Coursera, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to Coursera's third quarter 2022 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, again, press the star one. I'd like to turn the call over to Cam Carey, Head of Investor Relations. Mr. Carey, you may begin.

Hi, everyone, and thank you for joining our Q3 earnings conference call. With me today is Jeff Maggiancolta, Coursera's Chief Executive Officer, and Ken Hahn, our Chief Financial Officer. Following their prepared remarks, we will open the call for questions. Our press release, including financial tables, was issued after market closed and is posted on our investor relations website, located at investor.coursera.com, where this call is being simultaneously webcast and where versions of our prepared remarks and supplemental slides are available. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP measures to their 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. Please note, all growth percentages refer to year-over-year change unless otherwise specified. Additionally, all statements made during this call relating to future results and events are forward-looking statements based on current expectations and beliefs. These forward-looking statements include, but are not limited to, statements regarding the potential impacts of trends affecting our industry and uncertainties in the current economic and educational environment, our ecosystem, platform, content, and partner relationships. our anticipated plans and the anticipated benefits thereof, our strategy and priorities, and our business model, mission, opportunities, outlook, and future intentions. Actual results and events could differ materially from projections due to a number of risks and uncertainties discussed in our press release, SEC filings, and supplemental materials. These forward-looking statements are not guarantees of future performance or plans, and 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 us. I'm pleased to report solid third quarter performance with revenue growth of 24% to $136 million, reflecting our growing prominence among both individual learners and institutions. Learners are coming to Coursera from around the world, seeking job-relevant skills and branded credentials that can unlock the next stage of their career. We added more than 6 million registered learners in Q3. We also grew our paid enterprise customers, including businesses, campuses, and governments who are looking to drive powerful cross-sector collaboration to better meet the needs of an increasingly digital economy. One of the critical components of our recent success has been the growing relevance of industry micro-credentials across our business. In 2018, we had initial success with the launch of our first two entry-level professional certificates. And in the time since, we've grown this category in both breadth and depth, adding new partners and job roles while creating stronger connections with career and degree pathways. This year, our catalog's expanded scope became the foundation for Career Academy, an institutional offering that brings together our professional certificates and guided projects into a solution that businesses, governments, and campuses can deliver at scale to help individuals with no college degree or prior work experience start a new career or switch careers into an entry-level digital job. As we navigate the trends shaping higher education, we believe that industry micro-credentials provide a turnkey way for higher education systems to upgrade their curriculum and produce graduates who have the skills and abilities that employers are looking for. Let's discuss our latest views on the trends at play. and their potential impacts on the reinvention of higher education and adult learning. The first trend is digital transformation. The forces of technology and globalization have been accelerating the transformation of every institution in our society, requiring businesses to retool the systems, processes, and talent required to stay competitive, pushing campuses to modernize their curriculum and make quality education more accessible, and driving governments to deliver job training programs at the speed and scale needed to keep pace with job dislocation and unemployment challenges. The pandemic served to fast-forward these trends, but we believe its lasting impact may be defined in how it has reshaped both the supply and demand for jobs globally. The expansion of online learning has enabled more equal access to higher-quality education for millions of learners around the globe. And with remote and hybrid work, Learners that acquire the knowledge, skills, and credentials to unlock these job opportunities are met with a supply of digital careers no longer confined to a specific city, state, or even country. Simply put, we believe that the rise of remote work, digital jobs, and broadband connectivity have increased the ROI of education. And this benefit extends beyond individual learners. Forward-thinking institutions, including businesses, governments, and campuses are harnessing the opportunity to adapt to the fast-changing skills landscape and to build workforces and economies of the future. This leads me to my second major trend, skills development. In times of rapid change, I find it critical to stay close to the needs of our learners, customers, and partners, understanding how their needs are evolving and how we need to evolve to better serve them. That's why over the past several weeks, I spent time with Coursera for business, government, and campus customers across the U.S., Europe, the Middle East, and Central and Southeast Asia, hearing how these institutions are adapting to a changing skills landscape. This is what I'm hearing. Businesses are investing in their human capital to address a diverse set of needs, using online learning to deliver measurable, role-based skill development programs to support strategic transformation initiatives. And they're increasingly positioning learning programs as a career development benefit in order to attract and retain talent in a competitive labor market. Governments said that reducing unemployment and underemployment and building a more resilient workforce were key priorities and that they're looking to help higher education systems create more employable graduates. And campuses are telling us that they need to bridge the gap between evolving employer needs and student skill sets upon graduation, recognizing the value of offering industry micro-credentials alongside their core academic curriculum. Each of these use cases will require a flexible, affordable, and scalable system of higher education and workforce development, designed to keep pace with changing skill requirements as they evolve. And this leads me to the third trend that's driving our business, the transformation of higher education and adult learning more broadly. As technology and automation accelerate, we believe a new and inclusive lifelong learning model is required to meet this challenge with rapid speed and scale. In the past quarter, we conducted a third-party survey of over 2,400 students and recent graduates, as well as 1,200 employers across eight countries, including Australia, India, France, Germany, Mexico, Turkey, the UK, and the U.S. We learned that students, like their parents, are thinking more critically about the ROI of traditional three and four-year degree programs. Eighty-nine percent of students and recent graduates agree or strongly agree that earning an entry-level professional certificate alongside their diploma will help them stand out to employers and secure jobs when they graduate. And 88 percent said that including industry micro-credentials in an academic program would make them more likely to enroll in that program. From employers, we heard that industry micro-credentials help hiring decision makers solve their top two challenges, identifying and validating applicant skills. 