that we've talked about the skills you can learn from the amazing instructors on Coursera and Udemy, I want to talk about how we're enabling our customers worldwide with new product and platform innovations. First, I want to update you on how we're bringing learning into the flow of work with LLM integrations.

Second, I'll invite our Chief Product Officer, Patrick Supanc, to show you a very special first look at our new AI native platform that we internally call Project Helix. And then I'll come back to share some new product updates. Learning has become one of the most dominant use cases on LLMs. When an employee has a question about how to get work done, they often start by asking an LLM.

And that's why it's so critical that we meet learners where they are in the flow of work as part of their everyday tasks. That's one of the reasons I'm really proud that in October of last year, Coursera became the first learning partner with an app in ChatGPT.

It started with discovery. You could ask, how do I learn data analytics and discover a video from a leading institution on Coursera right in ChatGPT. Udemy offers a similar experience in ChatGPT, helping employees discover practical learning on emerging skills from real-world instructors.

Apps like these make trusted learning more accessible and relevant. And that's why we launched a similar app with Microsoft Copilot 365 in March. If employees need help while building a complex Microsoft Excel model, they can use Copilot to surface relevant content from leading university and industry partners right on Coursera, so they can build expertise as they execute on a task.

Similarly, the Coursera Connector for Claude, which launched in June, provides answers grounded in the trusted content from our catalog. And the experience is similar across all 3 LLMs through ChatGPT, Claude and Copilot, learners can watch a video, dive into a reading or get hands-on practice through AI-powered dialogues and role plays, all without leaving their current workflow.

It's the strong foundation of Coursera and Udemy that's fueling these innovations. Before I share what's next, I want to emphasize how we're approaching the future. We are not building AI for the sake of AI. Everything begins with the problems our customers are trying to solve, and it's an iterative process.

We listen closely to the outcomes you need, whether that's closing critical skills gaps, preparing people for new roles or demonstrating the impact of learning. Then we work backward to build differentiated solutions that can deliver those outcomes at scale. That customer-led approach is shaping our road map across the combined company and is the foundation for the new platform we're building next.

As we look further ahead, we're doing 2 things at once: continuing to invest fully in our current Coursera and Udemy platforms while also building what comes next. Altus was Udemy's early vision for how Agentic AI could connect business priorities, skills development and validation and workforce outcomes.

As one combined company, we are extending the spirit of that vision through a new AI-native platform codenamed Project Helix. Coming in 2027, Helix is designed to become an adaptive skills platform for the modern AI-powered workplace.

It will help people identify the right skills, build them through personalized learning, demonstrate what they can do and connect that proof to meaningful workforce and business outcomes. It brings together the unique strengths of Coursera and Udemy and the extraordinary expertise of our combined ecosystem to create the future of how we build measurable skills.

But rather than simply describe that vision, let's take a first look. To take us deeper into Project Helix and what it will make possible, please welcome our Chief Product Officer, Patrick Supanc.

Thank you, Greg, and thank you to everyone for joining us today. Before we look forward, we have to start where we always do, with you. We've spent hundreds of hours listening and your feedback has become the blueprint for our new unified platform. We're focused on solving 5 core problems you've told us you face.

First, you told us you need trusted proof of capability and a clear way to connect your learning investment to the business or strategic outcomes you're accountable for. Activity reports and course completions are not enough for your Boards and CFOs. We also heard loud and clear, nobody wants another destination to log into. That learning needs to be seamless, meet your learners where they are and where they work and not a disruption.

Many of you have invested in your own skills, frameworks, internal tools, HR and talent and learning management systems. Our job is not to force a new model of you, but to integrate seamlessly into your talent ecosystem and elevate it.

You also pointed out the fundamental problem with simply serving a content library. One size fits none. You need personalized and contextualized learning for your people based on their role, goal and current abilities as well as a flexible set of controls for your leaders to directly tailor learning to the needs of their team.

And finally, you told us that you'll only act on an AI recommendation if you can see the basis for it. Knowing the origin of your learning experience and trusting its quality and brands is important to you and what you value on our platforms today.

These problems are guiding the work of our product teams. They're what we've set out to solve. I'm excited to share our vision for what this solution looks like in action. Helix rigorously working as a system that compounds value continuously. I want to take a moment to share how Project Helix works behind the scenes. It first begins with the intelligence layer, which knows what skills matter for today's roles and goals and where they exist in your organization.

It's powered by a combination of a dynamic skills graph that draws on millions of industry and platform data points to understand which skills are critical to build. Agentic AI connectors that understand your organization's context by seamlessly integrating with your HRIS, LMS and LXP infrastructure and conversational AI that makes it easy for frontline managers to share their business objectives in natural language and have the AI do the heavy lifting of translation into capabilities, skills and learning programs.

Imagine taking your leaders' most critical objectives like launching a new product to market, strengthening the employability of your students or modernizing the skills of a public workforce and translating them directly into a data-driven skills development plan for their team in minutes, not months.

Next, the personalization layer. Historically, programs, learning plans and courses have been highly structured and static. Project Helix applies Agentic AI to orchestrate learning experiences tailored to the unique needs of each learner.

They can deliver full programs to individual skill exercises, all drawn from the world's best human-led expertise on Coursera and Udemy. Our objective is for every learner in your organization to feel like Project Helix was built for them, understands their goals and acts both as career guide and attentive tutor as they progress.

Finally, the action layer enables you and your leaders to act based on verified capabilities. It answers the ultimate question. Is my team ready? Project Helix measures what truly matters, real-world application, allowing you to verify new skills through practical assessments.

Here again, we leverage the power of AI to scale and customize skill assessment to reflect both rigorous learning science and the unique context of the industry and organization. This gives managers at all levels insight into how closely team capabilities are aligned to their strategy and objectives and ultimately, better outcomes and ROI. In all 3 phases, skills intelligence, learning personalization and skill verification, we are leveraging Agentic AI to orchestrate a continuous skill acquisition cycle that is more targeted, more efficient and ultimately more impactful for your organization. It's not about the technology, it's about better results.

So let's break down the results you should expect from Project Helix. First, we're enabling deeper personalization and customization at scale. This platform is grounded in your organization's actual skills, functions, roles, goals and data, not a guess from a tool that doesn't understand your context.

It translates your most critical objectives directly into flexible development plans and learning experiences tailored to each individual, which continuously adapt to learner based on their performance and as your goals shift.

Next, learning will continue to be powered by trusted expertise. Our promise is to deliver not just exceptional breadth, but the right high-quality content experience for the right need.

