Disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. My name is Josh Baer, software analyst at Morgan Stanley, and we are thrilled to have Coursera CEO Greg Hart join us today. Thank you so much for joining us.
Thank you, Josh. Thrilled to be here. Good to see you all.
A quick note, CFO Mike Foley just couldn't make it because he is under the weather.
He's got the flu. Saving us all by not being here.
Perfect. Greg, let's start with a little bit of a recap of this past year. We saw growth accelerate from 6% exiting 2024 to 10% in the back half of 2025. Your ending growth for the full year 2025, 9%, was more than double the initial growth guidance. What drove that acceleration and improvement in results throughout 2025?
Well, one of the things that we really tried to focus on right after I joined the company in February of last year is, you know, first of all, just better execution. Second of all, a real focus on product-led growth and on focusing our investments in product on things that we thought would make a material difference for the business.
Across top-of-funnel consumer conversion, retention, and ARPU, what are the product initiatives that we can drive that will help? A few of the things that we did over the course of the year that you would've seen reflected on the platform, and also reflected in the performance were a change to our freemium model. First module, free, and then pay to go beyond that. Our geo-pricing initiatives.
Those were some of the more, you know, obvious changes that we made to improve the performance in the business. Then an investment, that, you know, is playing out over a longer period of time on really accelerating the pace of content creation and content optimization to deliver better results for learners.
The Udemy combination will help with that tremendously just 'cause of the nature of their content model. Those were the few of the things that enable us to, really go from, an initial forecast of, you know, 4.5% at the midpoint, for 2024 to delivering 9% for full year, and then three quarters of successive growth at 10%. That's been driven, you know, primarily by performance in the consumer side of the business. Consumer exited the year at 12% in Q4.
The enterprise side has been a little bit more muted. We believe that, you know, a lot of the things that we've done over the course of the last year, and particularly since we brought on Anthony Salcito, our Head of Enterprise in October, will start to show up in our numbers over the course of 2027.
Excellent.
2026. Sorry.
We'll dig into those segments and some of those key initiatives. We wanted to ask for your top strategic priorities as we do think about 2026, and really how should investors track your execution against those throughout the year?
Well, number one strategic priority is successfully executing the close and integration with Udemy. You know, we believe that fundamentally transforms our business and gives us a really balanced offering. We historically at Coursera, 2/3 consumer, 1/3 enterprise. Udemy is 2/3 enterprise, 1/3 consumer. As we bring the two companies together, we'll have $1.5 billion of revenue that's split 50/50 across consumer and enterprise.
As we go through the integration, we really wanna make sure that we are able to not just integrate the two platforms, but do that in a way that really accelerates our pace of innovation. We committed to $115 million of annualized run rate cost savings when we announced the acquisition.
What excites me about the combination is not just the ability to deliver those cost savings and to deliver margin improvement, but to really accelerate revenue growth over time as we combine the two platforms. Right now, both platforms, you know, are broadly similar, and we invest in a lot of the same things.
We are not intending to deliver a lot of those cost savings through reduction in R&D, certainly not in the short term. Instead, we wanna leverage the combined teams to really accelerate as we go. Those are some of the key priorities that we have. And one of the main ways that I imagine we'll talk about, that we're focused on is how do we continue to have the experience become a much more AI-centric experience.
That is not only the number one thing that people are learning about on our platform, but it's also a tool that we are using to deliver that learning.
Excellent. Greg, let's stick to the combination with Udemy. Maybe take a step back and if you could review the strategic rationale for the combination. Why are Coursera and Udemy better together?
Well, you know, as I just mentioned, both companies are in the same space, you know, serving broadly the same type of needs for our customer sets, whether those are enterprise or consumer. Our approaches, though, have been very different to that, and they're very complementary. Our content model, you know, grew out of, at first, higher e ducation, you know, Stanford and, you know, top universities in the U.S. and then around the world.
Then we added content from industry partners, Google, Microsoft, DeepLearning, AWS, Meta, et cetera. That is really a curated marketplace approach, and the content that we have brings a high level of pedagogical rigor. On the Udemy side, they have 85,000+ subject matter experts from around the world creating content at a very rapid clip, in many, many languages.
