10-Q 1 cour-20240331.htm 10-Q cour-20240331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_________________________________________________________
FORM 10-Q
_________________________________________________________
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission File Number: 001-40275
_________________________________________________________
COURSERA, INC.
(Exact Name of Registrant as Specified in its Charter)
_________________________________________________________
Delaware45-3560292
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
381 E. Evelyn Ave.
Mountain View, California
94041
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (650) 963-9884
_________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading
Symbol(s)
Name of each exchange on which registered
 Common Stock, $0.00001 par value per shareCOURThe New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerxAccelerated filero
Non-accelerated fileroSmaller reporting companyo
Emerging growth companyo  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of April 25, 2024, the registrant had 156,111,926 shares of common stock, $0.00001 par value per share, outstanding.


Table of Contents
Page
Item 2.


PART I—FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
COURSERA, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
(Unaudited)
March 31, 2024December 31, 2023
Assets
Current assets:
Cash and cash equivalents$725,363 $656,321 
Marketable securities 65,746 
Accounts receivable, net of allowance for credit losses of $589 and $133 as of March 31, 2024 and December 31, 2023
58,254 67,418 
Deferred costs, net25,201 26,387 
Prepaid expenses and other current assets24,429 16,614 
Total current assets833,247 832,486 
Property, equipment, and software, net31,109 30,408 
Operating lease right-of-use assets3,206 4,739 
Intangible assets, net12,610 11,720 
Other assets36,131 41,180 
Total assets$916,303 $920,533 
Liabilities and Stockholders’ Equity
Current liabilities:
Educator partners payable$103,258 $101,041 
Other accounts payable and accrued expenses20,401 23,456 
Accrued compensation and benefits18,320 22,281 
Operating lease liabilities, current4,365 6,557 
Deferred revenue, current148,382 137,229 
Other current liabilities7,861 7,696 
Total current liabilities302,587 298,260 
Operating lease liabilities, non-current 39 
Deferred revenue, non-current2,177 2,861 
Other liabilities2,425 3,179 
Total liabilities307,189 304,339 
Commitments and contingencies (Note 9)
Stockholders’ equity:
Preferred stock, $0.00001 par value—10,000,000 shares authorized and no shares issued and outstanding as of March 31, 2024 and December 31, 2023
  
Common stock, $0.00001 par value—300,000,000 shares authorized as of March 31, 2024 and December 31, 2023; 165,168,002 shares issued and 157,158,478 shares outstanding as of March 31, 2024, and 162,898,279 shares issued and 155,320,538 shares outstanding as of December 31, 2023
2 2 
Additional paid-in capital1,480,238 1,459,964 
Treasury stock, at cost— 8,009,524 and 7,577,741 shares as of March 31, 2024 and
December 31, 2023
(69,193)(63,154)
Accumulated other comprehensive income 59 
Accumulated deficit(801,933)(780,677)
Total stockholders’ equity609,114 616,194 
Total liabilities and stockholders’ equity$916,303 $920,533 
See notes to Condensed Consolidated Financial Statements (Unaudited).
2

COURSERA, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended March 31,
20242023
Revenue$169,068 $147,642 
Cost of revenue79,571 70,174 
Gross profit89,497 77,468 
Operating expenses:
Research and development34,610 43,809 
Sales and marketing57,585 52,872 
General and administrative24,943 25,523 
Restructuring related charges2,101 (5,659)
Total operating expenses119,239 116,545 
Loss from operations(29,742)(39,077)
Interest income, net9,583 8,037 
Other (expense) income, net(285)102 
Loss before income taxes(20,444)(30,938)
Income tax expense812 1,426 
Net loss$(21,256)$(32,364)
Net loss per share—basic and diluted$(0.14)$(0.22)
Weighted average shares used in computing net loss per share—basic and diluted156,379,409148,974,454
See notes to Condensed Consolidated Financial Statements (Unaudited).
3

COURSERA, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Loss
(In thousands)
(Unaudited)
 Three Months Ended March 31,
 20242023
Net loss$(21,256)$(32,364)
Change in unrealized (loss) gain on marketable securities, net of tax(59)433 
Comprehensive loss$(21,315)$(31,931)
See notes to Condensed Consolidated Financial Statements (Unaudited).
4

COURSERA, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders’ Equity
(In thousands, except share data)
(Unaudited)
 Common StockAdditional
Paid-In
Capital
Treasury Stock Accumulated
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
Stockholders’
Equity
 Shares AmountShares Amount
Balance—December 31, 2023162,898,279$2 $1,459,964 (7,577,741)$(63,154)$59 $(780,677)$616,194 
Exercise of stock options1,202,043 4,097 — — — 4,097 
Vesting of restricted stock units, net of tax withholdings1,063,315— (13,514)— — — (13,514)
Repurchases of common stock— — (431,783)(6,039)— — (6,039)
Issuance of restricted stock awards4,365— — — — — — 
Stock-based compensation— 29,691 — — — 29,691 
Other comprehensive loss— — — (59)— (59)
Net loss— — — — (21,256)(21,256)
Balance—March 31, 2024165,168,002$2 $1,480,238 (8,009,524)$(69,193)$ $(801,933)$609,114 
Balance—December 31, 2022150,683,607$1 $1,364,116 (2,747,938)$(4,701)$(718)$(664,123)$694,575 
Exercise of stock options1,098,467— 5,354 — — — 5,354 
Vesting of restricted stock units, net of tax withholdings1,143,257— (13,036)— — — (13,036)
Issuance of restricted stock awards6,805— — — — — — 
Stock-based compensation— 26,053 — — — 26,053 
Other comprehensive income— — — 433 — 433 
Net loss— — — — (32,364)(32,364)
Balance—March 31, 2023152,932,136$1 $1,382,487 (2,747,938)$(4,701)$(285)$(696,487)$681,015 
See notes to Condensed Consolidated Financial Statements (Unaudited).
5

COURSERA, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended March 31,
20242023
Cash flows from operating activities:
Net loss$(21,256)$(32,364)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization6,356 5,511 
Stock-based compensation expense27,857 24,742 
Accretion of marketable securities(235)(5,016)
Impairment of long-lived assets 535 
Other635 96 
Changes in operating assets and liabilities:
Accounts receivable, net8,456 (14,585)
Prepaid expenses and other assets(1,586)(5,396)
Operating lease right-of-use assets1,533 1,197 
Accounts payable and accrued expenses(594)19,440 
Accrued compensation and other liabilities(4,954)(2,476)
Operating lease liabilities(2,231)(2,376)
Deferred revenue10,469 15,384 
Net cash provided by operating activities24,450 4,692 
Cash flows from investing activities:
Purchases of marketable securities (121,756)
Proceeds from maturities of marketable securities66,000 75,000 
Purchases of property, equipment, and software(134)(298)
Capitalized internal-use software costs(4,070)(2,862)
Purchases of content assets(2,153)(624)
Net cash provided by (used in) investing activities59,643 (50,540)
Cash flows from financing activities:
Proceeds from exercise of stock options4,097 5,354 
Payments for repurchases of common stock(5,634) 
Payments for tax withholding on vesting of restricted stock units(13,514)(13,036)
Net cash used in financing activities(15,051)(7,682)
Net increase (decrease) in cash, cash equivalents, and restricted cash69,042 (53,530)
Cash, cash equivalents, and restricted cash—Beginning of period
658,086 322,878 
Cash, cash equivalents, and restricted cash—End of period
$727,128 $269,348 
Supplemental disclosure of cash flow information:
Cash paid for income taxes, net of refunds$1,088 $1,108 
Supplemental disclosure of noncash investing and financing activities:
Stock-based compensation capitalized as internal-use software costs$1,834 $1,311 
Unpaid purchases of content assets$1,077 $478 
Unsettled repurchases of common stock$405 $ 
See notes to Condensed Consolidated Financial Statements (Unaudited).
6

COURSERA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except share and per share data)
1.    BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS
Basis of Presentation
The accompanying Condensed Consolidated Financial Statements (Unaudited) of Coursera, Inc., a Delaware public benefit corporation, and its subsidiaries (“Coursera,” the “Company,” “we,” “us,” or “our”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and following the requirements of the Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP can be condensed or omitted. These Condensed Consolidated Financial Statements (Unaudited) have been prepared on the same basis as our annual consolidated financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, that are necessary for a fair statement of our financial information. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any other interim period or for any other future year.
These Condensed Consolidated Financial Statements (Unaudited) should be read in conjunction with the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on February 22, 2024 (“Form 10-K”).
Description of Business
Coursera is an online learning platform that connects learners, educators, and institutions with the goal of providing world-class educational content that is affordable, accessible, and relevant. We combine content, data, and technology into a platform that is customizable and extensible to both individual learners and institutions. We partner with university and industry partners (collectively, “educator partners”) to bring quality higher education to a broad range of individuals, businesses, organizations, and governments. We also sell directly to institutions, including employers, colleges and universities, organizations, and governments, to enable their employees, students, and citizens to gain critical skills aligned to job markets. Our corporate headquarters is located in Mountain View, California.