This platform is built on 2 complementary strengths, Coursera's industry-recognized credentials and academic rigor, paired with Udemy's practitioner speed and real-world relevance. These world-class partners are working with us to design Project Helix from the beginning, which leads to my next point. All of this fits within your ecosystem. Learning shouldn't be a separate destination that requires switching context or painful migration.

The new platform is designed to deliver learning, practice and skills intelligence directly into the tools you and your people already use, meeting them exactly where they are. And while the Helix platform can be configured for your unique ecosystem, it's also designed to work just as well as a stand-alone skills development system.

This gives organizations the flexibility to choose the approach that best fits their needs. And finally, Project Helix will deliver a trusted record of capability. This is about moving beyond tracking completions because completing a course doesn't prove someone can do the work.

The platform uses hands-on rated assessments to provide a trusted signal they are truly capable, but it doesn't stop there, and this is key. The platform brings all those individual signals together into a single actionable view of your entire organization's readiness. This means you no longer have to dig through a dashboard to get an answer. You can see exactly where capability is growing and make quicker, more informed decisions that move your organization forward. This is the future we're building from the ground up, a truly adaptive skills platform for your organization. At its heart is a simple continuous cycle.

You set the goal, you build skills, you prove they're real and you connect that proof directly to the outcomes you care about. It finally allows you to draw that clear line. You've already made the investment in technology. Human capability is what decides how quickly that investment pays back.

Transformation starts with people carrying the change. The rest follows. We're excited and committed to being your partner on that journey. And with that, I'll hand it back to Greg.

Thank you, Patrick. Project Helix offers an incredibly exciting view of where we're going. And while our teams are hard at work building that future, we're continuing to make meaningful advances across both platforms today in a wide range of areas that are critical to you. One of those areas is helping learning leaders understand what's working, demonstrate the impact of their programs and determine what to do next. On Coursera, we've introduced a new admin AI experience that turns complex learning data into clear, actionable insights.

Administrators can ask a question in plain language and instantly get a complete answer, surfacing important trends and identifying potential next steps. And it doesn't stop at Insight. Admin AI can also help you move into action by launching targeted interventions that can help improve engagement and drive skill development.

On Udemy, the new Skills Insights Hub brings engagement, skills growth and learning outcomes into one AI-powered view, measure your organization's progress and skill development, benchmark against top trending topics, assessment completion and more and then turn those insights into meaningful action.

So enterprise admins can spend time strategically leading their programs rather than just managing tools. Another area I'm especially excited about is how we're turning practice into proof. Role play on both Udemy and Coursera gives learners a powerful, realistic way to practice real-world skills through conversations with an AI persona. As AI takes on more routine work, human capabilities like critical thinking, stakeholder communication and judgment are becoming even more valuable. But these skills have traditionally been difficult to measure.

How do you know whether someone can actually apply them? And that's why we're introducing graded role plays on Udemy. It assesses and scores performance against a clear, consistent rubric. So every learner is measured against the same standard. And today, I'm excited to share that we're also introducing graded role play on Coursera.

So across both platforms, leaders can now go beyond seeing who completed a course. You can understand whether the learner can actually demonstrate competency. This is a meaningful step forward from participation to proof and from learning activity to real workforce capability.

Beyond human skills, learners also need opportunities to put technical skills into practice. On Coursera, hands-on labs let them do exactly that, working with real-world programming languages and software tools. Now we've taken that a step further with graded Labs, which transforms that practice space into a formal high-integrity assessment. Similar to graded role play, every evaluation is objective and authentic and is created against author-defined rubrics. Again, this moves beyond completion to formally validate that learners have mastered critical technical skills.

And I'm excited that Graded Labs will soon be coming to the Udemy platform as well. Academic integrity is top of mind for learning leaders when it comes to use of AI during learning. On Coursera, our new AI browser deterrence tool detects AI-driven shortcuts by automatically flagging suspicious bot-like submissions.

This ML-powered behavioral detection system is designed to protect the integrity of credentials on Coursera from unwanted shortcuts and to preserve the impact of your learning programs. We've talked about how we're using AI to transform the learning experience from bringing learning into the flow of work to helping people practice, prove and protect the integrity of their skills.

But innovation only matters when it creates meaningful outcomes for people and organizations. And that's ultimately what all of this is designed to enable workforce transformation at scale. We're seeing organizations across businesses, government and higher education embrace that opportunity. Before I share a few examples, I'm excited to welcome several new organizations to our growing community of customers. In business, we're welcoming companies like Verizon, Red Hat and Mozilla, where we're working together to support their educational and skill-building initiatives across communities in the U.S.

In government, we've welcomed new customers MyDIGITAL, an agency within the Ministry of Digital Malaysia and the Cluster of IT of Nuevo Leon, Mexico, where we're partnering to equip their citizens with the skills needed for employment.

And across higher education, we are welcoming the Southern University and Agricultural and Mechanical College of Baton Rouge and SASTRA University in India, who are looking for a partner that can deliver trusted and relevant microcredentials to enhance their existing curriculum.

These customers span sectors and regions that share one goal, equipping people with the skills needed to navigate change. They are the real heroes. Now let me show you what workforce transformation looks like in action. Let's look at TEKsystems, a global technology and workforce solutions company that helps organizations navigate digital transformation. Their consultants need the right technical skills to solve client problems from the day they join the company, along with the ability to keep learning as technology evolves.

TEKsystems partnered with Udemy to embed structured role-relevant learning directly into consultant orientation and paired that with open access to the platform, so consultants could keep learning whenever they needed to. This has led to meaningful outcomes.

Consultants can hit the ground running much faster, and it's made learning a part of how they work with sustained engagement on Udemy for 18 months. A big part of that is because Udemy helps consultants prepare for certification exams and build emerging technical skills.

Now TEKsystems can build a workforce that adapts as quickly as skills and client needs change. The need to keep skills current is one nearly every organization faces. Bausch + Lomb is one of the world's leading eye health companies.

They wanted to ensure employees not only understand AI, but also develop the skills to apply it in ways that could transform the business. They launched an AI academy powered by Coursera that made 2 foundational AI courses mandatory for employees. Completion is tied to bonus eligibility, making AI literacy a core part of every job. Then they put learning into practice with the Vision AI challenge and asked employees for practical ideas on how AI could improve the way the company operates.

Within 90 days, they have nearly 200 ideas across the business from supply chain to R&D. And importantly, these ideas came from the people closest to the work. It's changed how creative teams develop commercial storytelling and how teams plan production to maximize manufacturing capacity. In total, these AI improvements are now saving Bausch + Lomb more than 32,000 hours every year.