There's a lot of complementarity between those two different models because we'll have everything from, you know, short form in-the-moment content in Indonesian about the latest version of Claude to a entire, you know, multi multi-week, potentially multi-month course on Coursera coming from a top university or from one of our industry partners.
The breadth of that content offering is incredibly rich. That enhances the value that we provide to our learner community. Coursera has, you know, $197 million registered learners from around the world. They have 82+ million registered learners. Combined, we will have a learning community that is, you know, approaching 300 million registered learners around the world. That's a huge audience. We'll have this amazing content offering that combines the best of both of those that we can offer to those.
Obviously it provides more value to each of those consumers. It provides more value to the enterprises that we work with. There's a lot of industrial logic that the combination offers. To me, what really excites me about the opportunity through the combination is we are seeing a fundamental. You know, I'm sure every single other conversation at this conference is, you know, analysts and inves tors asking CEOs, "How is your business being transformed by AI?
What are you doing to change your business and leverage AI?" We, Coursera and Udemy, and the combination are a tool that all of those CEOs can leverage to upskill and reskill their workforce to actually become not just conversant with AI, but to leverage it as a way to improve the performance of the business.
Perfect. We'll spend probably the rest of the time talking about skilling and reskilling. Couple more on this merger and combination. One of the themes that I heard throughout your strategic rationale was scale of content, scale of learners, customers. With that scale comes potential cost savings. What are the largest sources of that $115 million in run rate synergies that you guys are targeting?
Yeah. The $115 million is net of some level of revenue dyssynergies. The two largest buckets for the cost savings, and obviously there's some people elements to it and some non-people elements to the cost savings. The two largest are sales and marketing and then G&A. On the sales and marketing side, we have been much more efficient in our marketing spend than Udemy has been on both the consumer and enterprise side.
There's an opportunity to, you know, cut some of the costs that they've leveraged in their consumer business and deliver the same results from a lower spend. On the G&A side. Oh, sorry, there's also on the enterprise side of the business, you know, we have overlapping sales territories, et cetera.
We'll remove, you know, a portion of the sales organization that is overlapping. Obviously we'll focus on doing that in a way that keeps all of the top performers. On the G&A side, we're both public companies. There's a lot of overlap in functions. We don't need two CFOs, two, you know, heads of HR, et cetera, and, you know, that flows down through the organization. There's an opportunity to, you know, recognize some cost savings there as well.
Great. You were talking about accelerating revenue growth more broadly. You just mentioned some revenue dyssynergies, presumably with some of the overlap. I guess I'm wondering, how do you think about, you know, you laid out very specific components and a, and a number around cost savings. What about the revenue synergies and revenue optionality there?
Yeah. The number that we communicated doesn't include any forecast for revenue synergies. It is net of some revenue dyssynergies, which is really on the enterprise side. You know, we have some overlapping accounts. You know, as we reduce the size of the combined sales teams, there will be some quota that gets lost, and so that's factored into that net number. We did not try and model the revenue synergies that we believe we will be able to deliver over the long term, just because we think it's a little bit premature to do that, and we really wanna focus on getting through the integration as quickly as possible.
The things though that I believe will be catalysts for that will be the fact that we're gonna have, you know, instead of two separate platforms investing in the same things, we're gonna have one platform with a larger R&D team that is able to move faster and deliver much more benefit to our enterprise learners. We'll also be able to.
You know, both companies independently over the last year have really tried to reorient tent from being what I would call historically catalogs of learning material that were delivered either to individuals or to enterprises into really skill-focused delivery vehicles. For enterprise, you know, what are the specific skills that your specific job functions need to have, to, you know, fully deal with the transformation being wrought by AI and leverage that within their individual roles?
On the consumer side, to help consumers address that same thing. I believe there's a massive opportunity as we do that to also expand the value that we provide, in particular on the enterprise side, by differentiating and diversifying our offering to them so it's not just content, but it also helps them with, you know, just skills assessment and then, skills verification, skills as a system of record, so they can really start to enable in the relationship that we provide them a much more comprehensive approach to how do they evolve their talent management.
That makes sense. It's not just the potential to bundle or package additional content. There's that opportunity and all of these incremental products and capabilities.
Exactly.
from the platforms.
Exactly.
