Coursera, Inc.

year 2021 earnings call at this time all participants are in a listen only mode and please be advised that this call is being recorded after the speaker's prepared remarks there will be a question and answer session if you would like to ask a question during this time simply press star followed by the number one on your telephone keypad if you would like to withdraw your question press the pound key I'd like to turn the call over to Kim Carey, Head of Investor Relations. Mr. Carey, you may begin.

Hi, everyone, and thank you for joining our Q2 Earnings Conference call. With me today is Jeff Maggi-Incalda, Coursera's Chief Executive Officer, and Ken Hahn, our Chief Financial Officer. Following their prepared remarks, we will open the call for your questions. Our press release, including financial tables, was issued after market close and is posted on our investor relations website where this call is being simultaneously webcast. Additionally, downloadable versions of our prepared remarks and supplemental slides have also been made available. 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 press release and supplemental presentation. which are distributed and available to the public through our investor relations website located at investor.coursera.com. Please note that all growth percentages refer to year-over-year change unless otherwise specified. Additionally, I'd like to remind you that all statements made during this call that relate to future results and events are forward-looking statements based on current expectations. Actual results and events could differ materially from those projected due to a number of risks and uncertainties. which are discussed in our press release, SEC filings, and supplemental materials. These forward-looking statements are not guarantees of future performance or plans, and therefore, investors should not place undue reliance on them. We assume no obligation to update our forward-looking statements. And with that, I'd like to turn it over to Jeff.

Thanks, Cam, and good afternoon, everyone. We appreciate you joining today's call. Coursera's number one goal has been and always will be to serve learners. Working closely with our educator partners, we're working towards a world where anyone, anywhere has the power to transform their life through learning. A year ago at this time, our platform served a critical role during one of the most challenging moments of the pandemic. As schools and offices closed and learning and work shifted online, both individuals and institutions turned to platforms like Coursera. And today, I'm really excited to talk about unlocking the next phase of opportunity, the transformation of higher education and adult learning more broadly. For our Q2 results, I'm pleased to report another strong quarter. We grew quarterly revenue 38% year on year to $102.1 million, crossing the $100 million mark for the first time. Performance was strong across the business with sustained momentum in each of our segments, consumer, enterprise, and degrees. Institutions, including business and governments, are using Coursera to launch large-scale reskilling efforts. And individual learners are coming to the platform to upskill for high-demand digital roles. In particular, we continue to see strong interest in our growing portfolio of professional certificates. which are redefining the opportunities people have to get fast-growing digital jobs. These credentials, created by some of the greatest global brands, including Google, IBM, Facebook, and others, allow a learner with no college degree or prior industry experience to develop the skills required for an entry-level digital job fully online in less than a year. But a career pathway isn't the only option. In addition to these career pathways, we are collaborating with universities to offer degree pathways that enable learners who finish professional certificates to earn academic credit toward a college degree if they want to continue their education. This kind of institutional collaboration among universities, industry, and governments, enabled by Coursera's three-sided platform, makes higher education more flexible and affordable. And we believe greater flexibility, accessibility, and job relevance is the future of higher education and adult learning. As we look to the future of learning and work in a world reshaped by the pandemic, technology continues to emerge as the primary driver of both cause and effect. Technology is accelerating change and transformation around the world, destroying jobs and creating new demands for knowledge and skills. And it is also the means by which society is adapting to this accelerated change. Online learning has the potential to enable anyone anywhere to access a new world of educational opportunity. And remote work has the potential to enable anyone anywhere to access job opportunities if only they have the knowledge and skills required to perform them. I'd like to take a few minutes to discuss in more detail the fundamental forces we see at play. First, our world is accelerating, driven by technology and globalization. This force of technology, especially the Internet, cloud computing and AI continues to transform industry after industry. Over the last year, we've been fast forwarded to a new normal of online learning, digital skills, digital jobs and remote work. The pandemic is ushering in a new world of remote work, which is fundamentally changing not only how companies work, but also who they can hire as employees. pandemic has amplified the criticality of technology and digital tools in the way that we all work and by separating work from place the pandemic and remote work have opened new opportunities for companies to build more diverse distributed workforces we believe that companies that harness the potential and the power of a truly global talent pool not just those fortunate enough to live near the corporate offices will gain access to greater talent at lower costs than those companies who do not. And we believe that because of remote work, individuals who harness the power of online learning to acquire in-demand knowledge and skills will be rewarded with a growing selection of job opportunities as more remote jobs become available around the world. We believe technology is both lowering the cost and increasing the benefit to education. In this