Next, I want to focus on FPT University in Vietnam, which helps thousands of students prepare for the workforce. FPT University had ambitious goals to improve student employability and double enrollment every 2 years, but they needed to do that without putting even more burden on their faculty.

To solve that, FPT partnered with Coursera to integrate more than 80 credit-bearing micro credentials directly into their curriculum. Students got access to high-quality, job-relevant learning, including programs from leading companies and universities around the world, which helped the university fill curriculum gaps and enabled faculty to focus on using their time more effectively. FPT saw a 44% increase in their student population within just 1 year.

And today, 30,000 students each semester are learning through Coursera and roughly 20% of all academic credits on FPT are earned through the platform. This has been a game-changing partnership for FPT to keep its curriculum current and enable FPT to attract and serve many more students.

Now let's look at Karmayogi Bharat in India, where the scale of the challenge is remarkable. India has set a clear vision to become a developed nation by 2047. And delivering on that vision requires a civil service equipped for a digital future.

Mission Karmayogi, the world's largest civil services capacity building initiative was created to help build those capabilities in public servants across India. Mission Karmayogi integrated Coursera into their iGOT marketplace, an online learning platform that helps government employees in India learn new skills. It gave millions of civil servants access to world-class learning in areas like AI, data, risk analysis and more. Learning is mapped to specific competencies and roles, helping shift government training from rule-based to role-based learning.

We saw immediate impact with 100,000 enrollments in the first 100 days and 82% of the skills the civil servants learned were directly tied to the capabilities the government needs most.

Ultimately, this is about giving those civil servants the skills to use technology more effectively, make better decisions and deliver better services to citizens. That's what makes this program so exciting.

It shows what becomes possible when you bring high-quality learning to populations at scale. We began today with an ambition to unleash human and AI potential at global scale. The examples we've just seen from businesses, universities and governments show what becomes possible when learning is connected to real strategic priorities and meaningful outcomes.

AI will continue to move quickly, but its full potential will only be realized if people everywhere have the skills and confidence to move forward with it. We now have an extraordinary opportunity to shape that future, but none of us can do it alone. You're on the forefront of this transformation, and we are incredibly excited to partner with you.

Together, we can help every learner, employee and citizen build the skills that they need for the AI era. Thank you for everything you do and for building what comes next with us.

Thank you, Greg, Patrick and Andrew, for laying out a clear foundation for where learning and work are headed. Now I'm excited to shift our focus to execution and how these strategies come to life inside leading organizations.

In this next session, you'll hear directly from leaders and about how they're thinking about deploying AI, increasing platform engagement and delivering what most important, clear results for their organizations.

Their experience are certainly amazing, but they offer practical blueprints on any organization as you're thinking about these challenges and preparing for what comes next. Stay with us. We're going to be back right in the moment for our customer panel.

Ladies and gentlemen, thank you for standing by, and welcome to Coursera's Second Quarter 2026 Earnings Call. [Operator Instructions] 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 2026 Earnings Conference Call. Today, I'm joined by Greg Hart, our President and Chief Executive Officer; and Mike Foley, our Chief Financial Officer. Today's prepared remarks will also include brief comments from Andrew Ng, CEO of LearnVector and Chairman and Co-Founder of Coursera. Following the prepared remarks, we will open the call for questions with Greg and Mike. 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 posted.

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 materials. Unless otherwise specified, all growth percentages refer to year-over-year change, and all financial results discussed today are presented on an as-reported basis. As-reported financial results include Udemy only for the period following the transaction closed on May 11. References to normalized performance include Udemy's pre-close results as if the transaction had closed on January 1 and are provided solely for illustrative comparability.

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 due to a number of risks and uncertainties, including those discussed in our earnings 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. We appreciate you joining us. Q2 marked an important step in unlocking Coursera's next chapter of growth and value creation. On May 11, we completed our transaction with Udemy and began operating as a combined company. When we announced the combination last December, our objective was clear. The goal was never simply to become larger. It was to build a stronger, more capable company with the scale, data and innovation capacity to create next-generation learning experiences faster than either company could alone.

With integration efforts well underway, our early results are beginning to show why that stronger foundation matters. First, the composition of our revenue base is improving. In Q2, we reported revenue of $299 million. For full year 2026, we are increasing our outlook from June, now expecting to deliver between $1.22 billion and $1.245 billion of reported revenue, driven by our Enterprise segment and consumer subscriptions.

Our increasing focus on our subscription business drove an increase of 44% year-over-year in paid subscribers to more than 1.6 million. And now more than 85% of our total revenue comes from recurring subscription streams within our Enterprise or Consumer segments.

Second, our earnings profile is strengthening. For full year 2025, Coursera delivered an adjusted EBITDA margin of 8.4%. This year, with the combined impact of our structural gross margin expansion, cost discipline and accelerated synergy realization, we are confident in increasing our full year adjusted EBITDA margin target by another 100 basis points versus our June outlook to approximately 14%.

Compared to Coursera's 2025 results, that target represents more than 550 basis points of margin improvement. And as Mike will discuss in more detail, reflects a 16% adjusted EBITDA margin we expect to deliver in Q4. Third, we are executing at a faster pace. Following close, our teams moved immediately from planning to execution. We now expect to achieve at least $85 million of annual run rate net synergies by the end of 2026 and are tracking well ahead of the original 24-month time line to deliver the $115 million synergy goal. I'm encouraged by these early proof points, but integration is just the starting line.

With an improving financial profile and a leaner, more agile operating model, we are in a stronger position to accelerate the next phase of our strategy, faster, more continuous product innovation.

As we integrate, we are executing against a clear market reality. AI is changing work and skills faster than traditional learning models can keep pace. The pace at which people and workforces build new capabilities must accelerate with it. Learners around the world are asking the same questions. How do I stay relevant? What should I learn next? And how do I know it's credible? How do I prove I have the skills that employers actually value? Helping learners and organizations answer those questions and act on them represents one of the defining opportunities of the AI era. We believe that opportunity expands as AI makes answers more abundant and puts a greater premium on demonstrated capability. Put simply, AI raises the bar for learning.

Every major technological shift has created demand for new skills. What makes AI different is its pace. As AI diffuses through the global economy, skill requirements are changing continuously and basic information is becoming a commodity. In this environment, more content is not enough. Consuming content alone does not build skills and an answer is not an outcome. Learners and organizations need personalized pathways that help them identify the skills that matter, develop them in context and demonstrate capability in ways employers and institutions trust. That is why AI increases the need for continuous skills development, clear proof of mastery and workforce transformation at scale.