Excellent. Just given your insight, your trend, your visibility into an enterprise workforce and how they're engaging with your learning content, wanna ask you a high level sort of macro question on changes in the workforce. Is there anything, thinking about either how consumers are behaving or enterprises, that you're seeing around engagement or use of your platform that suggests that we're already seeing, you know, big shifts in workforce or disruption from AI?
On the consumer side, the number that, you know, sort of jumps off the page is that every four seconds, somebody is enrolling in a course on GenAI on Coursera. It's 15, you know, enrollments per minute in 2025 in GenAI content. For 2024, that number was eight per minute, so it's basically doubled year-over-year. Part of that is because we've doubled the size of our GenAI-related content catalog.
I think the larger aspect of that growth has really just been the fact that everybody is seeing how quickly the capabilities of the LLMs are really changing, and therefore, the need to urgently become conversant with that skill set.
That is also playing out on the enterprise side, where enterprises, I would say, you know, if you roll back the clock a few years, were primarily using either Coursera or Udemy more for broad L&D type offerings. Now increasingly we have functional buyers who are, you know, the CPO, the CTO, the chief data officer, who are really looking for, "I need to upskill or reskill my workforce to be able to do X, Y, and Z, and I need a partner who can help me do that." The conversations are increasingly becoming much more functionally focused. In recognition of that, in September, we rolled out curated Skill Tracks on the enterprise side of our offering.
One for GenAI, one for data, one for IT, one for software and product development, that are curated collections of courses from across our catalog that are really meant to appeal to a given functional buyer to help them create a much more customized learning pathway for whatever that function might be. Typically, what enterprises will do is they will leverage, you know, one of those Skill Tracks, and then they'll combine it with their own content that they have.
Then we enable through our Course Builder offering, which is an AI assisted course creation or learning program creation capability, them to combine, okay, we have these elements of, you know, content that we've created in our company that we wanna make sure everybody has context around, and we wanna combine them with these courses that deliver these functional skills, and they can create that sort of per role, and we work with them to do that. That's been a big trend that we've seen, and I think that's just gonna continue to accelerate.
Excellent. Sticking with skilling and upskilling, anything to add as far as your positioning and how, You know, to ensure that Coursera will be able to capture the skilling and reskilling opportunity, and also want to ask you from the perspective of competition, you know, how is Coursera differentiated, you know, in this area?
Well, in a world where, you know, AI makes it easier than ever before to create content, I think the value of the branded, trusted content that we have coming from the top universities and, you know, technology companies in the world, is a real differentiator for us. The way that we can not just take that content, but also really package it with we understand exactly what enterprises are using to upskill and reskill their workforce and what works really well, and we can take that signal back to all of our content creator partners and really optimize the performance of those courses by leveraging that data, that becomes a differentiator as well.
As we bring in Udemy, their, you know, they have a much larger enterprise business, and one of the things that they are ahead of Coursera on is really integrating directly into the flow of work within enterprise using MCP. The fact that they have, across their 85,000 content creators, a content base that gets changed on a much more rapid clip than ours does is a real asset.
I think the combination of those two things, you know, you have branded, trusted content from the best institutions in the world, and then you have content being created immediately as a new model releases from a massive army of subject matter experts around the world in, you know, every language you can possibly imagine natively. You know, obviously, we do AI translation and AI dubbing.
That combination of speed and brand, I think is a really unique one.
Great. We've been talking about some different capabilities around platform. You recently introduced a platform fee. Could you talk about that, what that opens up from an investment perspective, where are those dollars gonna go around platform enhancements?
Yep. The platform fee started on January 1st of this year, and it's a 15% fee that basically changes the economics that we have with our content partners. It's doesn't change consumer pricing, doesn't change enterprise pricing. The purpose of it and the rationale behind it was to enable us to invest in the platform in a more durable, ongoing way.
We are seeing the pace of technological change just increase and accelerate. We need to keep up with that on our platform. The platform fee is a mechanism to enable us to do that. Most of that investment is going to go into increasing the pace of innovation, specifically around how we use AI on the platform. Right now on Coursera, I talked about Course Builder.
