Coursera, Inc.

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 Q1 2024 earnings conference call. With me today is Jeff Maggi in Calta, 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 close 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, including our AI and machine learning initiatives and offerings, 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 undue 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, Cam, and welcome, everyone. It's great to be with you all. In Q1, we continue to make progress across our business as we navigate a dynamic environment and evolving education landscape. We welcome nearly 7 million new learners. We expanded our catalog offerings with new professional certificates, pathway degrees, and generative AI content. We made significant progress on getting our latest AI-powered product innovations into the hands of our learners and enterprise customers. And we grew revenue 15% over the prior year period while generating more than $8 million in adjusted EBITDA and $18 million of free cash flow. Our first quarter revenue was lighter than we anticipated. We are seeing softness in our North American paid learners, which have an outside impact on our in-quarter results and future performance, given their higher monetization rates. Ken will discuss the dynamics in more detail, as well as the implications on our outlook for the year. That said, our focus on branded, job-relevant credentials continues to resonate with the individuals and institutions that we serve. And I continue to see signs that the ecosystem that we've assembled, These learners, universities, educators, businesses, and governments all around the world have put Coursera in the right position to help solve the fast-changing demands of the labor market and education system. So, let me start with an update on how we see these global trends evolving. The first trend is digital transformation. For many years, the combined forces of technology and globalization have accelerated the transformation of nearly every institution in our society. It's been more than a year since the remarkable capabilities of generative AI mesmerized the world. Early concerns about this technology reflected challenges the world experienced in 2020, including its potential to disrupt local economies and educational systems, displace millions of workers, and demand new types of skills that risk further widening the digital divide. We believe that the lasting impact of that pandemic was an accelerated pace of change across every facet of society. But unlike the pandemic, which served as a catalyst to force digital adoption overnight, we remain in the early stages of understanding how gen of AI will reshape the way we live, learn, and work. Research by the University of Pennsylvania estimates that up to half of all tasks for half of all job roles could eventually be automated. But today, I believe that the vast majority of organizations are only experimenting with the technology and are generally overwhelmed and paralyzed by what they see coming and how to respond to it. Companies, universities, and governments are looking for mission critical use cases and best practices to emerge that correctly balance the risks with the opportunities of generative AI. We believe the key to navigating this conundrum lies in high-quality education and training, talent agility, and effective change management, enabling companies to adopt generative AI both quickly and safely. Coursera itself has been navigating this generative AI conundrum, and I'm excited to share that earlier this month, Harvard Business School released a case study titled Coursera's foray into gen AI, illustrating how Coursera responded to the opportunities and threats created by generative AI. To our knowledge, this is the first case study of its kind by a top global academic institution, and it sets Coursera as a thought leader and introduces higher education to the generative AI capabilities that Coursera is now offering. We believe that market pressures will eventually force institutions to take action or face the risk of being left behind, but leaders today are still grappling with how to make the leap from experimentation to implementation. Access to affordable, relevant, and high-quality education and training will help ensure that global talent has equal access to the skills, credentials, and job opportunities that they need to stay relevant and compete in our fast-changing world. This brings me to the second major trend, which is skills development. Accenture, a longtime industry partner and customer, published a report in January on generative AI's impact on the workforce, surveying thousands of CXOs and more than 5,000 employees. The report identifies a gap between leaders and employees that can help us understand barriers to workforce transformation that are facing companies this year. 86% of CXOs are using Genova AI to some degree in their own work, and nearly all believe that Genova AI will be transformative for their company and industry. However, only one in three leaders believe that they have the technology expertise or feel that they can tell a compelling transformation narrative to lead the change that's required. As for the employees, 95% see value in working with Genova AI, 94% said they are ready to learn new skills. And their top concern is that they don't trust organizations to ensure positive outcomes for everyone, which is reinforced by the report finding that only 5% of organizations are actively reskilling their workforce at scale at this moment. If organizations are going to succeed at moving from experimentation to implementation and unlocking the potential of these emerging technologies we believe it must start with unlocking the potential of their talent. And this leads me to the third trend driving our business, the transformation of higher education. Two weeks ago, I was honored to join ASU GSV in San Diego, alongside some of Coursera's closest partners. Coursera Director and President of the American Council