Coursera celebrated a remarkable achievement in the third quarter of 2024 with its consumer division exceeding $100 million in revenue for the first time. However, this landmark success was shadowed by the company’s growing caution regarding its annual outlook.
As the year began, Coursera projected optimism in February 2024. However, each subsequent earnings report told a more sobering story, climaxing in recent news that led to a nearly 20% stock price plunge overnight and a 10% reduction in the workforce. At the time of this writing, Coursera’s market cap stood at approximately $1.08 billion.
| Announcement Date | 2024 Revenue Forecast |
| Q4 2023 (Feb) | $730-740 million |
| Q1 2024 (April) | $695-705 million |
| Q2 2024 (July) | $695-705 million |
| Q3 2024 (October) | $690-694 million |
In May, during an earnings call, Coursera revised its revenue projections down by $35 million, resulting in a 15% drop in stock to a record low. This prompted a reorganization of the leadership structure, including streamlining top positions to allow division leaders to report directly to the CEO.
What challenges is Coursera facing, preventing it from hitting its targets? Analyzing the earnings call transcript uncovers two primary reasons.
Firstly, although enrollment, especially in AI courses, is robust with 7 million new learners this quarter, retention rates have declined. Fewer renewals are occurring, particularly outside North America, leading to shorter subscription durations and less revenue than anticipated from new courses.
Secondly, Coursera’s enterprise services for businesses and governments are still adjusting from pandemic-related spending surges, with government online learning programs scaling back. The net revenue retention rate fell to 89%.
Budget Trimming Across the Online Learning Industry
Like Coursera, competitor Udemy adjusted its operations recently, cutting 20% of its workforce, approximately 280 jobs. Both companies used similar corporate language to explain their strategies, emphasizing terms like “resource reallocation” and “flattening organizational structures.”
This is not Coursera’s initial experience with workforce reductions. Its last significant layoff occurred two years ago, prior to the rise of AI, to curb expenditure. Today, Coursera experiences six new enrollments per minute in AI courses.
With a workforce of 1,295 at the close of 2023, the latest 10% cut affects around 150 employees, with anticipated savings of $30 million per year.
Insights from Coursera’s Third Quarter of 2024
Despite hurdles, Coursera’s Q3 revenue rose 6% year-over-year to $176.1 million. Segment-wise performance includes:
| Q1 2024 | Q2 2023 | Q3 2024 | |
| Consumer | $96.7M | $97.3M | $102.3M |
| Enterprise | $57.5M | $58.7M | $60.4M |
| Degrees | $14.8M | $14.3M | $13.4M |
| Total | $169.1M | $170.3M | $176.1M |
The consumer sector achieved a milestone, surpassing $100 million for the first time. Enterprise revenue followed a steady incline, reaching $60.4 million.
The degrees division displayed unique dynamics; even as revenue dipped to $13.4 million, the student base grew 29% year-over-year to 26,400, bolstered by new cohorts in emerging Indian program markets.
Additionally, Coursera generated $17 million in free cash flow, concluding the quarter with $719 million in cash reserves, providing considerable financial resilience amid current challenges.
