Coursera, Inc.

Hi, 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, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press 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 Maggi-Incalta, 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 closing 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 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. 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 business and factors affecting the same, the anticipated benefits and impact of our strategic assets and platform advantages, our ecosystem, platform, content, and partner relationships, our anticipated plans and the anticipated advantages and benefits thereof, our strategy and priorities, our share repurchase program and cash and capital allocation, and our vision, business model, mission, opportunities, outlook, financial business and otherwise, and future intentions. 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 press release, SEC filings, and supplemental materials. These forward-looking statements are not guarantees of future performance or plans, and investors should not place under reliance on them. We assume no obligation to update our forward-looking statements except as required by law. And with that, I'd like to turn it over to Jeff.

Thanks, Kim, and good afternoon, everyone. It's great to be with you all. I'm pleased to share that we've delivered another strong set of results. We grew revenue 21% over the prior year, driven by 27% growth in our consumer segment. We welcome six and a half million new learners to our platform, our highest third quarter since the pandemic tailwinds of 2020. And once again, we are raising our outlook on revenue and adjust EBITDA as our business model scales. We're delivering these results against the backdrop of a dynamic macro environment, which has reinforced my confidence in our vision for the future of higher education, the strategic assets that differentiate our ecosystem with quality, trust, and world-class branded credentials, and the global need for a platform like Percera. We have a lot to cover today, so let's jump in, starting with the long-term trends that are driving our business. The first trend is digital transformation. For many years, the combined forces of technology, globalization, and automation have been accelerating the transformation of every institution in our society. More recently, the explosive adoption of generative AI is beginning to demonstrate how profoundly this new general purpose technology will reshape how we live, learn, and work. A McKinsey Global Survey on AI published in August showed that nearly 80% of respondents which included participants from all regions, industries, and seniority levels, reported at least some exposure to generative AI, either for work or outside of work. Ultimately, we believe increased demand for education will be driven by an unprecedented rate of change as every facet of our society, including businesses, governments, and academic institutions, grapples with the need to improve their productivity and human capital in this new world of generative AI. This change in our society brings me to the second major trend, which is skills development. The rapid adoption of new technologies, tools, and processes creates an urgent need for organizations and individuals to remain competitive. The same McKinsey survey found that high-performing organizations expect to reskill more than 30% of their workforces over the next three years as a result of AI adoption. For businesses, We believe that learning and development and HR leaders will play a crucial role in building organizational agility and implementing programs to take advantage of growth opportunities, product innovations, and productivity measures. This will include rapidly deploying new technologies, adapting to change, and unlocking new talent and skills. But businesses are not alone. Governments will need to deliver job training programs at the speed and scale required to keep pace with job dislocation and unemployment changes. As many of the world's largest employers, they will also need to transform their government workforces in order to unlock the value and efficiency gains enabled by generative AI. And academic institutions from single campuses to entire systems of higher education will reckon with how they change the way professors teach, the way that students learn, and the courses that they must offer to meet the needs of graduates and the employers who hire them. Arguably, generative AI will have a larger and more enduring impact on higher education than COVID did. A recent study by researchers at Princeton, Penn, and NYU assessed the impact that generative AI would have on more than 800 job roles. they concluded that 11 of the top 13 job roles that will be most impacted by generative AI are college and university professors in post-secondary education. And this leads me to the third trend driving our business, the transformation of higher education. Our vision for the future of higher education requires cross-sector collaboration between academic institutions, employers, and government to meet the needs and pace of a fast-changing economy. In past quarters, I've discussed our growing number of partnerships with international institutions, including entire countries, looking to up-level their higher education systems. This quarter, I'm excited to share an innovative blueprint for reimagining higher education in one of the largest and fastest growing states in the U.S. Coursera has partnered with the University of Texas system to launch one of the most comprehensive industry-recognized micro-credential programs in the country. The forward-thinking leadership of the UT system