Coursera,(COUR) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (Unaudited) The company presents its unaudited financial statements, showing revenue growth and a significantly reduced net loss - Effective February 3, 2025, Gregory Hart was appointed as the new President and Chief Executive Officer (CEO)[24] - Following the CEO transition, the company simplified its business model and now operates under two reporting segments: Consumer and Enterprise[25][83] Condensed Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $775.1 | $726.1 | | Total current assets | $881.9 | $830.7 | | Total assets | $979.9 | $930.3 | | Liabilities & Equity | | | | Total current liabilities | $346.2 | $327.5 | | Total liabilities | $352.9 | $332.9 | | Total stockholders' equity | $627.0 | $597.4 | Condensed Consolidated Statements of Operations Highlights (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $187.1 | $170.3 | $366.4 | $339.4 | | Gross Profit | $102.7 | $90.2 | $200.6 | $179.7 | | Loss from operations | $(15.1) | $(31.2) | $(29.5) | $(61.0) | | Net loss | $(7.8) | $(22.9) | $(15.6) | $(44.2) | | Net loss per share | $(0.05) | $(0.15) | $(0.10) | $(0.28) | Condensed Consolidated Statements of Cash Flows Highlights (in millions) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $69.0 | $48.3 | | Net cash provided by (used in) investing activities | $(15.1) | $52.8 | | Net cash used in financing activities | $(6.5) | $(48.7) | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes Q2 2025 results, detailing revenue growth, segment performance, and key business metrics Results of Operations Revenue grew 10% YoY in Q2 2025, driven by growth in both segments and improved gross margins Revenue by Segment (in millions) | Segment | Q2 2025 | Q2 2024 | % Change | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Consumer | $122.8 | $111.6 | 10% | $240.4 | $223.2 | 8% | | Enterprise | $64.3 | $58.7 | 10% | $126.0 | $116.2 | 8% | | Total Revenue | $187.1 | $170.3 | 10% | $366.4 | $339.4 | 8% | - Gross margin for Q2 2025 increased to 54.9% from 53.0% in Q2 2024, driven by lower content cost rates in both Consumer and Enterprise segments[132][133] - Total operating expenses for Q2 2025 decreased by 3% YoY to $117.8 million, primarily due to lower personnel-related expenses from 2024 expense reduction initiatives[138][139][143] Liquidity and Capital Resources The company maintains strong liquidity with $775.1 million in cash and increased operating cash flow - The company's principal source of liquidity as of June 30, 2025, was cash and cash equivalents totaling $775.1 million[148] - Net cash provided by operating activities increased by $20.7 million to $69.0 million for the six months ended June 30, 2025, compared to the same period in 2024[156][157] - The share repurchase program, authorizing up to $95.0 million, was completed in May 2024, with no repurchases made in 2025[152][153] Key Business Metrics and Non-GAAP Financial Measures Key metrics show growth in learners and enterprise customers, with improved non-GAAP profitability Key Business Metrics as of June 30 | Metric | 2025 | 2024 | YoY Growth | | :--- | :--- | :--- | :--- | | Total Registered Learners (millions) | 183 | 155 | 18% | | Paid Enterprise Customers | 1,686 | 1,511 | 12% | | Net Retention Rate for Paid Enterprise Customers | 93% | 93% | 0% | Non-GAAP Financial Measures Reconciliation (in millions) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Non-GAAP Gross Profit | $104.7 | $92.3 | $204.8 | $184.0 | | Non-GAAP Net Income | $19.3 | $13.8 | $39.0 | $25.7 | | Adjusted EBITDA | $18.0 | $10.4 | $36.7 | $18.7 | | Free Cash Flow | N/A | N/A | $53.9 | $35.1 | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are interest rate and foreign currency fluctuations - The company's primary market risks are interest rate changes and foreign currency fluctuations[186] - A hypothetical 100 basis point increase or decrease in interest rates would result in a $7.8 million change in annualized interest income as of June 30, 2025[189] - Foreign currency risk from operating expenses would have had a negligible impact on pre-tax loss for Q2 2025 based on a 10% change in exchange rates[190][192] Item 4. Controls and Procedures Management concluded that disclosure controls and internal controls over financial reporting were effective - The CEO and CFO concluded that as of the end of the period, the company's disclosure controls and procedures were effective at the reasonable assurance level[194] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[195] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company details legal proceedings, including a $4.5 million settlement for privacy arbitration matters - The company refers to Note 9 in Part I, Item 1 for information on legal proceedings[199] - In May 2025, the company entered into settlement agreements with the majority of remaining claimants in the Privacy Arbitration Matters for $4.5 million[59] Item 1A. Risk Factors The company faces risks related to industry growth, competition, regulation, AI, and its PBC status - The company's growth may be adversely impacted by macroeconomic conditions, and its limited operating history makes future results difficult to predict[201][207] - The business depends on partnerships with content creators, with the top five generating approximately 24% of total revenue in the first six months of 2025[212] - The use of AI presents risks related to inaccurate content, academic integrity, and evolving regulations, which could damage the company's reputation[245][246] - Degree programs rely on the DOE's non-codified "bundled services exception" guidance, which could be altered or removed, impacting revenue-sharing models[298][300] - As a Public Benefit Corporation (PBC), the board must balance stockholder interests with its public benefit purpose, potentially impacting short-term financial results[372][374] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities during the reporting period - None[381] Item 5. Other Information Two company officers adopted Rule 10b5-1 trading arrangements during the quarter - On May 15, 2025, Michele M. Meyers, VP, Accounting and Chief Accounting Officer, entered into a Rule 10b5-1 trading arrangement for the sale of up to 21,000 shares of common stock[383] - On May 30, 2025, Marcelo C. Modica, SVP and Chief People Officer, entered into a Rule 10b5-1 trading arrangement for the sale of up to 51,720 shares of common stock[384] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including certifications and charter documents - Lists the exhibits filed with the report, including charter documents, officer certifications required by the Sarbanes-Oxley Act, and Inline XBRL documents[390]