We are building a trusted platform for skills, one that connects skills, learning, proof and outcomes and ensures that human development has a platform designed to keep pace with technology. That is the opportunity we are positioning Coursera to lead, and we are moving on 2 fronts to get there faster. The first is our unified platform. We are bringing together the data, skills intelligence and product capabilities of Coursera and Udemy on a modern architecture.

And the second is LearnVector. Yesterday, we announced a $100 million strategic investment in LearnVector, a newly formed AI-native learning company founded and led by Andrew Ng. As a co-founder of Coursera and one of the world's foremost experts in AI, Andrew needs no introduction. His vision for LearnVector is to fundamentally transform what learning can become, a trusted one-to-one experience designed to adapt to the personal goals of every individual learner.

As Andrew accelerates the design, testing and development of AI-native learning experiences, we are exploring opportunities to connect and scale LearnVector's advancements in Agentic AI with the unified platform we are building to power one of the world's largest and most trusted learning ecosystems. I'm pleased to have him join us today and share the vision behind LearnVector.

Andrew, over to you.

Thank you, Greg. It's great to join you today. Conventional wisdom says that AI will replace people. I believe the opposite, that AI will be the greatest force for accelerating human development if we do it right. For most of history, great teaching was scarce, limited by cost, geography and time. But that was not a limitation of learning, it was a limitation of economics. And so education scaled through a one-to-many model of teachers lecturing to large classes and instructor would create one curriculum and learning experience and the same thing was delivered to many learners.

When we founded Coursera, we believe we could use technology to expand access, and we have done that, scaling courses to far more learners than the physical classroom could hold. But we did so still by delivering essentially one experience to many learners. Thanks to advances in AI, we can now do better, a learning experience that is custom for each individual. And that's why I founded LearnVector to transform learning from the traditional one-to-many model to a personalized one-to-one guide for every learner. I'm privileged to have worked on changing education 15 years ago when Coursera and massive open online courses took off. It's now time to change education again and look forward to building a new generation of AI native learning experiences.

And good learning experiences will require much more than just a chatbot. In fact, research shows that chatbots without guardrails harm learning. They help complete tasks and enable students to do better on homework, but cognitive offloading to a chatbot results in them being less skilled. And you also cannot always trust what a chatbot tells you. At LearnVector, we're building an agentic AI experience to plan your learning path with you, adapt to how you learn and patiently stay with you step by step until you have mastered new skills.

There has been enormous progress in AI, but we're still at the beginning of what AI native learning will become. At the same time, the need for trusted learning has never been greater. People want learning, they can trust, material that is accurate, relevant and worth the effort you put into it. That's why Coursera is a compelling strategic investor. Coursera and Udemy have a trusted library of materials from authoritative sources and it combines global reach with the trust it has earned among learners, universities, instructors and employers.

So working with Coursera creates an amazing opportunity to build one-on-one trustworthy experiences and bring them to the world at meaningful scale. That's what excites me most about LearnVector and about what Coursera support can help make possible, the opportunity to transform how we learn again and create a limitless set of opportunities for learners everywhere.

Thank you, Greg, and the whole Coursera team for your support of LearnVector. Greg, back to you.

Thank you, Andrew. Andrew's vision aligns with the next-generation platform work already underway. We are building our unified road map and accelerating product velocity across the company today to put new experiences in the hands of learners and customers by early 2027.

Combining with Udemy has provided the shared scale, data, talent and investment capacity to turn these ideas into reality faster. At its core is a skills and career graph informed by more than 2 million data points, mapping the relationships among jobs, skills and learning content. Coursera has deep insight into how the world learns. Udemy understands the rapidly changing skills employers value most. By connecting these signals, we are moving from isolated AI features toward an integrated skills system where learning is more personalized, adaptive and embedded directly in everyday workflows.

The experience begins with the outcome a learner or business leader wants to achieve rather than a catalog they have to navigate. It translates that goal into the skills required, a personalized path of trusted learning and interactive practice and upon completion, credible proof of what someone can do. Within 3 weeks of forming a cross-functional team after close, we built an early end-to-end prototype on a new AI native foundation. We're now expanding that work across our combined product and engineering organization and engaging select enterprise customers and content creators in the design process. This quarter's product updates show some of the building blocks taking shape.

First, we're making learning more active and applied. Across Udemy and Coursera, we continue to enhance AI-powered role play. Udemy introduced greater customization and immersive video, including AI avatars to make practice more realistic and help learners apply skills more effectively at scale. On Coursera, Role Play is now available in more than 2,300 courses. The newest experience adds real-time voice simulations so learners can practice job-relevant scenarios and receive immediate actionable feedback. This is the important and powerful shift underway, moving from learning about a skill to demonstrating it in real time.

Second, we are increasing our pace of experimentation. In June, we introduced Ollie, a stand-alone mobile app for Coursera Plus subscribers designed around a few minutes of focused learning each day. Ollie began as a small experiment to help people build stronger learning habits, and we're continuing to learn from how they use it.

More important than the app itself is the development model, a small AI incubation team using AI-assisted development tools to shorten the cycle from idea to product to learner feedback. That faster, more interactive cycle is shaping how we build our next-generation platform.

Third, we are bringing trusted learning into the flow of work. We're expanding our model context protocol, or MCP capabilities across both platforms, giving organizations a secure, standardized way to connect their own AI assistants and agents with Coursera and Udemy learning experiences. In June, we announced the Coursera Connector for Claude. Enterprise learners can ask a work-related question in Claude, receive recommendations grounded in relevant content from their organization's catalog on Coursera and move directly into an interactive Role Play experience to put that knowledge into practice. This builds on our work with ChatGPT, Microsoft 365 Copilot and other enterprise applications, but the approach is larger than any one integration.

We're designing Coursera and Udemy to serve as trusted skills infrastructure that can be surfaced, personalized and measured wherever work and learning happen. Together, these capabilities point towards the unified platform we're building, a system that can understand the goal, identify the skills that matter, orchestrate the right learning and practice across both ecosystems, adapt as needs change and verify proof of progress. That is how we move from catalogs, people search to a continuous system for building new skills, an approach that we believe is more closely connected to stronger career and business outcomes.

Our unified platform will be powered by one of the most comprehensive learning ecosystems in the world. Across Coursera and Udemy, we have reached more than 300 million registered learners and ended the quarter serving more than 12,000 enterprise customers. Serving that demand is an ecosystem of more than 100,000 instructors, encompassing Udemy's expert practitioners and more than 400 university and industry partners. No topic shows the speed of that ecosystem more clearly than generative AI. Across the 2 platforms, we now offer nearly 10,000 GenAI courses, including new offerings for Anthropic in May that are designed to build AI fluency.

