Udemy (NasdaqGS:UDMY) M&A Announcement December 17, 2025 08:00 AM ET Company ParticipantsMike Foley - CFOBrian Smilek - Equity Research AssociateCam Carey - VP of Investor RelationsGregg Hart - CEOHugo Sarrazin - CEOConference Call ParticipantsRyan MacDonald - Senior AnalystSteven Sheldon - Research Analyst, Technology, Media, and CommunicationsJosh Baer - Executive Director and Software Equity Research AnalystOperatorLadies and gentlemen, thank you for standing by, and welcome to today's conference call. A ...

Summary of Coursera and Udemy Conference Call Industry and Companies Involved - **Industry**: Online Education and Learning Platforms - **Companies**: Coursera and Udemy Core Points and Arguments 1. **Combination Announcement**: Coursera has entered into a definitive agreement to combine with Udemy, aiming to create a leading technology platform for skills discovery and development [2][4][12] 2. **Market Needs**: The World Economic Forum estimates that 39% of key skills will change in the next five years, highlighting the need for agile learning platforms [5] 3. **Learner Focus**: 86% of learners come to Coursera to transform their careers, indicating a strong demand for career-oriented learning solutions [5] 4. **Platform Capabilities**: The combination aims to unite Coursera's verified learning ecosystem with Udemy's dynamic marketplace, enhancing value and choice for learners and organizations [6][8] 5. **Innovation Acceleration**: The merger is expected to accelerate AI-native innovation, allowing for faster development of personalized learning experiences [9][10] 6. **Global Reach**: Coursera added 7.7 million new registered learners in Q3, bringing the total to 191 million, while Udemy has over 17,000 enterprise customers and generates more than 60% of its revenue outside North America [11][12] 7. **Financial Profile**: The combined pro forma annual revenue exceeds $1.5 billion, with identified cost synergies of $115 million expected to be realized within 24 months [12][19] 8. **Transaction Structure**: This is an all-stock transaction where Udemy stockholders will receive 0.8 shares of Coursera Common Stock for each share of Udemy Common Stock [20] 9. **Regulatory Perspective**: The companies believe the combination will deliver better value across the education value chain, although they will need to navigate regulatory approvals [38][39] Additional Important Content 1. **Instructor Opportunities**: The merger will provide instructors access to a larger learner base, enhancing their distribution and monetization opportunities [31][32] 2. **Content Strategy**: Both companies will maintain their content strategies, leveraging their strengths to create a more comprehensive offering [40] 3. **Geographic Expansion**: The combination is expected to enhance Coursera's reach outside North America, capitalizing on Udemy's international presence [44][45] 4. **Future Vision**: The goal is to create a platform that keeps pace with technological changes, ensuring learners gain essential skills for career advancement [22][23] This summary encapsulates the key points discussed during the conference call regarding the strategic combination of Coursera and Udemy, focusing on their market positioning, operational synergies, and future growth potential.

Summary of Coursera's Earnings Call Company Overview - **Company**: Coursera - **Industry**: EdTech (Educational Technology) Key Points Company Insights - Coursera has 191 million registered learners globally, indicating a strong user base [7] - The company is leveraging AI to enhance learning experiences and improve content delivery [6][28] - Coursera's balance sheet is described as healthy, providing a solid foundation for growth [8] Leadership and Management Changes - Greg Hart joined as CEO in February and is focused on improving customer service and operational efficiency [3] - Mike Foley has been appointed as interim CFO following Ken's departure, with a search for a permanent CFO ongoing [10][12] Financial Performance and Guidance - For 2026, Coursera projects revenue between $750 million and $754 million, reflecting an 8%-9% growth rate [14] - The company has increased its EBITDA margin guidance to 8% for the same period [14] - Q3 showed a 10% year-over-year growth, indicating a positive trend in revenue growth [14] Product and Content Strategy - Coursera is focusing on rapid product innovation and expanding its catalog, which now includes over 12,000 courses, a 44% increase year-over-year [16] - The company is enhancing its content engine to facilitate quicker content creation and better alignment with learner outcomes [15] - AI-driven tools like Coursera Coach and CourseBuilder are being utilized to improve the learning experience [6][36] Consumer Market Dynamics - Consumer revenue grew by 10% year-over-year in Q2 and 13% in Q3, showing strong demand for online education [20] - The introduction of a freemium model allows learners to access the first module of courses for free, potentially increasing conversion rates [21] - Pricing adjustments were made in over 60 countries to align with local purchasing power, enhancing accessibility [22] AI and Future Opportunities - The partnership with OpenAI aims to integrate Coursera's content with ChatGPT, enhancing the learning experience [33] - Coursera is also collaborating with Anthropic to create AI-related content, reflecting the growing demand for AI education [41] - The World Economic Forum predicts that 59% of the global workforce will need retraining by 2030, presenting a significant opportunity for Coursera [26] Enterprise Segment Focus - Coursera is experiencing mixed trends in its enterprise segment, with a focus on improving Net Revenue Retention (NRR), which was 89% in Q3 [61] - Skills Tracks, curated sets of content for workforce upskilling, are being developed to meet enterprise needs [63][66] - The company aims to enhance its offerings by integrating verified assessments to ensure skill mastery [65] Global Expansion and Accessibility - Over 60% of Coursera's catalog is translated into 26 languages, making education accessible to a broader audience [45] - AI-dubbed courses are set to exceed 1,000 offerings in five languages by year-end, improving international enrollments [43] Conclusion - Coursera is well-positioned to capitalize on the growing demand for online education, particularly in the context of AI-driven workforce changes. The company's strategic focus on product innovation, content expansion, and partnerships with AI leaders will likely drive future growth and enhance its market position [28][29]

Financial Data and Key Metrics Changes - Coursera reported revenue of $194 million for Q3 2025, reflecting a 10% year-over-year increase [5][24] - Free cash flow reached $27 million, up 59% from the previous year [5][26] - The company raised its full-year revenue guidance to a range of $750 to $754 million, representing 8% to 9% growth from the prior year [6][22] Business Line Data and Key Metrics Changes - Consumer segment revenue was $130 million, up 13% year-over-year, driven by 7.7 million new registered learners [27][29] - Enterprise segment revenue was $64 million, up 6% year-over-year, with a 10% increase in the total number of paid enterprise customers [30][31] - Consumer segment gross profit was $80 million, with a gross margin of 61%, while enterprise segment gross profit was $45 million, maintaining a gross margin of 70% [29][31] Market Data and Key Metrics Changes - The total number of registered learners reached 191 million, indicating strong growth in user engagement [27] - The demand for generative AI courses has surged, with 14 enrollments per minute, up from eight enrollments per minute last year [11][12] Company Strategy and Development Direction - The company is focusing on product-led innovation and operational discipline to enhance customer experiences and drive long-term growth [5][6] - Coursera is expanding its catalog, which has grown by 44% to over 12,000 courses, and is enhancing its offerings in AI skills [10][11] - The introduction of SkillsTrax aims to address skill gaps and improve training impact for organizations [17][56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the consumer business, citing strong top-of-funnel metrics and the success of Coursera Plus [42][43] - The enterprise environment remains muted, with no significant changes expected in corporate spending trends [54][82] - The company anticipates Q4 revenue in the range of $189 to $193 million, reflecting seasonal trends [21][82] Other Important Information - The appointment of Anthony Salcido as the new General Manager of the enterprise segment is expected to drive future growth initiatives [7][56] - Coursera's partnership with OpenAI to embed its platform in ChatGPT is seen as a significant opportunity for user engagement [36][37] Q&A Session Summary Question: Insights on OpenAI embedded app and its impact - Management is excited about the partnership with OpenAI, viewing it as a top-of-funnel opportunity to attract new learners [34][35] Question: Sales and marketing investment priorities - The company continues to see effective returns on sales and marketing investments, particularly in driving subscriptions [38][39] Question: Q4 revenue outlook and consumer growth durability - Management raised full-year revenue guidance, citing strong consumer growth and visibility from Coursera Plus [41][42] Question: Balancing free cash flow growth with content investments - The company is pleased with content investments, which have expanded the course catalog and improved gross margins [44][45] Question: Factors driving consumer acceleration and international pricing - Improved marketing strategies and localized pricing adjustments have contributed to consumer growth [48][50] Question: Trends in enterprise segment and corporate spending - Mixed trends were observed across different enterprise verticals, with Coursera for Campus performing better than Coursera for Government [53][54] Question: Future of AI certifications and partnerships - Management sees opportunities for AI certifications in collaboration with partners like OpenAI and Anthropic [68][71] Question: Shifts in search behavior and investment in AI search - The integration with OpenAI is expected to enhance user experience and improve course discovery through AI-driven search [72][76]

