started. My name is Jason Celino. I'm the vertical software and EdTech analyst here at KeyBanc. I have the greatest of pleasure of introducing Coursera's CFO, Ken Hahn, today. This is my first presentation this morning, so nice to get it out of the way. Maybe, Ken, just to start, you know, for the people in the audience on the webcast who don't quite know the Coursera story, do you want to just give us a quick intro of yourself and the company? Sure. I'm Ken Hahn. I'm Coursera's CFO, been with the company three and a quarter years ago. We've been public since March of 2020. At the highest level, what we do is we deliver educational content from the top universities and from the best industry brands to our learners via 3 channels. One is the consumer business, the second is enterprise business, which includes corporate, government, and campus, and then finally, the degrees channel. We deliver that content from those partners to those 3 different channels. Okay, perfect. I think how we'll try to tackle it is go from your different segments, you know, starting with consumer first. This business this year has been pretty strong. Mm-hmm. Maybe can we just start there and talk about the resiliency and kind of trends we're seeing? Sure. The consumer business has been great for us. We've continued to grow at a healthy pace. A lot of that has been the professional certificates that we offer through industry partners. We have 42 today that have launched, will be more than 50 by the end of the year. Just exceptional brands and job-ready skills. What they do is they prepare somebody from not knowing a topic to being job ready. These aren't college-level jobs, and they've been a tremendous hit. We think they're gonna be very important in a couple of different respects. One, as we continue to see change, and I think especially around AI, it plays well into that. We didn't know that when we launched all these. Just from an employability and breaking down the learning blocks to make them highly job relevant. The second piece of them that's been really interesting is they've been an entrée into the universities, into the degrees themselves. A number of our degree partners, a number of the universities are accepting these courses as credit, which is great for them as well because it makes their degrees more job ready and pragmatic. It's really bolstered. We've nailed it. That's been on a streak for a couple of years now. We continue to add. It's worked well, it's rinse and repeat, and it leverages a lot of different aspects of our business, the way we compete strategically. it leverages-- we have the biggest consumer base out there, our registered learner base, and it leverages the content that we use in all three verticals. Perfect. It's been really nice to see those results over the last couple of years. Awesome. With these, entry-level, job-ready for, certifications, when we think about the different subject areas they're in and the companies that you're partnering with, do the companies look at it from, like, a recruiting standpoint, or how do they kind of approach it? Yeah, it's a great question, and it's a couple of different things they look at. Some of these, a lot of them are the large tech players, so a lot of it is, is their brand and their platform. The types of job roles that they comprise aren't necessarily related to the technology itself. You know, Google has a project management one, and really, they're just recognized consumer brands. A lot of them are directly related, but it's when the brand is viewed as expert in a field. Salesforce and sales development reps, SDRs, is a great example. You know, you have backend and front-end developers for Facebook, but you also have digital marketing from Facebook. It's a mix of the two. The value to the consumer is a recognized brand that they can put on their LinkedIn or put on their resume. An employer would look at that and would think, "I think Google knows a thing or two about project management, or Facebook knows backend engineering." They're, they're helpful from that standpoint, but from, again, from the content provider standpoint, it's numerous things. It's brand, it's employment, sometimes it's ecosystem, if it is training people on the platform, which is extraordinarily important. For some, it's revenue, but that's a smaller portion of it from their services groups that they'll have to look at as a revenue source. It's real revenue, to be clear, but that's not the primary focus. For most of them, it's brand and it's platform for them. It's not all tech. There's we're growing the group substantially across the board, consumer, healthcare. It has worked very well for us, and it's continuing to work, and, we point to all the success we've had. You know, great brand begets great brand, too. Mm-hmm. We're a safe brand, and that's an important aspect for us to continue to move... Okay ... portfolio forward. Excellent. I've got kind of a funny story. One of my colleagues, another sell-side analyst at KeyBanc, I'm not going to name which one, he came to me and he's like: "Hey, I know you cover these EdTech companies. I'm trying to learn more about AI. Do you have any recommendations?" Have you seen any uplift to your consumer business from people wanting to learn about AI? We have. We've been putting more content out there. We have, you know, Andrew Ng, who is our founder, chairman. His course is out there. He's one of the world experts in AI, so certainly we've seen pick up there. I think we're going to see more going forward. The secondary effect of AI, well, firstly, to step back, the biggest thing driving education broadly is change. When there's a lot of change around required skills, which that started with the pandemic, right? The pandemic was interesting for us because people were locked in, and so a lot of them did education because they had time on their hands. More importantly, it changed the rate of change in the marketplace to remain job relevant. We really believe that's one of the reasons we've done so nicely since