92% of employers agree or strongly agree that a professional certificate strengthens a candidate's application for an entry-level job role, and on average, three-quarters are more likely to hire a candidate who has earned a professional certificate. Platforms like Coursera are able to address both of these challenges side by side by linking skills-based learning to skills-based hiring. Our ecosystem was designed to foster institutional collaboration between academic institutions, industry leaders, and governments that is required by students and employers in an increasingly digital world. We believe that the Coursera platform has three distinct advantages that we continue to reinforce. First, our leading educator partners who created a broad catalog of branded content and credentials. Second is our global reach and distribution. And third is the data and technology that powers our unified platform. Let's discuss recent highlights for each of these. First, our educator partners. Coursera's global learning ecosystem includes the powerful combination of both university and industry partners. Universities play an integral role in durable skills. Critical thinking, collaboration, and community are all hallmarks of the campus experience. But with the pace of digital transformation, industry partners can often complement traditional learning with practical, hands-on learning aligned with specific job roles. Today, more than 175 world-class universities and more than 100 industry leaders continue to expand our catalog of content and credentials. In September, we announced our first bachelor's degree program from an Indian university. The Birla Institute of Technology and Science, or BITS Pilani, is a premier engineering institution that is reimagining their highly sought after computer science program to expand access for Indian and international students. This includes broad learner eligibility with no entrance exam or background in science or mathematics, a job relevant curriculum that's designed with inputs from industry experts, and a flexible, affordable structure that allows students to pursue the program while they're working. We continue to see demand among working adults for degrees that are affordable, have convenient admissions and flexible schedules, and to develop knowledge and skills that are in high demand from employers. Next, I continue to be impressed by the progress and pace at which our partners are expanding our catalog of entry-level professional certificates. Since launching the category in 2018, we've announced 35 of these certificate training programs, including nearly 20 new titles so far this year from new and existing partners. Recently, we announced our first entry-level professional certificates from industry partners in India, who are excited to serve learners in our second-largest market. The three job roles include PWC India Goods and Services Tax Executives, PWC India Direct Tax Executives, and Tally Bookkeeper. Additionally, we continue to enhance some of our most popular certificates with new language translations, launching versions in Arabic and Spanish. Finally, in partnership with Google, we announced an exciting new offering that brings the benefits of university and industry collaboration to our entry level professional certificates. Google has collaborated with five of our university partners to pair several of their most popular certificates with specializations from leading academic institutions in high growth industries, including data analytics in finance from the University of Illinois, data analytics in the public sector from the University of Michigan, project management in construction from Columbia University, project management and sustainability from Arizona State University, and healthcare IT from Johns Hopkins University. Historically, collaboration between industry and academia has been slow and piecemeal. But by integrating industry expertise into university curriculum, we are beginning to witness what our ecosystem can make possible. The future is not universities or industry. It is the collaboration between universities and industry, which is increasingly taking place on Coursera's platform in multiple forms. This includes entry-level professional certificates back into degree programs, especially with ACE credit recommendations. It includes degree programs like BITS or Northeastern and Mayo Clinic that incorporate training and expertise from industry leaders into college degrees. And Career Academy delivered through the Coursera for Campus program where industry micro-credentials are offered alongside and incorporated into core university curriculum. Our second major advantage is the global reach of our platform. We have a large, growing learner base that attracts educator partners looking to teach both individuals and institutions around the world. We added more than 6 million new registered learners, growing our global learner base to 113 million by the end of September. Learner growth continues to be broad-based, with double-digit increases in all regions and the fastest growth coming in the Asia-Pacific region. Additionally, we've grown the number of paid enterprise customers by 53% this quarter to 1,086, which includes new additions across Coursera for Business, Coursera for Campus, and Coursera for Government customers. The final advantage is the ongoing product innovation on our unified platform, and I'd like to provide updates on two recently announced offerings. The first is Clips. There are more than 5,400 courses on Coursera today, and these courses are comprised of more than 200,000 individual video clips, which are typically 5 to 10 minutes long. Our new Clips feature enables Enterprise learners to directly access clips in a course without having to take the entire course. The videos and lessons are surfaced in the context of our longer courses, so learners can quickly access clips and then continue to the full course for deeper skills development. Our initial data show that over one-third of learners that viewed clips for immediate needs had gone on to enroll in at least one course. We launched in May with over 10,000 clips, primarily focused in business technology and data. In September, we expanded the offering with a more comprehensive library of content, including nearly 200,000 short videos and lessons. Customers like Google, Bosch, and the New York State Department of Labor were early adopters, and we look forward to bringing our expanded clips offering to more enterprise customers. I'd like to also provide an update on Career Academy. We announced Career Academy at our annual conference earlier this year and continue to see promising signals from our early customers. Career Academy leverages our entry-level professional certificates, benefiting when our industry partners create and launch new job roles. For example, in Q3, we launched five new certificates from Meta, allowing us to expand the scope of roles offered with new additions in software engineering. These roles include front-end developer, back-end developer, database application developer, iOS mobile developer, and Android mobile developer professional certificates. Additionally, we are bringing the new career discovery benefits to our learners to help them better understand the prospects and ROI of their education decisions. For example, individual learners in the US using Career Academy see key economic data alongside the career choices, including the median entry-level salary, the number of job openings, and the recommended professional certificates that are aligned with specific careers. Before I turn the call over to Ken, let me remind you of several key priorities we're focusing on in the coming years. We're focused on growing our enterprise segment across business, government, and campus customers, including new customer acquisitions and expanding existing relationships. We're focused on expanding our portfolio of degree programs, especially those tailored to meet the particular needs of working adults. We are broadening our entry-level professional certificate catalog, expanding with new roles, new partners, and additional languages. And finally, we are deepening our advantages. including expanding our educator partners and their content and credentials in improving and broadening our global scale and reach and the technology and data that underpins our platform. And now I'd like to turn it over to Ken. Ken, please go ahead. Thanks, Jeff, and good afternoon, everyone.