We have Coach, which is an AI-driven tutor that rides alongside the learner in every single course that they're taking. We really need to bring all of the innovation that lies behind Coach front and center throughout the learning experience and throughout the user experience as they're on the platform, not just when they're in the act of learning in a specific course, but more broadly, so that we can help guide people to the right content, help them between things that they're doing. You know, our real goal is to be a lifelong skilling partner for consumer learners and to be a, you know, lifelong company partner on the enterprise side to help them upskill and reskill their workforce. The platform fee is going to go into helping address that.
Great. Before we dig in a little bit on consumer and enterprise, want to stick with AI, but ask how you're using it internally. How is it making your business more efficient across the different OpEx categories, but also from a content creation perspective?
Well, I'll start actually with content creation. You know, we create content on our own as well. We have Coursera Originals and Coursera-produced content. We've continued to increase the investment in that. That provides a couple different benefits for us, and I'll talk about how AI enables that to operate much more efficiently. The reasons that we create the Coursera Originals are, number one, because we see gaps in the platform and our current content partners aren't perhaps filling those gaps as quickly or as comprehensively as we might like. Two, we see an opportunity to use that content as a test bed. We really test different approaches to learning to understand what works best.
If we see, for example, across our content that we, you know, see drop-offs in given places, or we see learning patterns where a more interactive approach at a given point in the learning journey can help engage the learner and keep them engaged for longer and deliver better outcomes for us financially, we use our Coursera Originals to test those hypotheses and then roll them back out to the rest of the content. The third piece is the margin benefit that we get. Obviously, we're trading off, you know, for Coursera Originals content, we're trading off a fixed investment in the cost of that versus no rev share, versus on the other side, we have no fixed content investment for a course that comes from universities, for example, but we have a rev share.
There's a margin benefit that we get from our Originals. We leverage AI to bring down that fixed content cost. With every year, we have substantially decreased the cost per course, and I expect that trend to continue. We're also leveraging AI to make it easier for all of our content partners to create content. You know, I mentioned Course Builder. One of the things that Course Builder does, it makes it very easy for a content partner or an enterprise to create content, whether it's a course or a custom learning pathway, at a much lower cost.
They can leverage AI and start with, you know, really an outline, content that they might have already in a different format and easily transform it into a format that will work really well and be engaging on Coursera. That is a big focus for us. Other ways that we use it internally, we use it across, you know, all of our different functions across the company. Our focus right now is to really drive as much experimentation across the company with AI as possible. Yes, of course, we wanna use it to become more efficient, but our primary focus right now is not cost savings. It is much more about experimentation and penetration of AI into every possible role that we have across the company.
The reason for that is just that we are still so much in the infancy of GenAI and the pace which it's moving, that if we focus sort of myopically on cost saving now, I think we'd lose the opportunity to move much more faster across the broader organization. That's a big thing. One of the things that we do to help do that is we have what we call AI Sparks sessions. Every month, we have the company come together and people basically just get up and volunteer. "Here's what I've done. Here's the workflow I created. Here's how I did it. Here's what worked. Here's what didn't work.
Here's how I tweaked it. It just becomes a really viral way for us to share what's working really, really well, because it's not, it's not tops down, it's bottoms up. We augment that with a centralized team that basically takes in requests from any area of the company. It's a really small team that basically, in a week, will turn out a prototype for how a given workflow in a given part of the company can be transformed by leveraging AI. We sort of have a mix of those two approaches, it's working so far really, really well.
Great context. I wanna ask you a question on consumer growth, and maybe I'll provide some context. I mean, most learning platforms saw tremendous acceleration during COVID, most faced really tough comps and had trouble growing after that. Coursera has consistently grown every year, most recently double-digit growth in consumer over the last three quarters. Is there a way to decompose that growth? I mean, focusing more recently, coming from AI, from new learners onto the platform, existing learners, like any way to think about the different types of products that you sell from individual courses to professional certificates, specializations, like where is that growth and the durability of that growth coming from?
I would say there's two broad themes. One, I think the company has done a very effective job over the last couple years of really improving the efficiency of our paid marketing. That has helped us, you know, both expand what we're able to spend there because we're seeing really good return on that investment, and also start to experiment in new channels. As consumer patterns change and as the way people search and learn about, you know, things changes, it's really important that we continue to diversify that. That's one trend. Another trend has broadly been the growth of our Coursera Plus subscription offering. You know, we commented on in our Q3 call that that's now more than subscription revenue is now more than 50% of our consumer business.