Reporting Segments
We conduct our operations through three reporting segments: Consumer, Enterprise, and Degrees. Refer to Note 13 for additional information.
2.    SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The Condensed Consolidated Financial Statements (Unaudited) include the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the Condensed Consolidated Financial Statements (Unaudited) in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and related disclosures as of the date of the Condensed Consolidated Financial Statements (Unaudited), as well as the reported amounts of revenue and expenses during the reporting period. We base our estimates on historical experience, current conditions, and various other factors that we believe to be reasonable under the circumstances. Significant items subject to such estimates, judgments, and assumptions include, but are not limited to, those related to the determination of principal versus agent and variable consideration in our revenue contracts; stock-based compensation expense; period of benefit for capitalized commissions; internal-use software costs; useful lives of long-lived assets; the carrying value of operating lease right-of-use assets; the valuation of intangible assets; and income tax expense, including the valuation of deferred tax assets and liabilities, among others. Actual results could differ from those estimates, and any such differences could be material to our Condensed Consolidated Financial Statements (Unaudited).
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Summary of Significant Accounting Policies
There have been no significant changes to our significant accounting policies as of and for the three months ended March 31, 2024 as compared to the significant accounting policies described in our Form 10-K.
Concentrations of Risk
Financial instruments that potentially subject us to concentration of credit risk consist of cash, cash equivalents, and marketable securities. We only invest in high-credit-quality instruments and maintain our cash equivalents and marketable securities in fixed-income securities. We place our cash primarily with domestic financial institutions that are federally insured within statutory limits.
For the purpose of assessing the concentration of credit risk with respect to accounts receivable and significant customers, we treat a group of customers under common control or customers that are affiliates of each other as a single customer. For the three months ended March 31, 2024 and 2023, we did not have any customers that accounted for more than 10% of our revenue. As of March 31, 2024, we did not have any customers that accounted for more than 10% of our net accounts receivable balance.
Our business model relies on educational content and credentialing programs from educator partners. Our largest educator partner has global brand recognition and supplies a variety of in-demand content across multiple domains. The loss of or significant reduction in this partnership or one of our other largest partners could have a material impact on our results of operations and cash flows.
Recent Accounting Pronouncements
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments’ significant expenses and certain other segment items on an interim and annual basis if they are regularly provided to the chief operating decision maker (“CODM”). This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied retrospectively to all prior periods presented. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. We expect that the adoption of ASU 2023-07 will not have a material impact on our Condensed Consolidated Financial Statements (Unaudited) and related disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities on an annual basis to disclose (1) specific categories in the tax rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied on a prospective basis, though retrospective application is permitted. We are currently evaluating whether the adoption of ASU 2023-09 will have a material impact on our Condensed Consolidated Financial Statements (Unaudited) and related disclosures.
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3.    REVENUE RECOGNITION
Contract Balances
Contract assets and liabilities were as follows:
March 31, 2024December 31, 2023January 1, 2023
Contract assets:
Billed accounts receivable, net of allowance for credit losses$48,911 $62,407 $45,337 
Unbilled accounts receivable9,343 5,011 8,397 
Total contract assets$58,254 $67,418 $53,734 
Contract liabilities:
Deferred revenue$150,559 $140,089 $118,777 
Total contract liabilities$150,559 $140,089 $118,777 
Revenue recognized during the three months ended March 31, 2024 and 2023 that was included in the corresponding deferred revenue balance at the beginning of each year was $70,258 and $58,733.
Remaining Performance Obligations
Remaining performance obligations represent contracted revenue that has not yet been recognized, which includes deferred revenue in the Condensed Consolidated Balance Sheets (Unaudited) and unbilled amounts that will be recognized as revenue in future periods. As of March 31, 2024, we had remaining performance obligations of $300,341 and expect to recognize approximately 70% as revenue over the next 12 months and the remainder thereafter.
Costs to Obtain and Fulfill Contracts
The following table presents our capitalization and amortization of commissions and related payroll tax expenditures recorded within sales and marketing in the Condensed Consolidated Financial Statements (Unaudited):
Three Months Ended March 31,
Commissions and related payroll tax expenditures:20242023
Capitalization$1,273 $2,972 
Amortization$3,649 $2,681 
Deferred commissions and related payroll tax expenditures included in deferred costs and in other assets were as follows:
March 31, 2024December 31, 2023
Deferred costs, net$12,646 $13,168 
Other assets$13,507 $15,361 
No impairment losses were recognized during the three months ended March 31, 2024 and 2023.
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4.    INVESTMENTS
Investments Measured at Fair Value on a Recurring Basis
The following table summarizes our investments measured at fair value on a recurring basis by balance sheet classification and investment type:
March 31, 2024December 31, 2023
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value - Level 1
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value - Level 1
Cash equivalents—money market funds$192,010 $ $ $192,010 $186,396 $ $ $186,396 
Cash equivalents—U.S. Treasury securities509,356   509,356 448,447 78  448,525 
Total cash equivalents701,366   701,366 634,843 78  634,921 
Marketable securities—U.S. Treasury securities    65,765  (19)65,746 
Total$701,366 $ $ $701,366 $700,608 $78 $(19)$700,667 
Gross realized gains and losses related to our cash equivalents and marketable securities were not material for the three months ended March 31, 2024 and 2023.
The following table presents the cost basis and fair value of our available-for-sale (“AFS”) marketable securities by contractual maturity date:
March 31, 2024 December 31, 2023
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
Due in one year or less$ $ $65,765 $65,746 
Investments in an unrealized loss position consisted of the following:
March 31, 2024December 31, 2023
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
U.S. Treasury securities$ $ $65,746 $(19)
As of December 31, 2023, our AFS marketable securities were comprised of U.S. Treasury securities, which are backed by the full faith and credit of the U.S. government. There were no credit or non-credit impairment losses recorded during the three months ended March 31, 2024 and 2023.
Investments Measured at Fair Value on a Nonrecurring Basis
Our existing equity investments are remeasured at fair value on a nonrecurring basis when an identifiable event or change in circumstance may have a significant adverse impact on its fair value. No such events or changes occurred during the three months ended March 31, 2024 and 2023.
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5.    CONSOLIDATED BALANCE SHEET COMPONENTS
Restricted Cash
The reconciliation of cash, cash equivalents, and restricted cash was as follows:
March 31, 2024December 31, 2023
Cash and cash equivalents$725,363 $656,321 
Restricted cash, current1,574  
Restricted cash, non-current191 1,765 
Total cash, cash equivalents, and restricted cash$727,128 $658,086 
Property, Equipment, and Software, Net
Property, equipment, and software, net consisted of the following:
March 31, 2024December 31, 2023
Internal-use software and website development$79,763 $73,881 
Computer equipment and purchased software4,527 4,405 
Leasehold improvements6,923 6,923 
Furniture and fixtures2,757 2,757 
Total property, equipment, and software93,970 87,966 
Less accumulated depreciation and amortization(62,861)(57,558)
Property, equipment, and software, net$31,109 $30,408 
The following table presents depreciation and amortization expense related to property, equipment, and software as well as the portion of amortization expense related to internal-use software and website development that is recorded within cost of revenue in the Condensed Consolidated Statements of Operations (Unaudited):
Three Months Ended March 31,
20242023
Depreciation and amortization expense$5,326 $4,822 
Amortization expense for internal-use software and website development4,786 4,221 
Intangible Assets, Net
Intangible assets, net consisted of the following:
March 31, 2024December 31, 2023
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
Content assets$14,901 $(4,237)$10,664 $12,982 $(3,558)$9,424 
Developed technology8,446 (6,500)1,946 8,446 (6,150)2,296 
Intangible assets$23,347 $(10,737)$12,610 $21,428 $(9,708)$11,720 
Capitalization of content assets and amortization expense for intangible assets was as follows:
Three Months Ended March 31,
20242023
Capitalization of content assets$1,920 $606 
Amortization expense for intangible assets$1,030 $689 
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As of March 31, 2024, future expected amortization expense for intangible assets was as follows:
Remainder of 2024$3,514 
20254,253 
20261,965 
20271,470 
20281,172 
Thereafter236 
Total$12,610 
6.    LEASES
We have entered into various non-cancelable office space operating leases with lease periods expiring through April 2025. These leases do not contain residual value guarantees, covenants, or other restrictions.
In May 2022, we entered into an agreement to sublease a portion of our existing office space in Mountain View, California. The sublease is classified as an operating lease. The term commenced on June 1, 2022 and terminates on October 31, 2024. Sublease income from this agreement was $680 for the three months ended March 31, 2024 and 2023.
7.    INCOME TAXES
Income tax expense or benefit for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, we update the estimate of the annual effective tax rate, and if the estimated tax rate changes, we record a cumulative adjustment.