we've been public, you know, and since the pandemic started. AI, we believe, is much the same. It's going to create a lot of change. Both the topic of AI itself is interesting, and people, we've seen uplift there on AI-specific topics, but I think it's going to bring up across the board our educational content, because AI isn't a standalone thing, right? It's related to some area of subject matter that you need to be somewhat expert in to apply AI. We think it's going to change a number of fields and require updates and knowledge and learning. We've seen some uplift is the answer, and we do expect more over the coming years as it really. Right now, we're still a little bit in the hype stage. Sure. It's real, but we think it's going to become more real and affect people's... Okay outlook on skills and job readiness. I'll follow up with my colleague to see if he ended up taking any of those courses. I'm doing Andrew's course now, and we'll see. I probably shouldn't announce that publicly. It's the calculus is, is something that I haven't done since college, but- Oh, sure. It's impressive. Apparently, they teach long division differently now, too, so- Yeah. Yeah. Maybe switching subjects a little bit to enterprise. I know it's been a, a tough selling environment from all budgetary aspects across enterprise software. Maybe can you just provide some updates on what you're seeing? Yeah, maybe start there. Sure. Our enterprise business comprises three different verticals. This is unlike some of the other players in the space. We just compete a little bit differently. Ours is, I'd say, premium product, which is not to be comparatively negative to the competition, but it's just a different. They're more robust, longer-form learning. The as we look at corporate, which is a bit more than half of ours, the Coursera for Business, that's come under a lot of budget pressure, and people in the space have noticed it. People are talking about it broadly. It's just where budgets are being pulled. That, in my opinion, that's real, and corporate budgets are real. We also need to perform better. There's room for us to do better with what we have. Again, that's a bit more than half the business, as we talked about it. My CEO, Jeff Maggioncalda, on the conference call that was just last week, talked about the fact that Coursera for Government and Coursera for Campus is now, you know, more than a quarter. It's between a quarter and a half of the business. Those two have been a lot less affected, and Coursera for Government, it's just the government vertical, but we're kind of uniquely positioned there. If you think about how I talk about the company, talked about it before, it's a great brand. Mm. That's where we started, both on the university side and the corporate side. It's job ready. That's what we do. It's longer form, real skills. If you're government, like we just signed last, last quarter, government of, of Kazakhstan, the whole country. Oh, wow. Right? If you're serving a whole population, there's states we've done that in the United States, there's numerous examples of whole countries. What do you want? You want great brand, right? Mm-hmm. If you're the president of a country, literally, that's who's rolling these things out, they're Departments of Education, and you want job-ready. That's what you're buying. That's continued to be robust, and we like our advantages there. We don't compete uniquely, but we compete relatively uniquely. On the Coursera Campus front, that's been interesting as some of the schools when we license the product for all students, which a lot of the schools like, because again, it's that job-ready aspect, and the students like it, and for their professors. The more interesting case there is where they're actually taking and making it part of their curriculum, because with a lot of these, we've taken these programs, and we have them ACE recommended for college credit. When you combine that, again, as part of the degree, it overlaps with our degree strategy, it's been fairly robust. For the longest time, we've talked about that as seeking product-market fit, because what I just described was our strategy going in. We didn't know it would take for sure. It's very complicated, and we're seeing good results. Those two verticals within enterprise are doing pretty well, and we compete differently. The business side of it, Coursera for Business, remains under pressure... Mm-hmm ... with budgets, but again, we, we just, we need to do better on that side. Okay. On the Coursera for Business side- Mm-hmm is there any way to think about, data points that we should be paying attention to or how to think of stabilization? We, at KeyBanc, we do a lot of survey work. We do an enterprise survey twice a year, and, skilling has been in kind of the bottom quartile, but in the most recent survey we did, it was toward the middle, so, you know, off the bottom. Are there any other data points, or, or how would you think about, kind of stabilization or recovery in that? Sure. you know, the metric we use around that is NRR. Mm-hmm. We use it for the overall business. We don't break it down by vertical, but we had color on the call because it's important to understand the business, and for sure, Coursera for Business was the weakest amongst the NRR. We don't directly forecast the operating metrics that we disclose. It'd just be too many metrics. You'd get it wrong too often. Mm-hmm ... it would cause problems, but it's useful for people to look at. I wouldn't say we have a sense it's getting better necessarily, but I don't have the sense it's getting worse either. We'll see how the rest of the year pans out at some point. Again, the more important thing is we figure out how to execute and add more value. That's really where we're focused. It's not holding our breath and waiting for a cycle to get better. It's certainly relevant, and then continuing to emphasize the other two verticals there so. Okay. Yeah, it feels fine. I'd like if we were doing better, and hopefully, we get to talk