sense, technology is increasing the return on investment of education on a global scale. This leads me to a second trend. As the world becomes more digital, jobs that are repeatable and predictable are being automated by technology. Recently, a McKinsey global business executive survey found that 67% of employers have accelerated automation and AI deployment during the pandemic. And the jobs most at risk of being automated, like freight movers, retail clerks, and waiters, are typically held by lower skilled workers making lower wages. These are also the jobs that have been most impacted by COVID-19, leading to businesses and governments around the world looking to upskill people so that they have the knowledge, skills, and credentials to enter digital jobs. In June, Coursera published our 2021 Global Skills Report, which draws in the performance data of millions of learners on the Coursera platform to benchmark skills proficiencies across business, technology and data science domains for over 100 countries. And these insights provide us with a glimpse into what our post-pandemic world might look like. First, the pandemic created a complex economic landscape that threatens to leave millions of workers unprepared for the digital future. In the report, there was a stark contrast between the hardest-hit sectors, such as tourism, retail, and construction, and positive job growth in industries like technology and finance. These shifts in the economy are expected to persist, implying a difficult uphill climb for displaced workers. But on a positive note, our research shows that the top skills needed for entry-level jobs of the future are more accessible than commonly thought. Our data suggests that these digital skills are attainable and can be learned in as little as 35 to 70 hours, not years, of online learning. But the impact did not stop at low-skilled roles. Our data also show that the pace of change is requiring every person in every job to keep learning throughout their life to stay relevant as the organizations evolve and business models adapt to a changing economy. This is particularly important for learners that pursue careers in fast-moving domains like technology and data science. In these disciplines, the median half-life of a skill, or the number of years it takes for a skill to reach half of its value in the labor market, is about seven years shorter than the half-life of a skill outside of these domains. And finally, our Global Skills Report points to a growing divide between countries. For example, high-skilled countries' skill proficiency on Coursera is associated with superior performance on the Global Innovation Index, higher labor force participation, reduced concentration of wealth, and increased economic output. During the pandemic, Coursera offered our Global Workforce Recovery Initiative to help governments stabilize their workforce and boost their economy's resilience through job-relevant training. And we expect this need to continue in the coming years with governments undertaking large rescaling initiatives. In many ways, the pandemic has accelerated trends that have been at play for decades. And we believe this moment presents a unique opportunity to build a more inclusive, modern and scalable education system, which brings me to my third dynamic at play here. And that is the digital transformation of higher education. Higher education, one of the largest industries in the world at $2 trillion, has seen relatively little innovation. We believe the world needs high-quality education to be more accessible, and the need for this kind of change has never been more urgent. Traditional college degrees are not affordable to many people. Their episodic structure doesn't meet the needs of continued lifelong learning, and they do not provide the flexibility previously desired but now required by working professionals who do not want to quit their job or relocate to get a college degree as our q2 results demonstrate the coursera platform is playing an increasingly important role in enabling the digital transformation of higher education and unlike other platforms we are an enabler not a disruptor we work directly with leading universities businesses and governments to equip them with the technology scale and insights they require to better serve the needs of learners. Let me share some updates on the progress that we've been making to expand and enhance the value of the Coursera platform. The Coursera platform centers on three primary advantages. First, the leading educator partners that are attracted to Coursera by our global reach. Second, the quality and breadth of the content and credentials that they've created. And third, the technology and data that powers this global platform. First, educator partners. Our expanding ecosystem of educator partners who are attracted to Coursera for our large growing learner base and global reach continues to expand. We now have 87 million total registered learners on the platform with a vast majority coming from outside of North America. And these learners are served by a growing list of more than 200 university and industry partners. As I shared on the last call, we announced 10 new university partners in conjunction with our Coursera conference held in April. We're also collaborating with a number of new industry partners in recent weeks, including Intuit, Infosec, Tencent, and Blue Prism. For industry partners, the development of these high-quality branded courses and credentials is becoming a business imperative. Coursera's scale and reach allows them to build a global community of developers and users critical to growing their ecosystems. In addition, it also allows them to specifically address the growing job displacement that their technology, automation and platforms have been creating in the pursuit of economic progress and efficiency. And with their job-focused credentials and career pathways, our industry partners are increasingly becoming part of the solution. helping to develop in-demand skills that prepare learners for career changes and career advancement. This brings me to our second strategic advantage, a broad catalog of world-class content and credentials created by these educator partners. Our stackable system of branded high-quality, freemium content enables us to attract learners at low cost and serve them at a range of price points. Learners