Our effective tax rate for the three months ended March 31, 2024 and 2023 was (4.0%) and (4.6%). The difference between the effective tax rate and the U.S. federal statutory rate is primarily due to a valuation allowance for our federal and state net deferred tax assets, income taxes on foreign operations, U.S. state income taxes, and stock-based compensation expense.
As of March 31, 2024, we continued to have a full valuation allowance against our U.S. federal and state deferred tax assets. Management regularly evaluates the realizability of our deferred tax assets. Adjustments are recorded to income during the period in which management makes the determination a deferred tax asset is more likely than not to be realized.
8.    NET LOSS PER SHARE
The following table presents the calculation of basic and diluted net loss per share:
Three Months Ended March 31,
20242023
Numerator:
Net loss$(21,256)$(32,364)
Denominator:
Weighted-average shares used in computing net loss per share—basic and diluted156,379,409148,974,454
Net loss per share—basic and diluted$(0.14)$(0.22)
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The following potentially dilutive securities were excluded from the computation of diluted net loss per share calculations for the periods presented because the impact of including them would have been anti-dilutive:
Three Months Ended March 31,
20242023
Common stock options9,927,36917,013,403
Restricted stock units (“RSUs”)
21,203,13924,487,480
Performance stock units (“PSUs”)
300,416 
ESPP stock purchase rights (“ESPP Rights”)
377,817324,358
Shares subject to repurchase4,365
Total31,813,10641,825,241
9.    COMMITMENTS AND CONTINGENCIES
Purchase Obligations
Our purchase obligations primarily relate to a third-party cloud infrastructure agreement, subscription arrangements, and service agreements used to facilitate our operations. As of March 31, 2024, we had approximately $20,254 of future minimum payments under our non-cancelable purchase obligations with a remaining term in excess of one year, which are expected to be paid through 2026.
Legal Proceedings
From time to time, we may be subject to legal proceedings, as well as demands, claims, and threatened litigation. The outcomes of legal proceedings and other contingencies are inherently unpredictable, subject to significant uncertainties, and could be material to our operating results and cash flows for a particular period. Regardless of the outcome, litigation can have an adverse impact on our business because of defense and settlement costs, diversion of management resources, and other factors. Other than the matters described below, we are not currently party to any legal proceeding that we believe, as of the filing of this Quarterly Report on Form 10-Q, could have a material adverse effect on our business, operating results, cash flows, or financial condition should such litigation or claim be resolved unfavorably.
We regularly review the status of each significant matter and assess its potential likelihood of loss or exposure. We record an accrual for loss contingencies for legal proceedings when we believe that an unfavorable outcome is both (i) probable and (ii) the amount or range of any possible loss is reasonably estimable. The Company intends to vigorously defend itself in these matters, and while there can be no assurances and the outcome of these matters is currently not determinable, the Company currently believes that, except as set forth below, these existing claims or proceedings are not likely, individually and in the aggregate, to have a material adverse effect on its financial position. Notwithstanding the foregoing, there are many uncertainties associated with any litigation and these matters or other third-party claims against the Company may cause the Company to incur costly litigation and/or substantial settlement charges. In addition, the resolution of any intellectual property litigation may require the Company to make royalty payments, which could adversely affect gross margins in future periods. If any of those events were to occur, the Company's business, financial condition, results of operations, and cash flows could be adversely affected. The actual liability in any such matters may be materially different from the Company's estimates, if any, which could result in the need to adjust the liability and record additional expenses.
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Privacy Class Action Lawsuit
In November 2023, a putative class action complaint, Iman Ghazizadeh, et al v. Coursera, Inc., was filed against Coursera, Inc. in the United States District Court (the “Court”) for the Northern District of California (Case No. 5:23-cv-05646) for alleged violations of the Video Privacy Protection Act, 18 U.S.C. Section 2710 et seq. (“VPPA”). The complaint alleges, among other things, that without consent or knowledge of the plaintiff, Coursera disclosed the video viewing history and certain other information of the plaintiff to a third-party company and made similar disclosures without the knowledge or consent of other unidentified users. The plaintiff seeks monetary damages for certain violations under the VPPA, including interest and reasonable attorney’s fees. In January 2024, the Company filed a motion to dismiss, which is pending before the Court. Given the procedural posture and the nature of such litigation matter, it is not possible to reasonably estimate the probability that we will ultimately prevail or be held liable for the violations alleged in this complaint, nor is it possible to reasonably estimate the loss, if any, or range of loss that could result from this matter. We dispute the claims and intend to vigorously defend against them.
Indemnifications
In the normal course of business, we enter into contracts and agreements that contain a variety of representations and warranties and provide for the potential of general indemnification obligations. Our exposure under these agreements is unknown because it involves future claims that may be made against us but have not yet been made. To date, we have not paid any material claims and have not been required to defend any actions related to our indemnification obligations; however, we may record charges in the future as a result of these indemnification obligations. In addition, we have indemnification agreements with certain of our directors, executive officers, and other employees that require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service with Coursera. The terms of such obligations may vary.
10.    STOCKHOLDERS' EQUITY
Share Repurchase Program
On April 26, 2023, our board of directors approved a share repurchase program with authorization to purchase up to $95 million of our common stock, excluding commissions and fees (the “Repurchase Program”). We may repurchase shares of common stock from time to time through open market purchases, in privately negotiated transactions, or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions. The Repurchase Program may be suspended or discontinued at any time and does not obligate us to acquire any amount of common stock.
We funded share repurchases under the Repurchase Program with our existing cash and cash equivalents. During the three months ended March 31, 2024, we repurchased an aggregate of 431,783 shares of our common stock for $6.0 million pursuant to a Rule 10b5-1 trading plan. As of March 31, 2024, we had $30.6 million, excluding commissions, remaining under the Repurchase Program, which has no expiration date and will continue unless otherwise suspended or discontinued.
In April 2024, we repurchased an aggregate of 1,135,280 shares of our common stock for $15.7 million pursuant to a Rule 10b5-1 trading plan and have $14.9 million, excluding commissions, remaining under the Repurchase Program as of the date of this filing.
11.    EMPLOYEE BENEFIT PLANS
Stock Incentive Plans
Our 2021 Stock Incentive Plan (the “2021 Plan”) provides for the granting of incentive and non-statutory stock options, RSUs, PSUs, and other equity-based awards. Pursuant to our 2021 Employee Stock Purchase Plan (the “ESPP”), eligible employees may purchase shares of our common stock through payroll deductions at 85% percent of the lower of the market price of our common stock on the date of commencement of the applicable offering period or on the last day of each six-month purchase period.
As of March 31, 2024, 16,196,764 shares and 5,861,089 shares of our common stock were reserved for future issuance under the 2021 Plan and ESPP.
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Stock Options
We may grant stock options at prices not less than the grant date fair value. These stock options generally expire 10 years from the grant date. Incentive stock options and non-statutory stock options generally vest ratably over a four-year service period.
Stock option activity for the three months ended March 31, 2024 was as follows:
Number of
Shares
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Term
(in Years)
Aggregate
Intrinsic
Value
Balance—December 31, 202311,165,138$7.03 5.22$142,444 
Granted 
Exercised(1,202,043)3.41 
Canceled(35,726)22.83 
Balance—March 31, 20249,927,369$7.42 5.22$73,722 
Options vested8,631,076$6.19 4.82$71,929 
RSUs and PSUs
RSU grants have a service-based vesting condition, which is satisfied generally either (i) over four years with a 25% cliff vesting period after one year and 6.25% vesting each quarter thereafter for new hires, or (ii) over four years with 6.25% vesting each quarter for new grants to existing employees. The related stock-based compensation expense is recognized on a straight-line basis over the requisite service period.
In March 2024, we granted PSUs to certain executives under the 2021 Plan. PSU grants have both performance and service-based vesting conditions. The ultimate number of units that will vest is determined based on the achievement of annual revenue against a pre-established target (with defined threshold and maximum amounts ranging from 50% to 150% of target). If annual revenue is below the threshold amount, none of the PSUs will vest. If annual revenue is equal to or exceeds the threshold amount, 25% of the PSUs ultimately granted will vest after one year, and the remaining PSUs will vest quarterly (6.25%) over the subsequent three years. The fair value of each unit is determined on the grant date, and the related stock-based compensation expense is recognized using the accelerated attribution method. We evaluate the vesting conditions on a quarterly basis and recognize stock-based compensation expense if the achievement of the performance condition is probable.
RSU and PSU activity for the three months ended March 31, 2024 was as follows:
RSUsPSUs
Number of
Shares
Weighted-Average
Grant Date Fair Value
Aggregate
Intrinsic
Value
Number of
Shares
Weighted-Average
Grant Date Fair Value
Aggregate
Intrinsic
Value
Unvested balance—December 31, 202318,361,046$15.24 $355,653 $ $ 
Granted(1)
5,126,61714.44 300,41614.36 
Vested(1,856,395)16.25  
Forfeited(428,129)16.52  
Unvested balance—March 31, 202421,203,139$14.93 $297,268 300,416$14.36 $4,212 

(1) For PSUs, the number of shares granted assumes the performance condition is achieved at the target level. The actual number of shares ultimately granted once the performance period is complete may range from 0% to 150% of the target amount.