believes that micro-credentials are a powerful and effective tool in producing graduates who are both broadly educated and specifically skilled, giving them a competitive edge in the labor market while also enhancing their overall student experience. Additionally, they are focused on investing in programs that can meet the state's evolving workforce demands, viewing the system as an engine for the local economy. What began as a pilot in 2022 has expanded into a system-wide project. The program provides access to over 240,000 learners, including students, faculty, and staff, as well as alumni. It encompasses nine UT campuses, all of which have access to the Career Academy on Coursera, which now includes more than 40 entry-level professional certificates created by the world's most respected companies. And these certificates are being integrated into the curriculum and often offered as career electives for credit for students pursuing traditional degrees. We designed Career Academy to be a turnkey, scalable solution for our customers, and the value of this offering is continuously enhanced every time that we launch a new certificate, secure additional credit recommendations, and forge new pathways between open course certificates and college degrees. Our partnership with Texas brings together the vision of Coursera's three-sided ecosystem, including broad, affordable access to high-quality education for learners, the powerful combination of universities and industry experts as educators, and the collaboration of employers, government, and academic institutions to enable innovation at the scale of an entire state or an entire nation. We're able to pursue these partnerships because of our strategic assets and platform advantages, which include our leading educator partners who created a broad catalog of trusted and branded content and credentials, our global reach to individuals and institutions, which encompasses businesses, governments, and campuses, as well as our data technology and AI advancements that we leverage across our platform. Now let's cover some of our recent progress for each of these categories. Educator partners. In a world where machines are increasingly capable of producing content at scale without guardrails for quality and accuracy, we believe trusted institutions will continue to play a critical role in education. Coursera is the trusted steward of more than 300 of the world's top university industry brands who continue to expand rapidly their catalog on our platform. I'd like to begin with updates to our portfolio of entry-level professional certificates, which we leverage as a strategic asset across every segment of our platform, driving consumer growth, enabling governments and campuses like Texas to embed micro-credentials into their curriculum with Career Academy, and allowing students to begin and earn credit towards a college degree with regional credit recommendations and a growing number of degree pathways to bachelor's and master's programs. Today, we have 44 entry-level professional certificates live on the platform, including new titles from Microsoft and Tableau that launched during the quarter. And earlier this month, we were proud to welcome our first entry-level professional certificate from Amazon Web Services in a fast-growing field of cloud consulting. Our expanding relationship with AWS seeks to serve our learners at every stage of their career. The new training program provides the foundational skills required to start or switch into a cloud career, and it is complemented by AWS's existing catalog of intermediate and advanced content already on Coursera. Now let's discuss degrees. We announced four new degree programs in Q3 from new and existing partners. They included a Master of Advanced Study in Engineering from the University of California, Berkeley, the top-ranked public university in the U.S. a master of engineering and computer engineering from Dartmouth, the university's first fully online degree, and the first online Ivy League master's degree in the field, which aims to prepare engineering leaders in emerging technologies and combat talent shortages associated with the CHIPS Act, as well as two additional master's degree programs from Northeastern University in data analytics engineering and information systems. Both Northeastern programs provide performance-based admissions pathways for learners, where eligible completion of open content on Coursera, simply scoring a B or better on two initial courses, can reduce historical barriers to starting a degree. We believe that the college degree needs to be more accessible, affordable, and relevant. And we have spent much of this year laying the groundwork for how our platform can uniquely address the needs of working adults, collaborating with partners committed to transforming the degree experience. Coursera is pioneering a new type of degree that we call pathway degrees that are designed to meet the needs of working adults. These degrees incorporate credit pathways where the learning and open content on Coursera can count as academic credit towards a college degree program, admissions pathways where performance and open content on Coursera can unlock admissions into a college degree program, and progress pathways where completion of content on Coursera can count as completion of coursework in a college degree program. One example of this is our recently launched degree programs with Illinois Tech. We're excited to share that as of September, Illinois Tech has agreed to create more than 10 pathways from our industry content into two master's degree programs. The industry content includes several of our best performing entry level and advanced professional certificates