on Education, or ACE, Ted Mitchell, founder of Grow with Google, Lisa Gevelber, and Chancellor of the University of Texas System, J.D. Milliken. As you may recall, last year we announced a statewide partnership with the University of Texas System, and at this year's conference, I had the pleasure of joining the UT System Chancellor Milliken on stage to discuss our progress. We talked about the strategy behind our system-wide micro-credential program, the value of professional certificates for universities, students, and employers, and the need for more flexible pathways for the system to serve diverse and growing populations. The main questions that kept coming up in the conversations was how. How does the collaboration between UT, Coursera, and industry partners like Google work? How do students use these industry micro-credentials to earn college credit towards a degree? And how can other universities implement a similar model in their city, state, or country? I'm pleased to share that as of the spring term, every UT campus has launched Coursera's Career Academy, and the majority of campuses now have curriculum integration for credit, including El Paso, Permian Basin, Rio Grande Valley, San Antonio, and Tyler. As of March, over 7,000 students have spent more than 100,000 hours learning online, and they've earned over 16,000 course certificates from Google, Microsoft, IBM, and others. It's a testament to both student demand and the power of university and industry collaboration to deliver solutions that are aligned with the labor market needs of the region. We believe our partnership with the University of Texas System is a replicable blueprint for the transformation of higher education. And it's only possible due to several leading capabilities and strategic assets that are unique to the Coursera platform, including our leading educator partners who create trusted, high-quality content and credentials that organizations like ACE increasingly recommend for credit recognition, our global reach to individuals and institutions, including our ability to facilitate collaboration by serving businesses, governments, and campuses, as well as the data, technology, and GenAI-powered product innovation we are investing in across our platform. Now, let me share some of the recent progress that we've made on each of these advantages. First, let's discuss our educator partners. More than 325 of the world's leading universities and industry experts power our content engine. Recently, we were proud to welcome several new partners, including the University of Huddersfield, as well as Olay, Workday, and the Recording Academy. Today, I'd like to provide updates on three critical areas of our catalog, certificates, degrees, and generative AI content, starting with our entry-level professional certificates. Unilever, one of the world's leading suppliers of beauty home and personal care products, has joined our partner community and launched two data analyst entry-level professional certificates. These certificates are designed to qualify learners with no college degree or prior experience for an analyst role in areas like inventory, logistics, demand planning, as well as data marketing analyst roles in SEO, content marketing, and CRM. This is what we refer to as a career pathway. But increasingly, learners completing certificates on Coursera are not choosing between a job or a degree. A certificate can provide the opportunity to unlock both a job and a degree. A key enabler of our credit recognition initiative and our pathway degree strategy is our growing partnerships with organizations like the American Council on Education. We believe this is the start of a long-term trend in higher education where industry micro-credentials play a more critical role in how learners acquire their first job or earn credit towards a college degree, in how campuses, like the UT system, modernize their curriculum to create employable graduates to fuel the local economy, in how governments deploy job-relevant workforce training at scale, and also in how businesses reskill and redeploy talent. Now, on to my second catalog update, which is the college degree. We recently announced a pathway degree program from the University of Huddersfield, a master's in management with performance-based admissions pathways to promote flexibility and accessibility. All learners, regardless of prior attainment or educational background, are eligible to attempt the first module on Coursera in our open content catalog. successful completion of this introductory module gains them admissions to the full degree program. And for my final catalog update, I'm excited to share the momentum we're seeing in rapidly expanding generative AI content and credentials on Coursera. In an era where machines are increasingly capable of producing content at scale without guardrails for quality, integrity, or accuracy, We believe that individuals will increasingly turn to quality content from trusted institutions when looking to learn skills and earn credentials. Last week, Google launched the AI Essentials course, which, in addition to teaching foundational concepts, shows learners how to use AI as a collaboration tool in their day-to-day work. The introductory course is taught by Google AI experts who are working to make this new technology accessible and helpful for everyone. Google's latest course is one of more than 75 new courses and projects in generative AI that our partners have launched since the start of the year. This includes a growing number of top research universities and companies at the forefront of AI, including deeplearning.ai, Duke University, Google Cloud, IBM, Microsoft, Vanderbilt University, and more to come in the future. That completes my catalog update, so let's move to our second advantage, the global reach of our platform. For institutions, we have grown our paid enterprise customers to 1,480, with recent additions across each of our verticals. As I highlighted before, we added nearly 7 million new registered