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Stock-Based Compensation Expense
Stock-based compensation expense is classified in the Condensed Consolidated Statements of Operations (Unaudited) as follows:
Three Months Ended March 31,
20242023
Cost of revenue$659 $877 
Research and development11,001 13,465 
Sales and marketing7,922 8,357 
General and administrative8,275 7,631 
Restructuring related charges (5,588)
Total$27,857 $24,742 
We capitalized $1,834 and $1,311 of stock-based compensation related to our internal-use software during the three months ended March 31, 2024 and 2023.
As of March 31, 2024, there was a total of $11,834 unrecognized employee compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of approximately 1.9 years. In addition, as of March 31, 2024, total unrecognized compensation cost related to unvested RSUs was $272,596, which is expected to be recognized over a weighted-average period of approximately 2.7 years, and total unrecognized compensation cost related to PSUs was $4,220, which is expected to be recognized over a weighted average period of approximately 2.1 years. Total unrecognized compensation cost related to ESPP Rights as of March 31, 2024 was $5,638, which is expected to be recognized over a weighted-average period of approximately 0.9 years.
Common Stock Reserved for Issuance
The following table presents total shares of our common stock reserved for future issuance:
March 31, 2024December 31, 2023
Stock options outstanding9,927,36911,165,138
RSUs outstanding21,203,13918,361,046
PSUs outstanding300,416 
Shares available for future grants22,057,85316,913,085
Total shares of common stock reserved53,488,77746,439,269
401(k) Plan
We have a 401(k) savings plan that provides for a discretionary employer-matching contribution. We made matching contributions of $854 and $856 to the plan for the three months ended March 31, 2024 and 2023.
12.    RELATED-PARTY TRANSACTIONS
We have a content sourcing agreement with DeepLearning.AI Corp (“DeepLearning.AI”), which was entered into in the normal course of business and under standard terms. Dr. Andrew Ng, one of our co-founders and Chairman of our board of directors owns DeepLearning.AI. Content fees earned by DeepLearning.AI during the three months ended March 31, 2024 and 2023 were $2,309 and $1,693, and were recorded within cost of revenue in the Condensed Consolidated Statements of Operations (Unaudited). As of March 31, 2024 and December 31, 2023, outstanding educator partner payables related to this content sourcing agreement were $2,309 and $3,895.
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13.    SEGMENT AND GEOGRAPHIC INFORMATION
Segment Information
Our chief operating decision maker (“CODM”) is our Chief Executive Officer. For the purposes of allocating resources and assessing performance, the CODM examines three segments, which relate to our three revenue sources: Consumer, Enterprise, and Degrees. This is also consistent with how we disaggregate revenue.
Financial information for each reportable segment was as follows:
Three Months Ended March 31,
Revenue20242023
Consumer$96,743 $82,029 
Enterprise57,494 52,173 
Degrees14,831 13,440 
Total revenue$169,068 $147,642 
Segment gross profit
Consumer$51,774 $44,617 
Enterprise39,130 34,970 
Degrees14,831 13,440 
Total segment gross profit$105,735 $93,027 
Reconciliation of segment gross profit to gross profit
Platform and support costs$9,763 $9,772 
Stock-based compensation expense659 877 
Amortization of internal-use software4,786 4,221 
Amortization of intangible assets1,030 689 
Total reconciling items16,238 15,559 
Gross profit$89,497 $77,468 
Geographic Information
Revenue
The following table summarizes the revenue by region based on the billing address of our customers:
Three Months Ended March 31,
20242023
United States$92,419 $78,509 
Europe, Middle East, and Africa39,149 37,007 
Asia Pacific21,080 18,598 
Other16,420 13,528 
Total$169,068 $147,642 
No single country other than the United States represented 10% or more of our total revenue during the three months ended March 31, 2024 and 2023.
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Long-lived assets
The following table presents our long-lived assets, consisting of property, equipment, and software, net of depreciation and amortization, and operating lease right-of-use assets, by geographic region:
March 31, 2024December 31, 2023
United States$33,423 $34,047 
Rest of World892 1,100 
Total$34,315 $35,147 
14.    RESTRUCTURING RELATED CHARGES
We have been reducing our expenses, focusing our efforts, and prioritizing investments in key initiatives that are expected to drive long-term, sustainable growth.
During the three months ended March 31, 2023 we recognized a reversal of stock-based compensation expense of approximately $5.6 million, resulting from the forfeiture of RSUs and stock options associated with our November 2022 global workforce reduction.
In January 2024, we implemented a plan to restructure our Enterprise segment sales force and recognized restructuring related charges of $2.1 million during the three months ended March 31, 2024. Related cash payments of $1.8 million were made during the same period and reflected as cash used in operating activities within our Condensed Consolidated Statements of Cash Flows (Unaudited). Remaining unpaid expenses relating to this restructuring are not material as of March 31, 2024.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following section discusses financial condition and results of operations of Coursera, Inc. and its subsidiaries (Coursera, the Company, we, us, or our) and should be read in conjunction with our Condensed Consolidated Financial Statements (Unaudited) and the related notes included in Item 1 of Part I of this report and together with our Consolidated Financial Statements and the related notes and the discussions under the heading Management’s Discussions and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2023 included in our Form 10-K.
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements in this report other than statements of historical fact, including statements identified by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” or the negative of these terms, or similar expressions, are forward-looking statements. Forward-looking statements include, but are not limited to, statements about:
trends and expectations for growth in the higher education and online education markets;
the acceptance, adoption, and growth of online learning and credentialing;
market acceptance and demand for our platform;
the potential benefits of our solutions to learners and educator partners;
anticipated launch dates of new educator partner programs;
our business model;
our expectations of our future financial performance, including revenue, expenses, and profitability;
our ability to successfully develop, launch, maintain, and scale new programs, offerings, and features, including artificial intelligence (“AI”);
our ability to expand our platform’s content and credentialing programs;
our ability to manage or sustain our growth and to effectively expand our global customer base and operations;
our ability to acquire new educator partners and expand program offerings with existing educator partners;
our ability to acquire prospective learners and to affect or increase learner enrollment, revenue, and retention;
our growth strategies, plans, objectives, and goals;
our ability to compete and expectations about the future competitive landscape;
our ability to attract and retain key employees;
the scalability of our platform and operations;
our ability to develop and protect our brand;
the size of our addressable markets, market share, and market trends;
the affordability and convenience of our platform;
our ability to obtain, maintain, protect, and enforce our intellectual property (“IP”) and proprietary rights and successfully defend against claims of infringement, misappropriation, or other violations of third-party IP;
our anticipated future capital requirements, including the availability of capital to grow our business;
our ability to successfully defend any current or future litigation brought against us;
our ability to implement and maintain effective policies, procedures, and internal controls;
potential changes in laws and regulations applicable to us or our educator partners and ability to comply;
our share repurchase program;
the amount of time for which we expect our cash balances and other available financial resources to be sufficient to fund our operations;
our contractual obligations and commitments;
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the anticipated utility of our non-GAAP financial measures and key business metrics; and
our expectations as to interest rate and foreign currency risks.
In addition, any statements contained herein that are not statements of historical facts are deemed to be forward-looking statements. These forward-looking statements reflect our management’s beliefs and views with respect to future events, are based on estimates and assumptions as of the date of this report, and are subject to a number of risks and uncertainties that could cause our actual results to differ materially from those expressed or implied by our forward-looking statements. These risks and uncertainties include, but are not limited to, those risks discussed in Part II, Item 1A “Risk Factors” of this report. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Given these uncertainties, you should not place undue reliance on these forward-looking statements. We qualify all of the forward-looking statements in this report with these cautionary statements.
You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance, events, or circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this report to conform these statements to actual results or to changes in our expectations, except as required by law.
Overview
Coursera is one of the largest online learning destinations in the world, connecting an ecosystem of learners, educators, organizations, and institutions with a platform of high-quality content and credentials, data, and technology.
As shifts in the digital economy are increasing the need for new skills, Coursera’s online learning offerings can meet this global demand and provide access to world-class education to learners, organizations, and institutions worldwide. We partner with over 325 leading global university and industry partners to create and distribute high-quality content that is modular, flexible, and affordable. As of March 31, 2024, approximately 148 million learners are registered on our platform to engage with a wide range of offerings from industry microcredentials, including entry-level Professional Certificates, to bachelor’s and master’s degree programs.
Coursera serves learners where and how they want to learn—in their homes, through their employers, through their colleges and universities, and through government-sponsored programs. We provide a broad range of learning content and credentials, including Clips, Guided Projects, Specializations, courses, and certificates that can build towards a broader course of study such as a degree or postgraduate diploma. Our go-to-market strategy centers on efficiently attracting learners to our platform through content and credentials from world-class brands, while promoting personalized pathways to jobs and degree programs. Additionally, our data-driven learner experience identifies potential Enterprise prospects, complemented by our direct sales team, which finds and engages with potential business, academic, government, and other institutional customers.