about that more in the coming couple of quarters. Yep. Okay, perfect. Then switching to degrees, I know this is a segment that you and Jeff have been very excited about over the last couple of years. Maybe can you just frame some developments over the last 12 months and any changes that to that? Sure. Well, you, you were with us at the IPO, so you had a view of all our pre-public models, which for those of you who don't know, you're allowed to share with your analysts. I mean, as soon as you're public, they can't go anywhere near it. We're barely allowed to talk to you. The, but you'll remember those models were growing quite rapidly on the degrees side. You know, overall, from the business, looking back two years ago, I think we're almost on all the numbers we had, but the mix has been very different. The degrees part, we didn't get it right out of the gates. Our historic model was these premium brands, a lot of them master's degrees, and the schools priced them like regular degrees. Those are great. They're still. It's a good part of our business, but it is not the emphasis going forward. We continue to sign those up, to be clear. It's good value add, but a lot more of it has been around these pathway degrees, and we do think, you know, we have the first ones coming live this fall. What those are is it's essentially better ROI for the student, better bang for the buck. It's subject matter, where you get increases in human capital, you know, at least equivalent to what you're spending on it. Think, you know, where we're expert, of course, is where we start, computer science, engineering. You get it right priced, right? Mm-hmm. Yeah, this is especially true of programs below the top 30 or top 50, a lot of which are the same as, as the ultra-premium elite schools. Those numbers don't work for a lot of students over time. It's why we have issues with Title IV funding, right? Because it doesn't pay it back. The degree you got doesn't pay it back. It's working more broadly to deliver these at scale, and then it's leveraging what we've always done on the degree side, our huge consumer base, for the top of funnel, for the marketing, for securing those degree students, which is the hardest part of doing degrees. We've launched those programs. We've been out finding those programs. There's a few we've announced so far. We're starting the first ones now, so that coming this fall quarter, at the next earnings call, we'll talk about the student cohorts. Okay. That'll be the first indication. From what we can see right now, it's working. We, you know, we're not there yet. Let me be very, very, very clear about that. We have the strong ones. We're not going to get in front of ourselves on it. We're really excited about it. It's what changes the world. It's our biggest market. It's delivering degrees at a price that makes sense. It is our biggest market. We have not, while we, through a period of time, have been working to figure out the strategy and, and reconnected, we've not shied away from that being our biggest market, which is a little bit taking on the chin, perhaps. Mm-hmm. We continue to communicate what we believe and what we're trying to do, whether we're succeeding or not. We're, you know, if fingers crossed, we start to have some really nice announcements around degrees in the coming, you know, quarters and couple of years. Okay. Maybe one last question on degrees, then we'll kind of move on to some of the- Sure ... financial stuff. They say imitation is the greatest form of flattery. Okay. I think one of your competitors has tried to recreate some of the flywheel effects that your platform has been successful at. I guess when we think about Coursera and Coursera's advantage, what gives you confidence, you know, in maintaining the cost leadership, innovation, and then if you've seen any changes in the competitive environment? Sure. The, you know, we, we have a bit of competition. You'd have to look in the different spaces. We compete kind of uniquely, certainly uniquely from an operational standpoint, but I guess from a communication standpoint, less so. You know, there's a big player in the enterprise space, which is a super high-quality company, which we have a lot of respect for, which is good, and it's important in the space. The space, over time, has had people who haven't been so disciplined and have shown issues. I really wish the space overall were better behaved. It would be helpful for us. Yeah, there, there's some people who've, who've started to talk about mimicking what we do. It's a lot harder to do than just having PowerPoint slides that look like ours. So, you know, delivering on the learner base is the first of our assets, and there's other people mimicking that. It's not silly, especially if you're doing degrees, because the top-of-funnel marketing is the most expensive part of it. That's in no way silly to do that. To really make it all come together with enterprise, it's hard. I mean, it's one of the things that's been a real challenge for us. You know, we're looking forward with, I think, the midpoint of our guidance is $620 for the year. You know, we're not a huge company, but we're not small. Even at this level, at, you know, at $620 top line, we're nowhere near scale. It's hard. Mm-hmm. Putting this all together, we believe, gives us huge competitive advantage as we get bigger, and it's what's going to enable degrees, frankly. If you think what I just described, a lot of that comes from consumer and to a lesser degree, from enterprise, to enable that strategy. No one quite does it the way we do. I think it's really, we have a lot to do to succeed performance-wise, but competition, just stealing our ideas, which, which can be a good thing. That's not a bad strategy. Mm-hmm ... let me be clear. There's a negative connotation with stealing. If someone can steal your ideas and out-educate- Oh, right. ... or out-execute, then- Flattery, right? Good for them. Exactly. Good for them. I, I think this, this is a, a huge level of complexity. I feel pretty good