Financial Data and Key Metrics Changes - Coursera reported Q3 2025 revenue of $194 million, reflecting a 10% year-over-year increase [5][24] - Free cash flow for Q3 was $27 million, up 59% from the previous year, contributing to a year-to-date total of over $80 million, representing 55% year-over-year growth [5][26] - The company raised its full-year revenue guidance to a range of $750 million to $754 million, indicating an 8%-9% growth from the prior year, up from an earlier projection of 4% [6][22] Business Line Data and Key Metrics Changes - Consumer segment revenue reached $130 million, a 13% increase year-over-year, driven by 7.7 million new registered learners [27][29] - The Coursera Plus subscription model now accounts for over 50% of consumer segment revenue, enhancing revenue predictability [5][29] - Enterprise segment revenue was $64 million, up 6% year-over-year, with a 10% increase in the number of paid enterprise customers [30] Market Data and Key Metrics Changes - The total number of registered learners on Coursera increased to 191 million, with strong growth in international markets due to localized pricing strategies [27][50] - The demand for generative AI courses has surged, with 14 enrollments per minute, up from eight enrollments per minute last year [11][12] Company Strategy and Development Direction - The company is focusing on product-led innovation and operational discipline to enhance customer experiences and drive long-term growth [5][6] - Coursera is leveraging its extensive data to improve product offerings and content delivery, aiming to differentiate itself in the competitive online education market [9][10] - The introduction of Skills Tracks aims to address the need for tailored learning paths in response to evolving job requirements [17][55] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the consumer business's growth trajectory, supported by strong top-of-funnel metrics and the success of Coursera Plus [42][82] - The enterprise environment remains muted, with no significant changes expected in corporate spending trends [21][54] - The integration with OpenAI's ChatGPT is seen as a strategic opportunity to enhance learner engagement and discovery [36][74] Other Important Information - The company has expanded its course catalog by 44% over the past year, now offering over 12,000 courses [10][45] - New leadership appointments, including Anthony Salcito as General Manager of the enterprise segment, are expected to drive future growth initiatives [7][56] Q&A Session Summary Question: Insights on OpenAI integration and its impact - Management expressed excitement about the partnership with OpenAI, noting it as a top-of-funnel opportunity without a direct economic arrangement [34][36] Question: Sales and marketing investment priorities - The company highlighted the effectiveness of sales and marketing investments, particularly in driving subscriptions and new learner registrations [38][39] Question: Q4 revenue outlook and consumer growth durability - Management indicated that Q4 typically experiences seasonality, affecting growth rates, but remains confident in consumer segment performance [41][43] Question: Balancing free cash flow growth with content investments - The company plans to continue investing in content while maintaining strong free cash flow, leveraging AI to reduce content creation costs [44][45] Question: Factors driving consumer acceleration and international pricing - Management noted improvements in marketing efficiency and localized pricing as key drivers of consumer growth [48][50] Question: Trends in enterprise segment and corporate spending - Mixed trends were observed across different enterprise verticals, with Coursera for Campus performing well while Coursera for Government faced challenges [53][54] Question: Future of AI certifications and partnerships - Management sees potential for AI certifications in collaboration with partners like OpenAI and Anthropic, emphasizing the importance of verified skills [68][71] Question: Shifts in search behavior and investment in AI search - The integration with ChatGPT is expected to enhance user experience and improve traffic quality, with ongoing investments in course detail pages and learner onboarding [72][76]

Financial Data and Key Metrics Changes - Coursera reported revenue of $194 million for Q3 2025, reflecting a 10% year-over-year increase [4][20] - Free cash flow reached $27 million, up 59% from the previous year, contributing to a total of over $80 million year-to-date, representing 55% year-over-year growth [4][22] - The company raised its full-year revenue guidance to a range of $750 to $754 million, indicating an 8% to 9% growth from the prior year [5][18] Business Line Data and Key Metrics Changes - Consumer segment revenue was $130 million, up 13% year-over-year, driven by 7.7 million new registered learners [20][23] - The gross profit for the consumer segment was $80 million, a 16% increase from the previous year, with a gross margin of 61% [24] - Enterprise segment revenue was $64 million, up 6% year-over-year, with