For the three months ended March 31, 2024 and 2023, we generated a net loss of $21.3 million and $32.4 million, which included stock-based compensation expense of $27.9 million and $24.7 million, and a net loss margin as a percentage of revenue of 13% and 22%.
Factors Affecting Our Performance
We believe that the growth of our business and our future success are dependent upon many factors. While each of these factors present significant opportunities for us, these factors also pose challenges that we must successfully address in order to sustain the growth of our business and enhance our results of operations.
Ability to attract and engage new learners, Enterprise customers, and Degrees students. In order to grow our business, we must attract new learners, Enterprise customers, and Degrees students efficiently and increase engagement on our platform over time. Our Consumer learners are the most important source of our overall learner base, as they contribute to both our Enterprise and Degrees revenue in addition to the Consumer revenue they may provide.
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Ability to source in-demand content from our educator partners. We believe that learners and enterprises are attracted to Coursera largely because of the high quality and wide selection of content provided by our educator partners. Continuing to source in-demand content and credentials from our educator partners—from courses to degrees—is important to attract learners and increase our revenue over time.
We believe that our reach, scale, and reputation provide an attractive value proposition for leading organizations and institutions to partner with Coursera to develop and distribute content and credentials. To be the platform of choice for educator partners, we continue to invest in increasing the size and engagement of our learner base, developing a suite of academic integrity features (e.g., identity verification and anti-plagiarism detection), improving recommendation and personalization features, developing marketing capabilities that drive higher conversion into paid offerings, and improving the analytics tools available for learners, educators, organizations, and institutions.
Impact of mix shift over time. The mix of our business amongst our Consumer, Enterprise, and Degrees segments shifts from time to time, and these shifts have and will continue to affect our financial performance. We typically incur content costs in the form of a fee paid to our educator partners, determined as a percentage of total revenue generated from their content. We do not incur any content costs for our Degrees offerings, since our university partners compensate us with a percentage of learner tuition.
Ability to convert free learners to paid learners. New learners typically begin to engage with our free courses on our platform, which serves as a funnel to grow our total learner base and drive referrals to our other offerings, including our paid offerings. Through both our on-platform and off-platform marketing efforts, we engage our free learners by highlighting key features that encourage conversion to our paid offerings, including paid subscriptions. These efforts include campaigns targeting existing learners, personalized recommendations, and performance marketing on the internet.
Ability to expand our international footprint. We see a significant opportunity to expand our offerings into other regions, particularly in regions with large, underserved adult learning populations. We have invested, and plan to continue to invest, in personnel and marketing efforts to support our international growth as part of our strategy to grow our customer and learner base.
Ability to retain and expand our Enterprise customer relationships. Our efforts to grow our Enterprise segment are focused primarily on business, academic, government, and other institutional customers. We believe a significant opportunity exists to expand our customers’ use of our platform by identifying new use cases that increase the size of deployments. Our business and results of operations will depend in part on our ability to retain and expand usage of our platform within our existing customer base.
Our measured investment in growth. We are actively managing our investments to support the future growth of our business using a measured approach. We focus our investments in select markets, offerings, and technologies that we believe will provide the best opportunity to grow our revenue and improve our operating results in the long term.
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Results of Operations
The following table summarizes our results of operations, which are not necessarily indicative of results to be expected for future periods.
Three Months Ended March 31,
20242023
(in thousands)
Revenue$169,068 $147,642 
Cost of revenue(1)
79,571 70,174 
Gross profit89,497 77,468 
Operating expenses:
Research and development(1)
34,610 43,809 
Sales and marketing(1)
57,585 52,872 
General and administrative(1)
24,943 25,523 
Restructuring related charges(1)
2,101 (5,659)
Total operating expenses119,239 116,545 
Loss from operations(29,742)(39,077)
Other income, net:
Interest income, net9,583 8,037 
Other (expense) income, net(285)102 
Loss before income taxes(20,444)(30,938)
Income tax expense812 1,426 
Net loss$(21,256)$(32,364)
(1)Includes stock-based compensation expense as follows:
Three Months Ended March 31,
20242023
(in thousands)
Cost of revenue$659 $877 
Research and development11,001 13,465 
Sales and marketing7,922 8,357 
General and administrative8,275 7,631 
Restructuring related charges— (5,588)
Total stock-based compensation expense$27,857 $24,742 
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The following table summarizes our results of operations as a percentage of revenue:
Three Months Ended March 31,
20242023
Revenue100 %100 %
Cost of revenue47 48 
Gross profit53 52 
Operating expenses:
Research and development21 30 
Sales and marketing34 36 
General and administrative15 17 
Restructuring related charges(5)
Total operating expenses71 78 
Loss from operations(18)(26)
Other income, net:
Interest income, net
Other (expense) income, net— — 
Loss before income taxes(12)(21)
Income tax expense
Net loss(13)%(22)%
Comparison of the Three Months Ended March 31, 2024 and 2023
Revenue
Three Months Ended March 31,Change
20242023$%
(in thousands, except percentages)
Revenue:
Consumer$96,743 $82,029 $14,714 18 %
Enterprise57,494 52,173 5,321 10 %
Degrees14,831 13,440 1,391 10 %
Total revenue$169,068 $147,642 $21,426 15 %
Revenue for the three months ended March 31, 2024 was $169.1 million compared to $147.6 million for the three months ended March 31, 2023. Revenue increased by $21.4 million, or 15%, compared to the three months ended March 31, 2023. The increase was primarily driven by a 20% increase in the average total number of registered learners resulting in more paid learners, an 18% increase in the average total number of Paid Enterprise Customers, and a 23% increase in the number of Degrees students.
For the three months ended March 31, 2024, total Consumer revenue increased by $14.7 million, or 18%, compared to the three months ended March 31, 2023. New learners that registered after March 31, 2023 contributed $41.6 million to total Consumer revenue of $96.7 million for the three months ended March 31, 2024. The remaining Consumer revenue in the three months ended March 31, 2024 of $55.1 million is attributable to learners that were registered on our platform as of March 31, 2023, thus retaining 67% of the revenue from those registered learners.
For the three months ended March 31, 2024, total Enterprise revenue increased by $5.3 million, or 10%, compared to the three months ended March 31, 2023 attributable to an increase in new customers. Acquisitions of new customers drove an increase of $9.7 million, offset by a $4.4 million decrease attributable to contraction of existing customer spend.
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For the three months ended March 31, 2024, total Degrees revenue increased by $1.4 million, or 10%, compared to the three months ended March 31, 2023. The $1.4 million increase in revenue was primarily attributable to $3.1 million in revenue from an increase in the number of Degrees students, partially offset by a decrease of $1.7 million due to lower revenue per student resulting from student growth in lower priced regions.
Cost of Revenue, Gross Profit, and Gross Margin
Three Months Ended March 31,Change
20242023$%
(in thousands, except percentages)
Cost of revenue$79,571 $70,174 $9,397 13 %
Gross profit$89,497 $77,468 $12,029 16 %
Gross margin53 %52 %
Cost of revenue for the three months ended March 31, 2024 was $79.6 million compared to $70.2 million for the three months ended March 31, 2023. The primary driver for the increase was revenue growth that resulted in an increase of $8.7 million in costs related to educator partner fees.
Content costs for the Consumer segment were $45.0 million and $37.4 million for the three months ended March 31, 2024 and 2023, with content costs as a percentage of revenue of 46% for both periods. Content costs for the Enterprise segment were $18.4 million and $17.2 million for the three months ended March 31, 2024 and 2023, with content costs as a percentage of revenue of 32% and 33% for the same periods, decreasing due to a shift in mix to content with a lower cost.
Gross margin was 53% for the three months ended March 31, 2024, compared to 52% for the three months ended March 31, 2023. The increase in gross margin was driven by a lower revenue content cost rate in our Enterprise segment.
Operating Expenses
Three Months Ended March 31,Change
20242023$%
(in thousands, except percentages)
Operating expenses:
Research and development$34,610 $43,809 $(9,199)(21)%
Sales and marketing57,585 52,872 4,713 %
General and administrative24,943 25,523 (580)(2)%
Restructuring related charges2,101 (5,659)7,760 nm
Total operating expenses$119,239 $116,545 $2,694 %
Total operating expenses for the three months ended March 31, 2024 were $119.2 million compared to $116.5 million for the three months ended March 31, 2023.
Research and development expenses for the three months ended March 31, 2024 were $34.6 million compared to $43.8 million for the three months ended March 31, 2023. The decrease was primarily due to lower personnel-related expenses of $6.0 million, including stock-based compensation expense of $2.3 million, and lower content creation costs of $2.7 million.