come to Coursera for our freemium content and bite-sized learning, including hands-on projects and short courses, enabling us to grow our top of funnel and attract registrants at low cost. As these learners look to progress in their careers by earning more valuable credentials, we aim to maximize lifetime value with the premium credentials from our partners, including specializations, professional certificates, and fully accredited bachelor's and master's degrees. And our catalog of world-class content and credentials continues to grow. In the past two months, we announced a number of new certificates from our university and industry partners, including four certificate programs in the high-demand fields of business, strategy, marketing, and product management from our new university partner, the Indian Institute of Management, Cozy Code. We've also added new entry-level professional certificates, including the bookkeeping professional certificate from Intuit and a marketing analyst professional certificate from Facebook. For degrees, we announced a Global Master's in English Language Teaching Leadership from Tomsk State University in Russia, which in addition to the five degree programs announced at Coursera Conference in April, brings our total portfolio to 31 degree programs, 19 of which are outside the United States. Now on to our third major advantage, which is our platform. This world-class content is delivered on a system of technology and data that underpins the Coursera learning platform. We continue to enhance the experience of our learners, institutions, and educator partners, as well as the scalability of our model. For learners, we recently expanded the availability of Coursera Plus as a monthly subscription, offering unlimited access to more than 3,000 courses and all of our guided projects for one all-inclusive accessible price per month. we see early evidence that Coursera Plus is improving retention of paid learners. Additionally, we're investing to localize the learner experience in fast-growing economies like India, including payments, pricing, partnerships, and content discoveries. These localization efforts appear to be improving conversion rates in our consumer segment. For institutions, we launched three academies earlier this year, the Data and Analytics Academy, the cloud and it academy and the software engineering academy these academies offer companies a skills first approach to enterprise learning focusing first on the critical roles that need scaling then specifying the skills and proficiency levels needed for those roles and then finally linking the skills to content that teaches those skills at the appropriate proficiency level We believe our broad catalog and our skills graph that connects roles to skills to content makes academies and skill sets a differentiated offering. And they appear to be resonating in the marketplace with more than 70 enterprise customers using them in Q2. Now for educators, we're making it easier to bring their content to Coursera. In June, we announced general availability of our new learning content ingestion solution. This feature allows educators to more quickly and seamlessly migrate large amounts of online content between a learning management system and Coursera and currently supports content ingestion from edX, Canvas, Blackboard, Moodle, and others. Individually, our ecosystem of partners, world-class content, and technology are important strategic advantages. But the real power is the way that these assets are reinforced by and leveraged across our single, unified platform. There's a flywheel effect as a growing selection of content and credentials attracts more individuals and institutions, which in turn motivates our educator partners to create more content on the platform. This growing content, technology, and data allow us to better meet the needs of learners, educators, and institutions. That in turn fuels our business. increasing scale reducing our acquisition costs and ultimately maximizing the lifetime value of learners on coursera we believe the transformation of higher education is only in the early innings so before i turn it over to ken for a closer look at our financials let me remind you of some of the key priorities we're focused on to drive long-term sustainable growth First, we continue to invest in our enterprise sales force using a land and expand strategy to acquire new customers while growing our relationships with existing customers. In Q2, we increased the total number of paid enterprise customers to 584, a 109% increase over the prior year that included customers from all of our institutional categories. Large customers like Go One in the UK and PWC ProEdge in the US expanded programs with Coursera for Business, integrating Coursera into their digital upscaling enterprise products. And others like Pernod Ricard, a leading beverage company based in France, are using Coursera to upskill their technology talent in cutting-edge digital skills. Additionally, with Coursera for Government, we launched large-scale nation and statewide re-skilling programs, including the Government of Barbados National Transformation Initiative, the U.S. Tennessee Department of Labor and Workforce Development, and an expanded partnership with the Commonwealth of Learning, serving 54 member nations. And finally, we're seeing strong adoption of Coursera for Campus, with leading public and private universities around the globe. In one example, the Morocco Ministry of Education approved a Coursera for Campus deal covering 13 leading universities in Morocco, reaching 80,000 students across the country, starting with L'Université Assante de Casablanca. Next, we are only in the beginning stages of our degree business and looking forward to growing the number of students in our current programs while increasing the number of degree programs offered on our platform. The expansion of our program catalog includes the types of degrees offered, bachelor's and master's, a greater variety of subject matters, as well as programs from more regions. And finally, we will continue to scale the Coursera platform, investing in growing our registered learner base, increasing our network of educator partners and their content and credentials, and expanding our reach into more countries and for more learners around the world. And now I'd like to turn it over to Kim. Ken?