Learners are now enrolling in GenAI content at a combined rate of more than 45 enrollments per minute in 2026, up from 25 per minute last year. That speed must be matched by trust, which is why demand for these emerging skills also extends to our micro-credentials. Our micro-credentials combine role-specific training with industry-recognized proof of capability. In Q2, we announced 10 new micro credentials from Google DeepMind, Meta, Microsoft, Dartmouth, the University of Michigan and other leading partners. We also published our 2026 micro-credentials impact report.

In our latest global survey of more than 3,500 learners, employers and higher education leaders, 92% of employers said that entry-level hires with micro-credentials performed better in their first year in the job, and 87% of graduates with micro-credentials reported securing a role aligned with their field within 12 months. That is the flywheel we are building. The expanded ecosystem provides trusted expertise and real-time demand signals. The platform turns those skilling insights into personalized pathways, interactive practice and verified proof of mastery. And each interaction improves the context needed to make the next experience more powerful, relevant and effective at delivering stronger career and business outcomes.

As we look to the second half of the year, our priorities are clear. First, integrate with speed and discipline while maintaining continuity for our learners, customers, instructors and partners. We are well on track to deliver at least $85 million of annual run rate net synergies by year-end. Second, translate the capabilities of our expanded ecosystem into a unified platform and faster product development cycles. And third, accelerate the pace of AI native innovation through both our unified road map and our investment in LearnVector. Succeeding on each of these priorities enables the next. Integration and synergy execution create capacity. That capacity enables faster innovation. Faster innovation drives differentiation and stronger differentiation is what delivers more durable growth and long-term value creation.

We believe AI makes Coursera's role more important and the opportunity more significant and meeting that moment has required our platform and pace to evolve. Over the past year, we've strengthened our operating foundation. Through Udemy, we expanded our ecosystem and our capacity. Now we are accelerating the product innovation required to lead in the next era of learning.

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

Thank you, Greg, and good afternoon, everyone. Q2 was our first quarter reporting as a combined company as well as the first opportunity to measure performance against the framework we established in our June modeling call. Results were consistent with that framework and in several areas, they reflect faster execution against our integration plans.

We reported total revenue of $299 million, up 60% year-over-year, driven by the inclusion of Udemy's results beginning May 11. On a normalized basis, revenue declined 1% year-over-year. Enterprise performance was broadly in line with our expectations. And while consumer subscriptions continue to grow, it was offset by pressure in our transactional offerings and a more disciplined approach to paid marketing.

For the remainder of my remarks, I will discuss our non-GAAP financial measures unless otherwise noted. Gross profit was $186 million, up 77% year-over-year. This represented a gross margin of 62%, an expansion of 620 basis points year-over-year as reported and approximately 200 basis points on a normalized basis, primarily driven by rate improvements. Both companies entered the transaction having independently expanded gross margins over the past year through deliberate actions to improve content economics.

At Coursera, that included the introduction of our platform fee and greater engagement with Coursera produced content. Udemy had also made significant progress through changes to instructor economics, operating leverage and a continued shift towards subscription revenue.

Coursera's margin profile immediately benefits from the contribution of Udemy results as well as the pre-close structural improvements of each company, providing us with a stronger starting point before we begin to recognize the full impact of our cost-saving initiatives.

Q2 operating expenses totaled $150 million or 50% of revenue, largely in line with the prior year period. Net income was $40 million or 13.5% of revenue and adjusted EBITDA was nearly $43 million or 14.3% of revenue. Together, these results provide early evidence of the stronger earnings profile outlined in June, higher gross margins, disciplined execution and the initial benefits of our integration and synergy actions.

While only a portion of that benefit is reflected in today's results, we made substantial progress in the pre-close planning phase and have taken meaningful steps since closing, including an action in early July to simplify the combined company and reduce duplication across functions. We've also started aligning global account coverage and integrating our go-to-market organization with customer support and continuity as a central focus.

As a result of these actions, we're increasing our expectation for 2026 cost savings and now expect to achieve at least $85 million of annual run rate net synergies by the end of 2026, up from the $80 million outlined in June and are well on track to delivering the full $150 million target.

Turning to cash performance and capital allocation. In Q2, free cash flow was a use of $33 million. This included approximately $39 million of merger and integration-related costs and $18 million of other merger-related payments, consistent with the onetime cash costs contemplated in June. Excluding those payments, free cash flow would have been approximately $25 million, trailing adjusted EBITDA primarily due to working capital timing expected to largely normalize next quarter.

Over time, we expect free cash flow will begin to ramp as our onetime costs subside and the benefits of integration, synergy realization and margin expansion build. We ended the quarter with approximately $982 million of unrestricted cash, cash equivalents and marketable securities and no debt, providing substantial flexibility to execute our capital allocation strategy. Our priorities remain consistent: execute the integration and strengthen future cash generation, invest in our unified platform and long-term product strategy and opportunistically return capital to drive shareholder value. We've moved quickly against those priorities.

As Greg and Andrew discussed, our $100 million strategic investment in LearnVector reflects our desire to accelerate innovation. It does not change our priorities around integration execution, margin expansion or the goal of driving greater returns for our shareholders. As part of that goal, we repurchased approximately $90 million of shares through the end of June at an average price of $5.45 per share. To date, total repurchases under our $500 million authorization have now reached approximately $140 million. We view this as an important use of capital and one of several actions in addition to our efforts to manage dilution that demonstrate the value we place on shareholder equity.

Now turning to our operating segments. As outlined in June, we report the combined business through 2 segments, Enterprise and Consumer. We have aligned the underlying definitions and provided historical combined metrics in today's shareholder letter for comparability. Starting with Enterprise, Q2 revenue was $140 million, up 118% year-over-year as reported and up 3% on a normalized basis. Performance was consistent with the trends discussed in June, reflecting a mixed demand environment with variability across customer segments, regions and use cases. NRR was 91%, and we ended the quarter with 12,107 enterprise customers. As a reminder, this combined figure excludes web-enabled self-service accounts to focus on the larger organizations that drive our enterprise performance.

Segment gross profit was $111 million, and segment gross margin was 79%, up 960 basis points year-over-year. This increase primarily reflected Udemy's contribution, while the normalized margin rate also benefited from the stronger content economics established prior to closing. As we focus on driving improvements in retention and ultimately, our growth profile, I've been encouraged by the early operational progress at Coursera since the start of the year.