Sales and marketing expenses for the three months ended March 31, 2024 were $57.6 million compared to $52.9 million for the three months ended March 31, 2023. The increase was primarily due to an increase in marketing and advertising expenses of $4.0 million.
General and administrative expenses for the three months ended March 31, 2024 were $24.9 million compared to $25.5 million for the three months ended March 31, 2023. The decrease was primarily due to a reduction of value-added tax expense of $2.7 million. Prior to November 2023, such taxes, as applicable to our Consumer revenue, were paid by Coursera to the taxing authorities. Whereas, these taxes are now included in the fees charged to and paid by learners. This reduction was partially offset by higher personnel-related expenses of $1.1 million.
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Restructuring related charges for the three months ended March 31, 2024 were $2.1 million related to a plan implemented in January 2024 to restructure our Enterprise segment sales force compared to $(5.7) million for the three months ended March 31, 2023 primarily relating to the reversal of stock-based compensation expense for the forfeitures of RSUs and stock options resulting from our global workforce reduction initiated in November 2022. Refer to Note 14, “Restructuring Related Charges,” in the notes to our Condensed Consolidated Financial Statements (Unaudited) included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information.
Other Income (Expense)
Three Months Ended March 31,Change
20242023$%
(in thousands, except percentages)
Interest income, net$9,583 $8,037 $1,546 19 %
Other (expense) income, net(285)102 (387)nm
Total other income, net$9,298 $8,139 $1,159 14 %
Total other income, net for the three months ended March 31, 2024 primarily reflected interest income earned on cash and cash equivalents. Interest income was higher during the three months ended March 31, 2024 compared to the three months ended March 31, 2023 due to a rise in interest rates and our average rate of return on investments in U.S. Treasury securities. The fluctuations in other expense, net primarily reflect changes in unrealized foreign exchange losses and gains for the periods presented. Our operating expenses are typically denominated in the local currencies of the countries in which our operations are located and are subject to fluctuations due to changes in foreign currency exchange rates. We also hold cash and cash equivalents in foreign currencies, primarily in our foreign entities to support their ongoing operations.
Income Tax Expense
Three Months Ended March 31,Change
20242023$%
(in thousands, except percentages)
Income tax expense$812 $1,426 $(614)(43)%
Income tax expense for the three months ended March 31, 2024 and 2023 was primarily related to our foreign operations.
Liquidity and Capital Resources
Overview
As of March 31, 2024, our principal sources of liquidity were cash and cash equivalents totaling $725.4 million.
Since our inception, we have financed our operations primarily through proceeds from issuance of redeemable convertible preferred stock, our initial public offering completed in April 2021 (the “IPO”), and cash generated from our business operations. Our principal uses of cash in recent periods include the funding of our business operations, investments in our internal-use software, purchases of content assets, and repurchases of our common stock, as discussed below.
We believe that our existing cash and cash equivalents, and our expected cash flows from operations will be sufficient to meet our cash needs for at least the next 12 months. Over the longer term, our future capital requirements will depend on many factors, including our growth rate, the timing and extent of our sales and marketing and research and development expenditures, the continuing market acceptance of our offerings, and any investments or acquisitions we may choose to pursue in the future. In the event that we need to borrow funds or issue additional equity, we cannot assure you that any such additional financing will be available on terms acceptable to us, if at all. In addition, any future borrowings may result in additional restrictions on our business and any issuance of additional equity would result in dilution to investors. If we are unable to raise additional capital when desired and on terms acceptable to us, our business, results of operations, and financial condition could be materially and adversely affected.
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Contractual Obligations and Commitments
Except as discussed in Note 6, Leases, and Note 9, Commitments and Contingencies, in the notes to our Condensed Consolidated Financial Statements (Unaudited) included in Part I, Item 1 of this Quarterly Report on Form 10-Q, there were no material changes outside of the ordinary course of business in our commitments and contractual obligations for the three months ended March 31, 2024 from the commitments and contractual obligations in Management’s Discussion and Analysis of Financial Condition and Results of Operations”, set forth in our Form 10-K.
Share Repurchase Program
On April 26, 2023, our board of directors approved a share repurchase program with authorization to purchase up to $95 million of our common stock, excluding commissions and fees (the “Repurchase Program”). We may repurchase shares of common stock from time to time through open market purchases, in privately negotiated transactions, or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions. The Repurchase Program may be suspended or discontinued at any time and does not obligate us to acquire any amount of common stock.
We funded share repurchases under the Repurchase Program with our existing cash and cash equivalents. During the three months ended March 31, 2024, we repurchased an aggregate of 431,783 shares of our common stock for $6.0 million pursuant to a Rule 10b5-1 trading plan. As of March 31, 2024, we had $30.6 million, excluding commissions, remaining under the Repurchase Program, which has no expiration date and will continue unless otherwise suspended or discontinued.
In April 2024, we repurchased an aggregate of 1,135,280 shares of our common stock for $15.7 million pursuant to a Rule 10b5-1 trading plan and have $14.9 million, excluding commissions, remaining under the Repurchase Program as of the date of this filing.
Cash Flows
The following table summarizes our cash flows:
Three Months Ended March 31,
20242023
(in thousands)
Net cash provided by operating activities$24,450 $4,692 
Net cash provided by (used in) investing activities59,643 (50,540)
Net cash used in financing activities(15,051)(7,682)
Net increase (decrease) in cash, cash equivalents, and restricted cash$69,042 $(53,530)
Operating Activities
Cash provided by operating activities mainly consists of our net loss adjusted for certain non-cash items, including stock-based compensation expense and depreciation and amortization, as well as the effect of changes in operating assets and liabilities during each period. Operating cash is primarily sourced by customer payments and is primarily used to pay for personnel-related expenses, partner fees, marketing and advertising expenses, indirect taxes, and third-party cloud infrastructure expenses.
For the three months ended March 31, 2024, net cash provided by operating activities was $24.5 million, primarily resulting from improved operational leverage and working capital driven by (i) a decrease in accounts receivables primarily from an increase in cash collections and (ii) deferred revenue growth, partially offset by the payout of annual bonuses.
For the three months ended March 31, 2023, net cash provided by operating activities was $4.7 million, primarily resulting from (i) deferred revenue growth, (ii) an increase in payables related to content fees mainly resulting from the extension of a multi-year agreement with our largest educator partner, partially offset by an increase in accounts receivable primarily from invoice and collection timing.
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Cash provided by operating activities increased by $19.8 million during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily resulting from (i) improved operational leverage and (ii) a decrease in accounts receivables primarily from an increase in cash collections, partially offset by an increase in content fees payable to our largest educator partner resulting from the extension of our multi-year agreement with them.
Investing Activities
For the three months ended March 31, 2024, net cash provided by investing activities was $59.6 million, primarily as a result of proceeds from maturities of marketable securities, partially offset by capitalized internal-use software costs, purchases of content assets, and capital expenditures of property, equipment and software.
For the three months ended March 31, 2023, net cash used in investing activities was $50.5 million, primarily as a result of purchases of marketable securities, capitalized internal-use software costs, capital expenditures of property, equipment and software, and purchases of content assets, partially offset by proceeds from maturities of marketable securities.
Financing Activities
For the three months ended March 31, 2024, net cash used in financing activities was $15.1 million, primarily as a result of employee payroll taxes paid for vesting of RSUs and payments related to repurchases of common stock under the Repurchase Program, partially offset by proceeds from the issuance of common stock from employee stock option exercises.
For the three months ended March 31, 2023, net cash used in financing activities was $7.7 million, primarily as a result of employee payroll taxes paid for vesting of RSUs, partially offset by proceeds from issuance of common stock from employee stock option exercises.
Key Business Metrics and Non-GAAP Financial Measures
We monitor the key business metrics and non-GAAP financial measures set forth below to help us evaluate our business and growth trends, establish budgets, measure the effectiveness of our sales and marketing efforts, and assess operational efficiencies. These key business metrics and non-GAAP financial measures are presented for supplemental informational purposes only, should not be considered a substitute for financial information presented in accordance with GAAP, and may differ from similarly titled metrics or measures presented by other companies. A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure is provided in “Non-GAAP Financial Measures” below.
Key Business Metrics
Registered Learners
We count the total number of registered learners at the end of each period. For purposes of determining our registered learner count, we treat each customer account that registers with a unique email as a registered learner and adjust for any spam, test accounts, and cancellations. Our registered learner count is not intended as a measure of active engagement. New registered learners are individuals that register in a particular period. We believe that the number of registered learners is an important indicator of the growth of our business and future revenue trends.
Three Months Ended March 31,
20242023
(in millions)
New Registered Learners6.6 5.5 
March 31,
20242023
(in millions, except percentages)
Total Registered Learners148.5 123.7 
Total Registered Learners year-over-year (“YoY”) growth
20 %
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Number of Degrees Students
We count the total number of Degrees students for each period. For purposes of determining our Degrees student count, we include all the students that are matriculated in a degree program and who are enrolled in one or more courses in such a degree program during the period, including students enrolled within any wind-down or teach-out periods of any existing programs. If a degree term spans across multiple quarters, the student is counted as active in all quarters of the degree term. For purposes of determining our Degrees student count, we do not include students who are matriculated in the degree but are not enrolled in a course in that period. We believe that the number of Degrees students is an important indicator of the growth of our Degrees business and future Degrees segment revenue trends.