about our competitive position. Okay, great. I did want to touch on EBITDA. Yeah. I think we've seen some good improvement there. When we think about framework, I think over the last couple of years, you've kind of guided to a margin, then you've maintained that. On the most recent quarter, you actually increased the margin. Yeah. Maybe can you speak to, you know, what gives you confidence to, you know, to do that? Sure. Thank you for acknowledging the front end, which is the way we run the company and have since we were pre-public, is we pick an EBITDA margin target, and we drive towards that. If we overachieve on it. We try to spend down towards growth initiatives. It's how, it's how we've chosen to run a growth company, because we believe our shareholders will be best rewarded if we win in these markets. It's invest, invest, invest where you can and still make progress on your leverage, because it's really important to build a company that scales, right? That's, it's, at the end of the day, important. You know, growth first, make sure it's being built with leverage. For the first time, we actually upped our guidance on a margin standpoint, which I'm not sure I'm that excited about. It's good. The reasons for it is we just got too far ahead of it on the growth side. You know, we try to have numbers that we're gonna hit. You referred to it on the front end, the consumer's been particularly robust and durable. There's a little bit less visibility in the consumer model. It's an internet consumer business, right? By definition, it doesn't have the visibility of an enterprise business, right? An enterprise business, essentially an enterprise SaaS model with great visibility, and degrees even more so. You can look out on degrees. The consumer business, consumer internet business, it's a great business, but there's less visibility. We're feeling a lot more comfortable in the durability. As we've talked about, it's just been rinse, repeat. The growth has kind of overwhelmed our ability to-- we're not going to waste money- Sure ... to spend productively into that growth. We've been wanting to get to EBITDA break even, and it's been 900 basis points improvement in the 2 years. So we're excited to be there. We had said we were going to be there anyway for the, for the coming year, but we accelerated it by a quarter. We're, we're excited that we're showing growth plus leverage, which is... We talk about that internally. We beat it like a drum. It's growth plus leverage, that everything we're doing is building towards better profitability. Hopefully, we continue that exact- Yeah ... trend line, and it's, we're building, building a solid company. Yeah, I know a lot of companies have- Dominate ... done it well, done well, getting to break even. We've seen that shift over the last year. I guess, how should we think about your long-term potential and the pace to get there? Yeah, it'll, we start, we always start with growth, right? The most important thing is we win in these markets. If we were to deliver outstanding, like, over-the-top improvement in EBITDA next year and not grow, we're not very interesting as a company in stating the obvious. The important thing is we're doing the right things. This is a really, these markets we're in are enormous, and it's early, and the amount of strategic change is off the charts. How people consume education, the changes we're going to see in degrees and universities is going to be unbelievable. The breakdown in the unit of learning, we believe from degrees to job ready, we're at the beginning stages of pretty massive change in some of the largest markets in the world, you know, ever. Making sure we're doing the things to win in those markets while we're constantly getting better is our focus. Largely, we will figure out your answer in the near term. Sure ... as we go through our planning cycle for the coming year and, and the trade-offs it entails. We like to move, moving the profitability needle faster rather than slower, we prefer, but if it means sacrificing opportunity to win in the markets, we won't do that. Okay. We'll always get better, though. That's what we continue to commit to. Perfect. You'll always see us trending with leverage. Yep. I think there's only a couple of minutes left. I got a couple closing questions. This year, we're, we're trying to ask some of our panelists and fireside chat people kind of the same questions. One of them, you know, informal survey: If you think about exiting Q2 versus exiting Q1, yes or no answer, would you think that your business has improved? Yes. Okay. Then, two AI-related questions. Yeah. Yes or no, do you view generative AI as an opportunity for direct monetization in your business? Wow, only yes or no, no expansion. Yes or no. Yes! Okay. Yes, absolutely. And then- It's cheating. if you expect to monetize, do you expect that will be impactful in second half 2023, first half 2024? Whatever. I guess, how should we think about timing? We'll start to see some of it first half 2024, for sure, top line and bottom line. For us, there's, again, it changes the rate of change in the world, and so overall, it lifts all education companies. What it's going to do for us from a product standpoint to deliver value to our learners, which ultimately, it's create value, and then you figure out how you divide the spoils, essentially. Our ability through things like Coursera Coach, we think, to enhance the value of the learning environment, we think is off the charts. For anybody else in our space who figures out how to do that. I think it's a particularly bright time related to AI around education broadly, and I'm hopeful we're the leader. Okay in doing it. Perfect. Last question, favorite outdoor hobby? I love hiking, actually. Okay, great. I should get outside. I should have said hobby, because then maybe you could have talked about your pilot flying, but hiking is fine. Hiking, okay. Great. Well, I want to thank everyone for coming. I want to thank Ken, and hope everyone has a great rest of their time in Vail.