from Google, IBM, and more. And these micro-credentials have over 4 million cumulative historical enrollments. That recaps our progress with our catalog and educator partners, so now let's move to our second major advantage, the global reach of our platform. For institutions, we increased the number of paid enterprise customers to over 1,300, with many of the recent additions driven by the momentum we're seeing in our campus vertical. As I highlighted before, we added 6.5 million new registered learners, growing our global learner base to 136 million by the end of September. Growth continued to be broad-based, with double-digit percentage increases across all regions. This year, we've been investing in a number of strategic priorities focused on enhancing the localized learner and customer experience on Coursera, which is where I'd like to start the discussion of our third advantage, the ongoing product innovation across our platform. First is our AI-powered language translation initiative. We believe that high-quality education from the world's leading experts should be accessible to learners anywhere in the world, no matter what language they speak. For much of the world, access to educational opportunities is often limited to those who speak English. As emerging technologies create new skill requirements and the world's talent becomes more globalized, language barriers create impediments to collaboration, productivity, and economic opportunity. Our strategy is to use technology to dramatically reduce the time and cost of producing high-quality trusted content at scale. And remarkable advancements in the quality of machine learning translations can now translate courses at a fraction of both the cost and speed of using conventional human methods. We set an ambitious target at the beginning of this year to deliver more than 2,000 full-course translations into seven of the world's most commonly spoken languages. I'm pleased to share that we accelerated our efforts, launching twice our original goal with more than 4,000 full course translations in Spanish, Arabic, Brazilian Portuguese, French, German, Bahasa Indonesia, and Thai. The newly translated courses include the full learner experience, like lecture video subtitles, course readings, assessments, discussion prompts, the user interface, and more. And we've created a simple toggle experience providing learners with the option to practice skills in their local language or use subtitles for English courses to advance their proficiency in specific workplace skills. I've been inspired by the team's progress, but we're just getting started. We expect to have more than 4,000 courses translated into more than 15 languages by the end of this year. And we see many other ways that generative AI can reduce language barriers in addition to the translation of written words. Second, I'd like to provide an update on our credit recommendation initiative. We've been actively pursuing American Council on Education, or ACE, credit recommendations for many of our most popular courses and credentials, specifically our catalog of entry-level professional certificates. Achieving these credit recommendation distinctions, which is possible due to the quality of our catalog, has enabled us to pursue many of the strategic highlights I've shared today, including large system-wide deployments of Coursera for Campus as well as a growing number of pathways from our consumer segment into our degree segment. I'm excited to share that the Foundation for International Business Administration Accreditation has certified 12 professional certificates from Google and IBM with European Credit Transfer and Accumulation System or ECTS credit recommendations. This allows ministries, higher education institutions, and students to accept and transfer university credit for eligible industry micro-credentials on Coursera at institutions across 49 member nations. It's an important milestone in our ongoing regional efforts to bridge the combined expertise of university and industry for the benefit of learners, employers, and academic institutions. Finally, we continue to make progress on our efforts to integrate generative AI into our product experience. Coursera Coach, our virtual learning assistant, launched as beta versus the Coursera Plus subscribers during Q2. This quarter, we expanded our beta program to include enterprise customers while embedding the Coach interface into additional areas of the learner experience. We remain excited about the potential for this technology to dramatically enhance the personalized learning and discovery experience on Coursera and feedback from beta participants remains encouraging, specifically our distinct ability to ground these technologies in the expert, trusted content on Coursera. To wrap up my opening remarks, let me recap several key priorities that we're focused on in the years ahead. First, we are rapidly enhancing our catalog of entry-level professional certificates, including new partners, roles, languages, and credit recommendations. we're sourcing and launching new degree programs, especially those tailored to meet the needs of working adults, including flexibility, affordability, and streamlined pathways between our consumer micro-credentials and college degrees. Third, we're focused on growing our enterprise segment across our business, government, and campus verticals. And fourth, we're harnessing AI technologies to deepen our advantages while reimagining the platform experience for the benefit of our learners, customers, and educator partners. And we're accomplishing these priorities while delivering more scale and operating leverage over time. I'd like to now turn it over to Ken. Ken, please go ahead.