The Degrees student count is affected by the seasonality of the school class cycles, combined with the underlying growth interacting with those trends. For quarter-over-quarter fluctuations, the number of Degrees students fluctuates in part because the academic terms for each degree program often begin and/or end within different calendar quarters, and the frequency with which each degree program is offered within a given year varies. This metric is also subject to variation resulting from the addition or removal of degree programs over time.
Three Months Ended March 31,
20242023
(in thousands)
Number of Degrees Students22.218.1
YoY growth23 %
Paid Enterprise Customers
We count the total number of Paid Enterprise Customers that are active on our platform at the end of each period. For purposes of determining our customer count, we treat each customer account that has a corresponding contract as a unique customer, and a single organization with multiple divisions, segments, or subsidiaries may be counted as multiple customers. We define a “Paid Enterprise Customer” as a customer who purchases Coursera via our direct sales force. For purposes of determining our Paid Enterprise Customer count, we exclude our Enterprise customers who do not purchase Coursera via our direct sales force, including organizations engaging on our platform through our Coursera for Teams offering or through our channel partners. For the three months ended March 31, 2024, approximately 94% of our total Enterprise segment revenue was generated from our Paid Enterprise Customers. We believe that the number of Paid Enterprise Customers and our ability to increase this number is an important indicator of the growth of our Enterprise business and future Enterprise segment revenue trends.
March 31,
20242023
Paid Enterprise Customers1,4801,253
YoY growth18 %
Net Retention Rate for Paid Enterprise Customers
We disclose Net Retention Rate for Paid Enterprise Customers as a supplemental measure of our Enterprise revenue growth. We believe Net Retention Rate for Paid Enterprise Customers is an important metric that provides insight into the long-term value of our subscription agreements and our ability to retain and grow revenue from our Paid Enterprise Customers.
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We calculate annual recurring revenue (“ARR”) by annualizing each customer’s monthly recurring revenue (“MRR”) for the most recent month at period end. We calculate “Net Retention Rate” for a period by starting with the ARR from all Paid Enterprise Customers as of the 12 months prior to such period end, or “Prior Period ARR”. We then calculate the ARR from these same Paid Enterprise Customers as of the current period end, or “Current Period ARR”. Current Period ARR includes expansion within Paid Enterprise Customers and is net of contraction or attrition over the trailing 12 months but excludes revenue from new Paid Enterprise Customers in the current period. We then divide the total Current Period ARR by the total Prior Period ARR to arrive at our Net Retention Rate for Paid Enterprise Customers. Our Net Retention Rate for Paid Enterprise Customers decreased to 94% as of March 31, 2024 from 104% as of March 31, 2023, mainly due to a reduction in the value of renewal and expansion contracts. Our Net Retention Rate for Paid Enterprise Customers is expected to fluctuate in future periods due to a number of factors, including the growth of our revenue base, the penetration within our Paid Enterprise Customer base, expansion of products and features, and our ability to retain and expand our Paid Enterprise Customers.
Three Months Ended March 31,
20242023
Net Retention Rate for Paid Enterprise Customers94 %104 %
YoY change(10)%
Segment Revenue
We generate revenue from three reportable segments: Consumer, Enterprise, and Degrees.
Three Months Ended March 31,
20242023
(in thousands, except percentages)
Consumer revenue$96,743 $82,029 
YoY growth18 %
Enterprise revenue$57,494 $52,173 
YoY growth10 %
Degrees revenue$14,831 $13,440 
YoY growth10 %
Total revenue$169,068 $147,642 
YoY growth15 %
Segment Gross Profit
We monitor segment gross profit as a key metric to help us evaluate the financial performance of our individual segments. Segment gross profit represents segment revenue less content costs paid to educator partners; segment gross margin is the quotient of segment gross profit divided by segment revenue. Content costs only apply to the Consumer and Enterprise segments as there is no content cost attributable to the Degrees segment. Instead, in the Degrees segment, we earn a Degrees service fee based on a percentage of the total online student tuition collected by the university partner. Given that content costs are the largest individual cost of our revenue, and that these costs contractually vary as a percentage of revenue between our Consumer and Enterprise offerings while there are no content costs attributable to our Degrees offering, mix shifts between our three segments is expected to be a significant driver of our overall gross margin, financial performance, and profitability.
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Three Months Ended March 31,
20242023
(in thousands, except percentages)
Consumer gross profit$51,774 $44,617 
Consumer segment gross margin %54 %54 %
Enterprise gross profit$39,130 $34,970 
Enterprise segment gross margin %68 %67 %
Degrees gross profit$14,831 $13,440 
Degrees segment gross margin %100 %100 %
Consumer segment gross margin remained at 54% in the three months ended March 31, 2024 and 2023. Enterprise segment gross margin slightly increased to 68% from 67% when comparing those same periods driven by a lower revenue content cost rate.
Non-GAAP Financial Measures
Non-GAAP Gross Profit, Non-GAAP Net Income (Loss), and Non-GAAP Net Income (Loss) Per Share
We define non-GAAP gross profit and non-GAAP net income (loss) as GAAP gross profit and GAAP net loss excluding the impact of stock-based compensation expense, amortization of stock-based compensation capitalized as internal-use software costs, payroll tax expense related to stock-based compensation, and restructuring related charges. Non-GAAP net income (loss) per share is calculated by dividing non-GAAP net income (loss) by the diluted weighted average shares of common stock outstanding. We believe the presentation of these adjusted operating results provides useful supplemental information to investors and facilitates the analysis and comparison of our operating results across reporting periods.
The following tables provide a reconciliation of GAAP gross profit and GAAP net loss, the most directly comparable GAAP financial measure, to non-GAAP gross profit and non-GAAP net income (loss):
Three Months Ended March 31,
20242023
(in thousands)
Gross profit$89,497 $77,468 
Stock-based compensation expense659 877 
Amortization of stock-based compensation capitalized as internal-use software costs1,477 1,169 
Payroll tax expense related to stock-based compensation46 50 
Non-GAAP gross profit$91,679 $79,564 
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Three Months Ended March 31,
20242023
(in thousands)
Net loss$(21,256)$(32,364)
Stock-based compensation expense27,857 30,330 
Amortization of stock-based compensation capitalized as internal-use software costs1,477 1,169 
Payroll tax expense related to stock-based compensation1,741 1,363 
Restructuring related charges2,101 (5,659)
Non-GAAP net income (loss)$11,920 $(5,161)
Weighted-average shares used in computing net loss per share—basic156,379,409148,974,454
Effect of dilutive securities(1)
11,925,056— 
Weighted-average shares used in computing non-GAAP net income (loss) per share—diluted168,304,465148,974,454
Net loss per share—basic and diluted$(0.14)$(0.22)
Non-GAAP net income (loss) per share—diluted$0.07 $(0.03)
(1) For periods presented with a non-GAAP net loss, we have excluded the effect of potentially dilutive securities as their inclusion would be anti-dilutive.
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA and Adjusted EBITDA Margin are key measures used by our management to help us analyze our financial results, establish budgets and operational goals for managing our business, evaluate our performance, and make strategic decisions.
We define Adjusted EBITDA as our net loss excluding: (i) depreciation and amortization; (ii) interest income, net; (iii) income tax expense; (iv) other expense (income), net; (v) stock-based compensation expense; (vi) payroll tax expense related to stock-based compensation; and (vii) restructuring related charges. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue.
The following table provides a reconciliation of net loss, the most directly comparable GAAP financial measure, to Adjusted EBITDA:
Three Months Ended March 31,
20242023
(in thousands, except percentages)
Net loss$(21,256)$(32,364)
Depreciation and amortization6,356 5,511 
Interest income, net(9,583)(8,037)
Income tax expense812 1,426 
Other expense (income), net285 (102)
Stock-based compensation expense27,857 30,330 
Payroll tax expense related to stock-based compensation1,741 1,363 
Restructuring related charges2,101 (5,659)
Adjusted EBITDA$8,313 $(7,532)
Net loss margin(13)%(22)%
Adjusted EBITDA Margin%(5)%
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Free Cash Flow
Free Cash Flow is calculated as net cash provided by operating activities, less cash used for purchases of property, equipment and software, capitalized internal-use software costs, and purchases of content assets as we consider these capital expenditures necessary to support our ongoing operations. Current and prior period Free Cash Flow amounts reported herein reflect the change to our definition of Free Cash Flow to include purchases of content assets.
We consider Free Cash Flow to be a liquidity measure that provides useful information to management and investors in understanding and evaluating our liquidity and future ability to generate cash that can be used for strategic opportunities, including investing in our business and strengthening our balance sheet, but it is not intended to represent the residual cash flow available for discretionary expenditures.