We expect that to continue to increase over time. We like that for a couple different reasons. Obviously, for the subscription, you see a longer relationship with the consumer, and you have more predictable revenue flows from that. You know, it starts to resemble, you know, a mini enterprise type business from that perspective. Those have been a couple of the things. I think we certainly are benefiting from the fact that there is such a huge transformation happening with AI, and, you know, you see that reflected in that stat that I mentioned earlier about an enrollment every four seconds. That's been another factor that's helped drive the growth as well. I think we continue to evolve the product piece of the platform.
We're earlier on that, you know, just because that takes a little bit of time. You know, I started a year ago. We hired our Chief Product Officer, Patrick Supanc, in June. We're still making changes, but you saw some of that, you know, get reflected in some of the freemium and geo-pricing changes that we made. You will expect to see, or you can expect to see, some changes to continue to bring AI more to the fore in the experience as well.
Right. That statistic that you mentioned earlier, like, clearly lays out some of the tailwinds from AI. But how would you respond to the market or the investor concern that some of your learners will meet their learning needs elsewhere, either through LLMs or new entrants because of GenAI?
Yeah, I mean, clearly that is a sentiment that overhangs our sector and has for a long time and now overhangs many other sectors as well. My perspective on that is that, you know, we are providing a very differentiated skill-focused outcome, and it's up to us to make sure that we are demonstrating that to individual learners and to enterprises in a way that delivers material ROI. Nine out of 10 learners who come to Coursera come to advance their careers. 91% of the learners on Coursera who take a course report that they've had a tangible career outcome since completing that course. That is a really powerful and very differentiated stat versus what you might experience by just going to ChatGPT and learning something. You're not necessarily getting the same skill.
You might get general knowledge, but you're not necessarily generating a skill that can actually transform to a career outcome. 46% of the learners on Coursera report a salary increase since enrolling in a course. You know, the more that we can, you know, leverage those types of outcomes in the way we market Coursera and in the onsite experience to both reinforce the value of what we provide but also help direct people to the things that are best correlated to delivering those outcomes for us, I think the better we'll be able to differentiate ourselves and provide defensible value versus LLMs.
Excellent. Maybe shifting gears to the enterprise. Your net retention rate improved by four points last quarter, which is great, but it still remains under 100%, not where you wanna be. Within the enterprise, you've got Coursera for Business, Government, and Campus. Can we unpack a little bit of what you're seeing in those different end markets, just around downsizing, expansions, and customer demand?
Yeah. Our enterprise business, with C for B, C for C, and C for G, the majority of that business is C for B, the business-focused element of that. There, you know, as we've talked about on some of our calls, the environment remains, you know, muted, because of economic uncertainty and some of the changes that companies are trying to wrestle with. You know, whether that may be tariffs or the threat of AI, all of those potentially cause companies to, particularly the ones who are a little bit more short-term focused, potentially pull back on spending. We see an uncertain outlook there.
On C for G, our government business, you know, that tends to be a more cyclical type of business, where, you know, it's really hard to project the same level of year-over-year relationship with any given government just 'cause of the nature of the funding cycle. Having said that, you know, we saw some really good performance in C for G in Q4, in part because of one particular expansion opportunity that we had with a government in Asia. That is actually a really powerful proof point of what Coursera can do. This particular government was using Coursera as a means of upskilling their entire citizenry. That's one of the things that I think we're uniquely positioned to help forward-thinking governments or companies do as they're trying to think about upskilling broad populations.
Coursera for Campus is, you know, a smaller portion of our enterprise business, but we think we are very uniquely positioned there. Every single university in the world is facing the challenge of how do I move my institution at the right pace as AI reshapes what is possible in learning and in education, and also what is demanded of the graduates of any given institution. A lot, you know, particularly in the US, a lot of universities are really under threat because there's a perception that they're not delivering a value when people, you know, finish their college career that is commensurate with the cost that they have paid for that college career. We provide a way for them to augment their in-person curriculum with all of the richness of the really skill-focused delivery, and particularly that comes from our industry partners.