a net retention rate of 89% [25][26] Market Data and Key Metrics Changes - The total number of registered learners reached 191 million, with significant growth in the consumer segment [23] - The demand for generative AI courses has surged, with 14 enrollments per minute, up from eight enrollments per minute last year [9][10] Company Strategy and Development Direction - The company is focusing on product-led innovation and operational discipline to enhance customer experiences and drive long-term growth [4][5] - Coursera is expanding its catalog, which has grown by 44% to over 12,000 courses, and is enhancing its offerings with nearly 100 professional certificates [8][9] - The integration with OpenAI's ChatGPT is expected to enhance user engagement and discovery of Coursera's offerings [16][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the consumer business, citing strong top-of-funnel metrics and the success of Coursera Plus [37][38] - The enterprise environment remains muted, with no significant changes expected in corporate spending trends [70] - The company anticipates Q4 revenue in the range of $189 to $193 million, representing 5% to 8% year-over-year growth [17][18] Other Important Information - The appointment of Anthony Salcido as the new General Manager of the enterprise segment is expected to drive growth initiatives [5][6] - The company is investing in AI-driven innovations and personalized learning experiences to meet evolving learner needs [19] Q&A Session Summary Question: Insights on OpenAI embedded app and its impact - Management is excited about the partnership with OpenAI, noting it as a top-of-funnel opportunity without a direct economic arrangement [29][30] Question: Sales and marketing investment priorities - The company continues to see effective returns on sales and marketing investments, particularly in driving subscriptions [33][34] Question: Q4 revenue outlook and consumer growth durability - Management raised full-year revenue guidance, citing strong consumer growth and visibility from Coursera Plus [36][37] Question: Balancing free cash flow growth with content investments - The company plans to continue investing in content while leveraging AI to reduce production costs [39] Question: International pricing strategy and its impact - Management lowered prices in various international markets to enhance accessibility and drive revenue growth [43][44] Question: Trends in enterprise segment and corporate spending - Mixed trends were observed across different verticals, with Coursera for Campus performing better than Coursera for Government [45][46] Question: Future of AI certifications and partnerships - There is potential for creating AI certifications in collaboration with partners, similar to existing certifications with other companies [58][60] Question: Shifts in search from traditional SEO to AI search - The integration with OpenAI is expected to improve user engagement and traffic quality, enhancing the learner journey [63][64]

Financial Data and Key Metrics Changes - The company reported revenue of $194 million, reflecting a 10% year-over-year increase [7] - Free cash flow reached $27 million, up 59% from the prior year [7] - The company raised its full-year revenue guidance to a range of $750 to $754 million, representing 8% to 9% growth from the prior year [8][25] - Gross profit was $108 million, maintaining a gross margin of 56% [29] - Net income was $17 million, or 8.6% of revenue, with adjusted EBITDA of $16 million, or 8% of revenue [30] Business Line Data and Key Metrics Changes - Consumer segment revenue was $130 million, up 13% year-over-year, driven by 7.7 million new registered learners [31] - The Coursera Plus subscription offering now accounts for more than half of consumer segment revenue [7] - Enterprise segment revenue was $64 million, up 6% year-over-year, with a 10% increase in the total number of paid enterprise customers [34] Market Data and Key Metrics Changes - The total number of registered learners reached 191 million, with 7.7 million new learners added in the quarter [32] - The company reported 14 enrollments per minute in its generative AI courses, up from eight enrollments per minute last year [14] Company Strategy and Development Direction - The company is focused on product-led innovation and enhancing customer experiences to drive long-term growth [6] - There is a commitment to leveraging data insights to improve product offerings and learner engagement [11] - The introduction of SkillsTracks aims to address skill gaps and provide tailored learning paths for enterprises [63] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business's growth trajectory, citing strong top-of-funnel metrics and the success of Coursera Plus [48] - The company anticipates a seasonal decline in Q4 revenue, which is typical based on historical trends [49] - Management highlighted the importance of adapting to changing corporate spending environments and the need for upskilling in response to AI advancements [62] Other Important Information - The company announced the appointment of Anthony Salcedo as the new general manager of the enterprise