The following table provides a reconciliation of net cash provided by operating activities, the most directly comparable GAAP financial measure, to Free Cash Flow:
Three Months Ended March 31,
20242023
(in thousands)
Net cash provided by operating activities$24,450 $4,692 
Less: purchases of property, equipment, and software(134)(298)
Less: capitalized internal-use software costs(4,070)(2,862)
Previously reported Free Cash Flow1,532 
Less: purchases of content assets(2,153)(624)
Free Cash Flow$18,093 $908 
Critical Accounting Estimates
Our Condensed Consolidated Financial Statements (Unaudited) and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The preparation of these Condensed Consolidated Financial Statements (Unaudited) requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Actual results may differ from these estimates. To the extent that there are material differences between these estimates and our actual results, our future financial statements will be affected.
There have been no material changes to our critical accounting estimates as compared to those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in our Form 10-K.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We have operations both within the U.S. and internationally, and we are exposed to market risks in the ordinary course of our business, including the effects of interest rate changes and foreign currency fluctuations. Information relating to quantitative and qualitative disclosures about these market risks is described below.
Interest Rate Risk
Our exposure to interest rate changes relates primarily to our investment portfolio. Although we are exposed to global interest rate fluctuations, U.S. interest rate fluctuations tend to affect our interest income the most, impacting the interest earned on our cash, cash equivalents, and marketable securities as well as the fair value of those securities.
Our investment policy and strategy are focused on preserving capital and supporting our liquidity requirements. We use a combination of internal and external management to execute our investment strategy and achieve our investment objectives. We typically invest in highly-rated securities, such as U.S. Treasury securities, with original maturities between three months and one year. Our primary objective is to minimize the potential risk of principal loss.
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Based on our investment positions as of March 31, 2024 and 2023, a hypothetical 100 basis point increase in interest rates across all maturities would have resulted in a $0.5 million and $2.2 million incremental decline in the fair value of the portfolio. Such losses would only be realized if we sold the investments prior to their maturities.
Based on the balance of our cash, cash equivalents, and marketable securities as of March 31, 2024 and 2023, a hypothetical 100 basis point increase or decrease in interest rates would have resulted in a $7.3 million and $7.8 million increase or decrease in our interest income on an annualized basis.
Foreign Currency Risk
Our reporting currency and the functional currency of our wholly owned foreign subsidiaries is the U.S. dollar. As the majority of our sales are denominated in U.S. dollars, our revenue is not typically exposed to significant foreign currency risk. Conversely, our operating expenses are typically denominated in the local currencies of the countries in which our operations are located. These can be subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the British pound sterling, Canadian dollar, and Indian rupee.
We also maintain foreign-currency denominated cash and cash equivalents in our foreign entities to support their ongoing operations. Fluctuations in foreign currency exchange rates may cause us to recognize transaction gains and losses in our Condensed Consolidated Statements of Operations (Unaudited). To date, we have not entered into any hedging arrangements with respect to foreign currency risk or other derivative financial instruments, although we may choose to do so in the future. A 10% increase or decrease in current exchange rates would have resulted in an impact of $0.5 million and $0.9 million on our Condensed Consolidated Financial Statements (Unaudited) for the three months ended March 31, 2024 and 2023.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, that are designed to ensure information required to be disclosed in our reports that we file or furnish pursuant to the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer), as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As required by 13a-15(b) under the Exchange Act, we carried out an evaluation, under the supervision and the participation of our management, including our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer), of the effectiveness of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and 15d-15(e) promulgated under the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Inherent Limitations on Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings
See discussion of legal proceedings in Note 9, “Commitments and Contingencies,” in Item 1 of Part I of this Quarterly Report on Form 10-Q (“Form 10-Q”), which is incorporated by reference into this Item 1 of Part II.
Item 1A. Risk Factors
Our business is subject to numerous risks, as more fully described in the section entitled “Risk Factors” below and elsewhere in this Form 10-Q. In particular, risks associated with our business include, among others, the following, any of which could have an adverse effect on our business, financial condition, results of operations, or prospects:
Our historical growth may not be indicative of our current or future growth;
Fluctuations in our quarterly and annual revenue and operating results could cause our stock price to fluctuate and the value of your investment to decline;
Our limited operating history makes it difficult to predict our future financial and operating results;
The nascency and market adoption of online learning solutions and generative AI, which may not grow or evolve as we expect or lead to increased demand for our offerings;
Changes in contractual terms with our educational partners, including with respect to pricing or contract length, could materially and adversely affect our business, financial condition, and results of operations;
Our ability to maintain and expand our partnerships with our university and industry partners;
Our ability to attract and retain learners;
Our ability to manage the growth of our business both in terms of scale and complexity;
Changes in our contract terms, including our pricing models, for our offerings, which in turn could impact our operating results;
Our learners’ expansion beyond our freemium offerings and free trials available on our platform;
Our ability to successfully expand our international operations, including growing our worldwide educator partner and learner base, and to manage the risks presented by such operations;
Our ability to launch new offerings and services to learners to grow our business;
We have incurred significant net losses since inception, and we may not achieve or maintain profitability in the future;
Our ability to generate sufficient revenue from a new offering to offset our costs of the offering;
Our ability to compete effectively;
Our and our educator partners’ ability to comply with international, federal, and state education laws and regulations, including applicable state authorizations for their programs;
Our educator partners’ ability to obtain timely approval from applicable regulatory agencies to offer new programs, make substantive changes to existing programs, or expand programs into or within certain jurisdictions;
Any changes to the validation or applicability of the United States (“U.S.”) Department of Education “Dear Colleague” Letter (“DCL”), on which our business model relies;
Our educator partners’ ability to maintain institutional or programmatic accreditation for their programs;
Changes in laws, regulations, accounting principles, or government spending policies or budget priorities that impact our business;
Any disclosure of sensitive information about our partners, their employees, or our learners, whether due to cyberattack or otherwise;
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Any failure to obtain, maintain, protect, and enforce our intellectual property (“IP”) and proprietary rights and successfully defend against claims of infringement, misappropriation, or other violations of third-party IP;
Any disruption or failure of our platform or operations, including as a result of geopolitical crises, natural disasters, public health crises, or other catastrophic events;
Litigation or regulatory proceedings could adversely impact our business and financial condition, including exposing us to significant monetary damages or limiting our ability to operate our business; and
Risks related to our status as a Delaware public benefit corporation (“PBC”) or Certified B Corporation that may negatively impact our financial performance or reputation.
Risks Related to Our Business and Industry
Our historical growth may not be indicative of our future growth, and our revenue growth rate may decline compared to prior years.
Our historical growth may not be indicative of our future growth, and our revenue growth rate may decline compared to prior years. Accordingly, you should not rely on our revenue for any previous annual or quarterly period as any indication of our revenue or revenue growth in future periods. As we grow our business, we expect our revenue growth rates to decline compared to prior years for a number of reasons, which may include more challenging comparisons to prior periods as our revenue grows, slowing demand for our platform or offerings, slowing growth of our sales, increasing competition, increasing regulation, a decrease in the growth of our overall market or market saturation, and our failure to capitalize on growth opportunities. In addition, our growth rates are likely to experience increased volatility, and may decline, due to inflation and currency and interest rate fluctuations, the world's recovery from the COVID-19 pandemic, and related shifts in societal and economic circumstances.
Our quarterly and annual revenue and operating results have fluctuated from period to period and may do so in the future, which could cause our stock price to fluctuate and the value of your investment to decline.
Our quarterly and annual revenue and operating results have historically fluctuated from period to period, and our future operating results may vary significantly from quarter to quarter due to a variety of factors, many of which are beyond our control. You should not rely on period-to-period comparisons of our operating results as an indication of our future performance. Factors that may cause fluctuations in our quarterly operating results include, but are not limited to, the following:
our ability to maintain existing customers and attract new customers, including businesses, governmental organizations, and educational institutions that subscribe to our Enterprise platform, as well as learners who access the content and credentialing programs available on our platform;
our ability to continue to offer compelling content and degrees or other credentialing programs created by our industry and university partners;
changes in, or trends affecting, subscriptions to our Enterprise platform from businesses, governmental organizations, and educational institutions;
changes in, or trends affecting, learner enrollment and retention levels, including with respect to learners electing to access our paid offerings;
our ability to increase and manage the growth of our international operations, including our international customer base, and our ability to manage the risks associated therewith;
the timing of our costs incurred in connection with the launch of new course content and offerings and new certification, degree, or other credentialing programs, and the timing and amount of revenue we generate from new offerings and programs or as a result of the pricing models and payment terms, or changes to the pricing models or payment terms, associated with our offerings and programs;
trends and factors impacting the demand for, and acceptance of, online learning and credentialing programs and the prices consumers and businesses are willing to pay for such programs;
changes in, or trends affecting, the mix of partners, including educational institutions, offering open online courses only and those offering certification, degree, or other credentialing programs;
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