Our second half priorities are straightforward: prioritize customer continuity, integrate and align our global account coverage and begin bringing the capabilities of Coursera and Udemy together into a more valuable unified enterprise offering, one that helps our customers navigate a rapidly changing skills landscape and address their broader workforce transformation needs.

Turning to Consumer. In Q2, Consumer revenue was $159 million, up 29% from a year ago as reported and down 5% on a normalized basis. Consumer gross profit was $103 million, and segment gross margin was 65%, an increase of 380 basis points year-over-year. The expansion reflected the stronger content economics and subscription mix both companies have been building prior to the transaction. As Greg mentioned, we ended the quarter with more than 1.65 million paid subscribers, up 44% year-over-year.

Consumer subscription revenue was approximately $122 million, representing more than 75% of segment revenue. This includes Coursera Plus, which continued to deliver strong performance across both monthly and annual offerings.

Stepping back, the consumer trends are clear. Core subscriptions are the growth engine, while subscriptions to individual programs and Udemy's transactional offerings remain under pressure. We expect those trends to continue as we evolve towards a subscription-first model across both platforms and maintain paid marketing discipline focused on profitable growth. Over time, we believe a more unified platform can strengthen the value of our subscriptions across more roles, skills and stages of the learner journey.

Now moving to our financial outlook. With the June modeling framework in place, we're returning to a more standard quarterly guidance practice. As a reminder, our guidance is provided on an as-reported basis and includes Udemy results from the May 11 close.

For the third quarter, we expect revenue of $364 million to $372 million. For adjusted EBITDA, we expect to deliver between $52 million and $56 million, reflecting continued operating discipline and the early contribution from our integration and synergy activities. For the full year 2026, we're raising and narrowing our revenue outlook to a range of $1.22 billion to $1.245 billion. And as Greg highlighted, we're now targeting a full year adjusted EBITDA margin of approximately 14%. This is an increase of 100 basis points from the 13% target in June and reflects our Q2 performance and the faster pace of synergy realization.

Importantly, our full year margin outlook only captures the recognized portion of the run rate synergies benefit we intend to deliver. For that reason, Q4 remains the better indicator of our margin profile exiting the year, now anticipating an adjusted EBITDA margin of more than 16% as we make meaningful progress towards a fundamentally stronger earnings profile.

Updated modeling considerations are available in the outlook section of today's shareholder letter, including the purchase accounting benefit expected to moderate in future years, onetime cash expenses related to transaction and integration activities and share count expectations.

Let me close by returning to the framework we established in June and the priorities we're focused on to measure progress. First, execution, protecting customer continuity, integrating with speed and discipline and delivering at least $85 million of annual run rate net synergies by year-end, with more to come in 2027.

Second, translating that execution into higher margins and stronger cash flow. These are the 2 priorities investors should expect us to deliver in the near term, and we're confident in our execution plan. The third and most important is the future platform that execution enables. We've made deliberate strategic decisions to increase our innovation capacity and move with greater speed.

Bringing Coursera and Udemy together gives us greater scale, data and reach, along with significantly more resources to build a unified next-generation platform for the AI era. Our strategic investment in LearnVector adds agile AI-native innovation capacity to the stronger foundation, a potential accelerant for our road map and the global scaling opportunity we intend to lead.

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

[Operator Instructions] we will now take our first question from the line of Stephen Sheldon with William Blair.

First I just wanted to ask how the integration of the 2 enterprise sales teams is progressing. Is there anything to call out going either better or worse than you would have expected, especially in terms of the retention of key members of those sales teams? And is the combined team moving past any distractions from the merger and focusing mainly on selling in the back half? Or could there still be some distraction factors as we think about enterprise sales rep productivity?

Thanks, Stephen, for the question. So for the period up to about 3 weeks ago, those teams on the Coursera and Udemy side were still operating separately. And 3 weeks ago, with the action that Mike mentioned in the scripted remarks, we took the first step to combine those teams. We're very confident in the leadership of those teams and on how now that we've made this step, we get to sort of single books of business for reps across the organization and their ability to have the potential to sell either platform while also bringing people along on the new platform that we're creating. So we've seen really good progress on the Coursera side over the first half of the year under Anthony's leadership, and I'm really excited about seeing how that plays out across the combined organization over the back half of the year.

That's helpful. And then just a follow-up on the LearnVector investment. Can you just talk about the decision to invest $100 million there versus using that capital for additional share repurchases? And are there other investors that are kind of backing LearnVector? Is this going to be a fully owned kind of subsidiary of Coursera where their financials are also incorporated into your total financials. Just maybe detail on those fronts.

I'll have Mike speak to the detailed piece. But no, we are not a majority investor. We invested and own 1/3 of LearnVector roughly. The decision was driven by a special committee of the Board. Obviously, it's a related party transaction. We are very excited about the opportunity to benefit from one of the world's leading experts on AI and Andrew, who's also deeply passionate and knowledgeable about education and the opportunity to really leverage AI to benefit humanity by creating learning experiences that are far more interactive, engaging and effective at delivering not just an answer to a question, but learning that delivers a skill and proof of mastery of that skill with trusted credentials. So we are looking forward to seeing what that can do to accelerate our progress on the unified platform.

And just on the accounting question, this is not -- we will not be consolidating the financials of LearnVector. It will sit as an investment on our balance sheet. It will be mark-to-market if there's an indicator that we need to do that. But generally, it will sit at cost on our balance sheet. There's -- it's not a P&L consolidation.

The next question comes from the line of Bryan Smilek with JPMorgan.

Greg, just curious more on the product road map into the back half. Now that we're past the integration, what excites you the most across both the core Udemy platform and the core Coursera platform and how you can drive content and go-to-market synergies across the subscription platforms? And then secondarily, can you just talk about the change in paid marketing that impacted the growth in subscription on the consumer side in 2Q?

On the platform, the thing that I'm most excited about is a little bit further out than just the back half of this year, which is the new AI native unified platform that I referenced in my scripted remarks. We believe that, that's going to do a much better job of serving our customers, whether they're individual consumer learners or enterprise customers by creating a far more engaging interactive experience that is personalized to every individual learner. So it's not one-to-many, but one-to-one that helps people achieve their objectives, match them to the skills that they need to learn to do that, delivers those skills in a much more engaging fashion, leading to verifiable proof and mastery that they can then take with a trusted certificate out to the workforce.