segment [8] - The catalog has expanded by 44% to over 12,000 courses, with a focus on job-aligned micro-credentials [13] Q&A Session Summary Question: Insights on OpenAI embedded app and its impact - Management expressed excitement about the partnership with OpenAI, noting it as a top-of-funnel opportunity to attract new learners [40][41] Question: Sales and marketing investment priorities - The company highlighted the efficiency of its sales and marketing efforts, particularly in driving subscription growth [43] Question: Q4 revenue outlook and consumer growth durability - Management indicated that consumer growth is supported by strong marketing and product enhancements, despite typical seasonal impacts [48][49] Question: Trends in enterprise segment and budgetary challenges - Mixed trends were noted across different verticals, with Coursera for campus performing well while government segments faced challenges [61][62] Question: AI skills initiatives and Coursera's role - Management confirmed ongoing dialogues with partners like Google and Microsoft to enhance collaboration on AI skills training [73][74] Question: AI certifications and course offerings - The company sees potential in developing AI certifications in collaboration with partners, emphasizing the importance of verified skills [80][81] Question: Shifts in search and user engagement - Management discussed the integration with OpenAI as a way to enhance user engagement and improve course discovery through AI [86][87]

Financial Data and Key Metrics Changes - The company reported revenue of $187 million, representing a 10% year-over-year growth [6][25] - Free cash flow increased by 68% year-over-year to $29 million [6] - Gross profit was $105 million, up 13% year-over-year, with a gross margin of 56%, an increase of 180 basis points from the previous year [25] - Net income was $19 million, or 10.3% of revenue, while adjusted EBITDA was $18 million, or 9.6% of revenue [26] Business Line Data and Key Metrics Changes - Consumer segment revenue reached $123 million, also up 10% year-over-year, driven by increased learner engagement and Coursera Plus subscriptions [30] - Enterprise segment revenue was $64 million, reflecting a 10% year-over-year growth, with a net retention rate of 93% [32][34] - The number of paid enterprise customers increased by 12% year-over-year to 1,686 [34] Market Data and Key Metrics Changes - The total number of registered learners grew by 18% year-over-year to 183 million, with 7.5 million new learners added in the second quarter [7][8] - The generative AI course catalog expanded to over 925 courses, with more than 10 million enrollments [10][11] Company Strategy and Development Direction - The company is focused on product-led growth, enhancing platform capabilities, and accelerating content production to meet the rapid pace of skills development [21][22] - New appointments in leadership positions aim to drive innovation and operational rigor [9] - The company is expanding its catalog of industry micro-credentials and collaborating with universities to broaden access to job-relevant education [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to adapt to the changing labor market and the growing demand for new technologies and skills [7][11] - The company raised its full-year revenue guidance to a range of $738 million to $746 million, reflecting a midpoint increase of $17 million [7][35] - Management acknowledged macroeconomic uncertainties affecting the enterprise segment but remains optimistic about consumer growth [40][86] Other Important Information - The company has a strong balance sheet with approximately $775 million in unrestricted cash and no debt [28] - The catalog now includes over 10,500 courses, having expanded by more than 36% over the past year [10] Q&A Session Summary Question: What is driving the guidance for Q3 and Q4? - The guidance reflects strong performance in the consumer segment, with macro trends in enterprise remaining uncertain [39][40] Question: How is Coursera positioned in the context of big tech prioritizing AI skills education? - The company is well-positioned with trusted content and an AI-enabled learning platform, recognizing the need for reskilling and upskilling in the workforce [44][46] Question: Can you elaborate on consumer outperformance and future growth? - The consumer segment saw broad-based growth across regions, with ongoing improvements in product development and marketing strategies [55][56] Question: What trends are observed across government, business, and campus in the enterprise segment? - The enterprise segment showed strong performance in business and campus verticals, with ongoing monitoring of budgetary trends [60][64] Question: How sustainable are the improvements in consumer gross margins? - Improvements are driven by better revenue share agreements and investments in content, with expectations for continued positive trends [72][74] Question: What are the key metrics being monitored to assess business performance? - Key metrics include traffic conversion rates, learner engagement, and retention, all of which are essential for revenue growth [102][104]