learners, growing our global learner base to 148 million by the end of March. Growth continues to be broad-based, with the fastest year-over-year increase coming from learners in our Asia-Pacific region. To better serve our expanding base of learners and institutions around the world, we rapidly introduce new value through generative AI-powered innovation. And this leads me to our third advantage, the ongoing product innovation occurring across our platform. My first product update is Coursera Course Builder. In many organizations, human resources and leadership and development teams are tasked with keeping employees informed, prepared, and skilled. We believe this will include creating, updating, and deploying learning resources that empower their workforce to keep pace with an increasing rate of change. It's why we launched Course Builder. an AI-assisted authoring tool that enables any business, government, or campus customer to easily and quickly produce high-quality custom private courses at scale. Based on a few simple inputs from an author, the tool auto-generates course content, including outlines, descriptions, and learning objectives, dramatically reducing the time and cost of content production without sacrificing quality. Then, Coursera can seamlessly blend modules of courses on Coursera from participating world-class industry and academic partners with content from their own experts in their own organization. For example, private and public sector employers can quickly create and launch organization-specific courses tailored to their unique needs. Leadership and development teams can combine content from our industry and academic experts with relevant business context and internal expertise. And higher education institutions can leverage time-saving authoring tools to empower faculty to create custom courses and keep learning resources relevant and up-to-date at the speed and scale that students and employers now expect, like adding guest lectures or current events to their own university courses. Next, I'd like to provide an update on our AI-powered translation initiative, which we recently expanded from 18 to 21 languages. adding support for learners speaking Hindi, Japanese, and Korean. As a reminder, in 2023, we started translating our catalog of thousands of courses, certificates, and specializations into local languages for our learners around the world. To date, more than 1 million learners have already accessed AI translated content in their enrolled courses. And 90 million registered learners on our platform are based in countries where the primary language is one of our 21 supported translated languages. Learner feedback has been inspiring, but we've also heard from our enterprise customers, including businesses and governments, who have large multinational populations who can now have equal access to the world's top experts no matter what local language they speak. And finally, an update on Coursera Coach. In Q1, we broadened access to the Coursera Coach beta program for paying consumer learners, as well as for our Coursera for Business and Coursera for Government customers. Coach usage has increased 150% since our initial beta release, and I wanted to share some initial feedback from early learners. Our research revealed that many learners come to Coursera lacking the skills to learn effectively without a tutor. When we talked to them, these learners said that they talked to Coach like a tutor, asking for summaries, explanations, quiz practice, and even career advice. Rather than spending hours searching for answers to their questions on external sites or creating notes from scratch, Coach has freed up their time for actual learning. Using Coach fundamentally improved the quality of their learning, becoming an essential part of their course experience, much like the videos and assessments already in the courses. In every example of our generative AI-powered product innovation, we had a clear strategy that focused on enhancing the value of the Coursera experience through the unique assets of our platform, the content that we have, the data we have, and the scale that we've had. And we've designed these generative AI products with the support for multiple large language models so that our learners, educators, and customers will get to experience the rapid advancement in future models. To wrap up my opening remarks, I'd like to share a leadership update. In 2022, we implemented a new organizational structure, including roles for a chief revenue officer and chief operating officer that has not delivered the growth that we need in our large but early markets. After careful consideration, I've decided to flatten our leadership team structure, elevating our three segment general managers, and creating chief technology officer and chief product officer roles that will all report directly to me. This change is designed to enable our next chapter of growth, innovation, and leverage, all in support of our long-term strategy. Before I turn it over to Ken, let me remind you of the key priorities we are focused on in the year ahead. First, we are broadening our catalog of entry-level professional certificates, including new partners, roles, languages, and credit recommendations to support degree pathways and campus integration. Second, we're sourcing and launching new degree programs with a focus on flexibility, affordability, and scaled pathways that are open content and industry micro-credentials can count as credit towards college degrees. Third, we're focusing on growing our enterprise segment across business, government, and campus customers, supporting institutional collaboration to better serve learner needs in this fast-changing environment. And fourth, we're deepening our platform advantages, including the broad application of generative AI for translations, personalized learning with Coach, and content creation and course building with Course Builder, all while driving more scale and leverage over time. I'd like to now turn it over to Ken. Ken, please go ahead.