In terms of the things nearer term that I'm excited about and the way we're approaching product development over -- both over Q2 and over the back half of the year, we're really focused on some of the themes that are going to be present in that unified platform. So a more interactive and applied learning capability. So you saw that reflected in the comments I had in my scripted remarks on the role play improvements that we've had across both Coursera and Udemy, both platforms are leveraging AI to deliver AI-enhanced role play. We also have real-time voice practice and immediate feedback on the Udemy side, they've got AI avatars. So there's a lot of invention that's happening there.

I also mentioned in the scripted remarks, Ollie, which is our AI native mobile learning app for Coursera Plus subscribers. And we really created that to basically both provide a benefit to our Coursera Plus subscribers, but really also to use that as a learning model for us as we think about the capabilities we need in the new unified platform. And we're leveraging the model that, that team used to build Ollie in the approach that we're taking to the unified platform.

And then finally, delivering learning in the flow of work. So on the Coursera side, we launched our Claude connector with MCP. Obviously, on the Udemy side, they've had MCP integrations with Claude, with Chat, with Copilot. And then on the Coursera side, we now have Claude and Copilot. And of course, we've had our app integration on OpenAI since the launch of their app ecosystem. All of that really helps us not just with our existing business on the 2 platforms, which, of course, is critical, but also with the capabilities that we believe are essential to the new platform that we're creating.

The next question comes from the line of Eric Sheridan with Goldman Sachs.

Maybe 2, if I can. Following up a little bit on Bryan's question. When you think about working through the integration of the 2 businesses on the consumer side of the equation, how should we think about you being more aggressive on marketing over a multiyear time frame to sort of capitalize on the opportunity set that the merger presents you with? And how to think about what signal you're watching for to maybe think about moving from synergistic mode into sort of playing offense mode when you think about marketing relative to the growth opportunity? That would be number one.

And then on LearnVector, how should we understand the operating relationship? Because in the prepared remarks, it implied there would be aspects of the relationship that would potentially bring more to your platform or amplify growth. So away from the pure equity relationship. Can you help us just better understand a little bit how the operating relationship between the 2 entities might proceed?

Sure. Maybe I'll start with the second part of your question. So we're working on a commercial relationship, but the high-level approach is basically leverage the innovations that LearnVector comes up with to improve the platform on Coursera and to deliver more personalized adaptive learning. That's what Andrew was very focused on with LearnVector. And so we don't know exactly what those inventions and innovations will look like yet, but I'm highly confident that he is uniquely positioned to come up with things that we wouldn't have come up with on our own, and that can be real force multipliers for our effort.

And importantly, that the unified platform is being built in an AI-native way so that not only is it easier for us to build on that platform, it's also easier for us to integrate any potential features from LearnVector.

And then on the first part of the question, as we roll out that unified platform, which we expect will be over the first half of next year, we think that does create an interesting opportunity to move from what historically has been an effective performance marketing approach that we've taken at Coursera to think about a broader approach to how we do that. My view is that even though conventional wisdom right now in the market seems to be that AI will shrink demand for learning and for the learning that we provide, my perspective is exactly the opposite of that, that AI will expand the demand for learning and that Coursera with this new platform will be uniquely positioned to serve that far better than any other company can. That is a moment to potentially pour some fuel on that fire if we see the right signals from that platform.

Next question comes from the line of Ryan MacDonald with Needham & Company.

Maybe starting on the Enterprise segment and sort of the integrations and sort of the go-to-market strategy here for the back half. Now that you have those teams integrated, obviously, we've talked in the past about some of the customer overlap here. Sort of given the fact that we won't have the sort of new AI native unified platform ready, maybe it sounds like until next year, how are we approaching sort of renewal discussions with the overlapping customers?

And then just generally, are we leading with more of the Udemy platform approach or the historical Coursera enterprise platform approach? Just how are we kind of sort of strategizing in the go-forward process as we go into like the end of the year renewal season here?

So since we still have 2 separate platforms today that, of course, have some level of overlapping customers, but roughly 80% of the customers are non-overlapping. So there's far more opportunity to cross-sell and upsell to that piece of the customer base. On the overlapping customers, obviously, the conversation with them is how do we both ensure that they're getting value out of their existing relationships and how do we expand that value over time before we get to the unified platform and then certainly once we have that as well. Many of those customers are design partners.

And so we've started enlisting design partners for the unified platform, enterprise customers who we are exposing them to how we're thinking about it, showing them some of the features, getting their feedback, that's going to be a critical part of that effort, and we really think that will enable us to deliver a platform that's far more responsive to enterprise needs.

I would say over the back half of the year, the things that we're really focused on from a road map perspective because, of course, at the same time, we're also continuing to improve the existing platforms, not just to serve the business, which, of course, is critical, but also because our customers expect it, and they should. And we also want to test out things that are going to be helpful in the unified platform that we're creating as well. And so some of the big themes around that are really AI-enabled learning. I just mentioned some of the MCP work and the AI connectors that we've developed, some of the role play and custom dialogue or rather AI dialogues and then also hands-on technical applications.

So Pro Labs, workspaces, et cetera. You all and all of our enterprise customers will have a chance to get a much deeper look at what we are building in our forward events, our enterprise-focused sales conferences that are coming up for our existing customers and the prospects in September. And so those are some of the big themes though that we are using right now in conversations and also that will be a big part of that event as well.

Really helpful. And then maybe just a follow-up on LearnVector. As a part of the commercial agreement and the investment, will Andrew and the team be able to sort of train the models that they're building sort of on the Coursera content and Udemy combined content library? And I guess on the backside of that as products come to market, will they be available on the Coursera and Udemy websites? Or are we thinking sort of a different sort of go-to-market motion with this here?

They'll be available as they are developed, they'll be available on the unified platform. Some of them may be available on one or both of the independent platforms as well. We haven't certainly gotten that far until we understand what some of the products might be. They are not trained on the course content. Obviously, that's the IP of our partners. And so no, there is no training that is done on the course content other than the specific AI features that we have within each individual course.

The next question comes from the line of Rishi Jaluria with RBC.

Maybe just 2 that I would love to hit on. Starting with maybe just both related to LearnVector. Number one was, I'll ask the top question that we're all getting asked, which is just around this being a related party transaction around -- I know we've got Andrew with us, right, being the Chairman of the Board of Coursera, now the combined Coursera Udemy business as well as kind of founding this net new business and the strategic investment. Just help us understand kind of the pieces here and help us as we're talking to investors who may be worrying about a potential conflict of interest just kind of how that plays out?