We've seen a lot of good traction in Coursera for Campus, and so that's growing at a pace that we really like. You know, we wanna continue to expand that. We also want to do a better job of demonstrating the value that we provide to our enterprise business because that is the, you know, the biggest part, C for B, the biggest part of the business. That's on us to, you know, really deliver better value delivery to those enterprise partners.
Greg, just to follow up on Coursera for Campus, it always seems like such a bright spot of the enterprise segment. Any context for how large that business is or how to frame the opportunity? It sounds like what you have is very unique. Correct me if I'm wrong, but not sure if there's real competition for exactly what you're trying to do.
There isn't any real competition for us. That is still, you know, a small portion of the business, but it's growing well. We want it to become more material, but we want it to become more material, not necessarily by, you know, becoming a larger percentage, but just by growing at a faster rate as we also grow all the other pieces at a faster rate.
The challenge of that business is I think we haven't had we now have a leader in Anthony Salcito, our new enterprise leader, who actually has 20+ years of experience in. He led Microsoft's worldwide education business for the better part of two decades. He actually has a very informed viewpoint on how to go about doing that because he has deep familiarity with that customer segment.
I am very hopeful for the future growth trajectory of that, both in the near term and over the long run with Anthony on board.
That's helpful. In just thinking about the upward trajectory of this net retention rate, how does the Udemy combination impact that over the next several quarters? Like, are there customer behaviors that you're seeing like, "Oh, let's wait to see what happens?" Does that, you know, hurt the momentum?
Well, you know, we have some overlapping customers. There'll be, you know, a bit of work that we have to do as we work through the combination to understand how we, you know, take those individual relationships and package them into something that's larger for the combined entity. One of the real opportunities that we feel that we have as we combine is we now have a better toolkit for every single enterprise customer.
If you are a Udemy enterprise customer and, you know, their enterprise business is, you know, far larger than Coursera's, they now will have the ability to access all the content that we have on the Coursera platform from our university and industry partners, and the brand value of that is really appealing to enterprise.
On the Coursera side, you know, even though our enterprise business is smaller than theirs, we now have the ability to give our enterprise customers the access to all of this, you know, really rapid, shorter, more modular content that is being created by their network of subject matter experts. We think there's an opportunity to give every single one of our enterprise sales team basically a better, you know, arsenal to go out to market with. Hopefully do a better job of both landing new accounts and also expanding our relationship with existing ones.
If you think about this, proposed merger, all stock, like, the pro forma combined entity will still have a lot of cash and no debt. Like, how do you think about capital allocation or industry consolidation, going forward?
Well, we committed, you know, when we announced the deal, to a sizable buyback at close. You know, when we combine the companies on a pro forma basis, you know, we'd have $1.5 billion in revenue between $1.2 billion and $1.3 billion of cash on the balance sheet with no debt. That's a lot of, you know, powder. We certainly will wanna use a sizable portion of that to do a share buyback. We also wanna make sure that we preserve enough of it to have the opportunity to really look at inorganic ways to drive faster growth. What we really are gonna focus on as a combined company is how do we accelerate the growth profile of the combined entity?
Yes, we will have through the nature of the combination, but also through the synergies, you know, 10% EBITDA margin pre-synergy and, you know, improving EBITDA margins post synergies. We really wanna focus on how do we leverage, you know, the balance sheet and how do we leverage the fact that we will be, you know, generating free cash flow on a combined basis at a nice, healthy clip to drive faster growth. We really think that there's an opportunity for us to leverage, you know, some of that balance sheet to look at inorganic ways to accelerate that. We also, of course, wanna think about how do we deliver, you know, the right return to shareholders. You know, part of that may be through an ongoing, share buyback program.
You know, part of that may be through our expansion into, you know, adjacent spaces that delivers higher growth profiles, a different margin profile, and, you know, better returns for shareholders overall. We will work through the share buyback in a very short order following the close. You know, we believe it's really critical that we do that because of the commitment. Then with the new board, we will chart a longer term approach to capital allocation that we think strikes the right balance between growth and enhancements for our shareholder return.
Perfect. We're out of time. Greg, thank you so much for the conversation.
Thank you very much, Josh. Thank you all.