And then maybe related to that, I know the question was asked earlier about share buybacks. Maybe beyond that, if I think about the capital that you're putting here, I guess, is this not something that you feel like given the partnerships you have, given the talent you have, given the kind of flywheel of innovation that it's not something that you would be able to kind of build out yourself internally and this kind of requires that external investment and relationship.

I view this as an and, not an or. So we are absolutely building a suite of AI native features to enhance the learning experience. And our team is going to continue to do that. I also believe that it's going to be tremendously helpful and an accelerant to have one of the world's foremost experts on AI. Andrew is literally the only person that both Sam Altman and Dario Amodei have worked for. And so he's going to come up with things that nobody else can come up with. But the opportunity to be able to leverage that within the platform to me is a huge force multiplier.

In terms of the investment, the Board created a special committee that negotiated the terms of the investment, set the valuation, et cetera. And so it was handled in the appropriate way given the fact that it is a related party transaction. I'll let Mike speak to some of the cash thinking and a cash flow perspective.

Yes. Just one thing I'd add on that is we -- Greg and I consider the most important area for us to invest in terms of capital allocation is the next-generation AI native platform. And we are doing that internally. The guidance that you see in the financials you see already incorporate the investment we're making. So the teams are already in place. They're building the platform. This gives us the opportunity to kind of force multiply and move faster with, frankly, someone who may be able to hire people that very few companies in the world could hire in terms of AI talent.

So sort of 2 irons in the fire gets us there faster is the idea. And so the other factor, of course, is that as we move towards higher EBITDA margin, much higher free cash flow into next year, we're going to be a very cash-generative business on the current platform. And that's just another factor as we think about like deploying capital overall.

Your final question will come from the line of Nafeesa Gupta with Bank of America.

So one is kind of a follow-up to the earlier question. With both internal AI initiatives and the LearnVector partnership now, where do you think the largest opportunity is for AI to improve monetization? Is it learner conversion? Is it enterprise adoption? Is it content? Could there be pricing changes in the future? How should we think about monetization?

Well, we're doing a lot of work right now on pricing and packaging across both the Consumer and Enterprise segments because obviously, we have 2 different platforms today that have historically taken different approaches to pricing. And so not only do we need to do that work as part of bringing the 2 companies together, but we think it's also an opportunity to think really strategically and long term about the monetization model that we want to create and how we can help that be as effective as possible at delivering a platform that creates value for our individual consumer learners and for our enterprise customers and then also does the right value creation from a shareholder perspective.

In terms of how we're going to apply AI, it literally is applied across all areas of the platform. The enterprise components have MCP integrations into the flow of work directly into enterprise systems and then also, of course, into their integrations with either Chat or Claude or Copilot, et cetera. And then also into third-party systems that they use, whether those are HRIS or other systems. And then on the consumer side, the main thing that we think our learning experience needs to deliver, which our unified platform is very focused on doing is a much more personalized approach that shifts learning from one-to-many to one-to-one.

So understanding the objective that somebody has when they arrive at a platform, the skills that they have that are relevant to that objective, the gap that they have from where they are today to where they need to go to achieve that objective, the learning experience that helps deliver that gap and bring them on that journey in a far more effective, engaging way that is personalized to them, proof of their ability to close that gap, demonstrate that skill that they have just mastery and not just knowledge of it and that the knowledge and the mastery stick with them. So it doesn't just get them to enable them to pass a certification, but actually sticks with them in practice.

And then instancing all of that within a verified trusted certificate or badge that they can take with them to their employer -- to a prospective employer. And so that's what we are focused on building with the unified platform on the consumer side. And obviously, elements of that learning experience that I just talked about will be highly applicable to the enterprise side of the business as well as they look to upskill and reskill their employees.

Got it. And if I can ask another one. So given the broader content catalog now, are you seeing any early evidence of Enterprise customers opting for larger deal sizes or improved win rates in the Enterprise side since the acquisition closed?

I would say, broadly, the business hasn't changed substantially versus pre-close on the Enterprise side, and we haven't delivered a new platform also. So it's the same -- those conversations are happening against the backdrop of the same 2 businesses and platforms that we have had historically. And I would expect that to broadly be the case until we deliver the new platform. As I mentioned, we're starting design partnerships with enterprise customers now. We'll be increasing that over the back half of the year, and we're looking to roll this out in stages starting in the first half of next year.

We have one final question coming from the line of Devin Au with KeyBanc Capital Markets.

Could you maybe unpack the NRR downtick within Enterprise? I believe that number stepped down by 4 points year-over-year. Anything to call out either on the Coursera or the Udemy business specifically? Any color on maybe how churn has trended across both businesses? And how we should think about the near-term trend line of that metric as you guys go through the integration?

Yes. Thanks for the question. This is Mike. Yes. So for NRR, I think it's been a reasonably consistent picture for a while there across our 3 main business segments. Obviously, our largest segment is business, and we continue to have -- to be cautious there about the environment. We see pressure on L&D budgets. That's been a relatively consistent theme for a while now.

Our campus business and our government business are actually quite strong. The campus business overall is quite differentiated for us, and we continue to see pretty solid customer retention there. And then on the government side, as I've said a few calls now, it's just kind of a lumpy business. Some quarters, we have really strong retention. But at the end of the day, they're generally annual customers because they're governments, and they don't commit to more than a year. So it can be a little bit more lumpy.

I would say really what we're seeing overall is just a consistent environment that not significantly different from last quarter or the quarter below -- we are, as Greg said earlier, seeing, I think, pretty solid execution with the teams. We integrated the 2 Enterprise go-to-market teams just a few weeks ago, as Greg said. So we hope to see continued progress on the execution side on the Enterprise business through the next couple of quarters. It does obviously take a while for progress to show up as revenue in that business. So positive signs on the execution side, but at the end of the day, the business environment remains consistent.

Got it. Got it. And then maybe just my second question, I wanted to ask about your integration plan with demand side as well, maybe specifically on the partner side. I believe Udemy has some pretty extensive relationship in the APAC region. I would love to just get some more color on how you guys kind of view that relationship going forward as you guys combine both Coursera and Udemy.

Yes. I mean you're referring to Udemy's business in Japan and the partnership that Udemy has with Benesse to drive that business. It's a very unique partnership. As you note, we're very happy with it. They are very happy with it as well. I was in Japan within 2 weeks of closing the deal in May to spend time with the team there, get to know the business a little bit deeper and get to know the Benesse leadership. Really pleased with what we're seeing overall there and think there's opportunity for that business as well on a go-forward basis.

All right. Thank you, Devin, and thanks to everyone for joining today's call. A replay will be available shortly on our Investor Relations website. We appreciate you joining us. Take care.

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, 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.