Coursera : Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

About this update from Coursera, Inc.

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, 2024 included in our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on February 24, 2025 ( " Form 10-K " ). This Quarterly Report on Form 10-Q ("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 "accelerate," "anticipate," "believe," "can," "continue," "could," "demand," "design," "estimate," "expand," "expect," "intend," "may," "might," "mission," "need," "objective," "ongoing," "outlook," "plan," "potential," "predict," "project," "should," "target," "will," "would," 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 and offerings; • the potential benefits of our solutions to learners and content creators; • anticipated launch dates of new content creator 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 manage ethical, transparency, and trust considerations associated with our AI technologies; • our plan to expand access for our AI-powered translations, Coach, Role Play, and Course Builder; • our ability to continue providing learners with the necessary skills for career development; • our ability to expand our platform's content and credentialing programs; • our ability to source new content creators and expand program offerings with existing content creators; • our ability to establish, maintain, and expand our content creator relationships, strategic partnerships, and collaborations; • our ability to navigate changes in content creator financial terms, including potential disruptions to partnerships and offerings; • our ability to manage or sustain our growth and to effectively expand our global customer base and operations; • our ability to drive adoption of our platform among Enterprise customers; • 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 successfully expand our international operations; • our ability to adapt to changing geopolitical dynamics and economic environments; • 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, settle, or otherwise resolve any current or future legal proceedings; • our ability to implement and maintain effective policies, procedures, and internal controls; • our ability to comply with potential changes in laws and regulations applicable to us or our content creators; • our expense reduction initiatives and their anticipated timing and impact; • our expectations regarding the sufficiency of our cash and financial resources to fund our operations over time; • our contractual obligations and commitments; • 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 operates a global online learning platform that connects an ecosystem of learners, content creators, organizations, and institutions. The platform offers high-quality educational content, credentials, and learning tools to support skills development and career advancement. We partner with over 375 content creators, including universities and industry organizations, to develop and distribute educational content that is modular, flexible, and affordable. As of September 30, 2025, the platform had approximately 191 million cumulative Registered Learners. Coursera offers a range of learning products to meet diverse educational and professional development needs, including Guided Projects, industry micro-credentials, and accredited degree programs. We continue to invest in platform capabilities to enhance and scale the delivery of online education. Recent innovations include generative AI-powered features such as Coach, Role Play, and Course Builder, as well as role-based solutions like Skills Tracks. These tools enable content creators and institutions to deliver targeted learning aligned with evolving workforce needs. Organizations across the public and private sectors use Coursera to upskill and reskill employees, students, and citizens in fields such as generative AI, data science, technology, and business. Coursera serves individual learners and institutional customers through two operating segments: Consumer and Enterprise. The Consumer segment focuses on attracting learners via branded content, institutional partnerships, and digital marketing, supported by personalized discovery and localized recommendations. The Enterprise segment engages employers, academic institutions, and government organizations through a direct sales team, as well as data-driven insights derived from activity on the Consumer platform. This approach enables Coursera to efficiently expand its reach, while delivering learning solutions and essential skills aligned with the evolving needs of both individuals and institutions. Key Financial Results for Third Quarter 2025 • Total revenue was $194.2 million, up 10% from $176.1 million a year ago. • Gross profit was $106.0 million, compared to $96.2 million a year ago. Non-GAAP gross profit was $108.0 million, compared to $98.1 million a year ago. • Net loss was $(8.6) million, compared to $(13.7) million a year ago. Non-GAAP net income was $16.7 million, compared to $16.6 million a year ago. • Net loss per share was $(0.05), compared to $(0.09) a year ago. Non-GAAP net income per share was $0.10, compared to $0.10 a year ago. • Adjusted EBITDA was $15.6 million, compared to $13.3 million a year ago. • Net cash provided by operating activities was $33.9 million, compared to $27.8 million a year ago. Free Cash Flow was $26.6 million, compared to $16.7 million a year ago. The foregoing highlights mention both GAAP and non-GAAP financial measures. For definitions of our non-GAAP financial measures and why we believe they are useful, please see "Non-GAAP Financial Measures" below. Organizational Updates and Strategic Realignment Leadership Transitions Effective February 3, 2025, our Board of Directors (the "Board") appointed Gregory Hart as our President, Chief Executive Officer ("CEO"), and a Class III director on our Board. Effective October 29, 2025, Kenneth Hahn resigned from his positions as Senior Vice President, Chief Financial Officer, and Treasurer, and transitioned to an advisory role for a one-year period. On October 30, 2025, our Board appointed Mr. Hart to also serve as our principal financial officer, which is expected to be on an interim basis. For additional information, refer to Note 1, Basis of Presentation and Description of Business , and Note 11, Employee Benefit Plans , both included in Part I, Item 1 of this Form 10-Q and Item 5, Other Information , included in Part II of this Form 10-Q. Reporting Segments Our chief operating decision maker ("CODM") is our CEO. In connection with Mr. Hart's appointment as our CEO, we simplified our business model and conduct our operations through two reporting segments: Consumer and Enterprise. This updated structure reflects how our CODM assesses performance and allocates resources to support our strategic and operational priorities. This segment reporting change does not impact our Enterprise segment or consolidated results. Prior-period segment information has been recast to conform to the current presentation. For additional information, refer to Note 13, Segment and Geographic Information , included in Part I, Item 1 of this Form 10-Q. Restructuring and Expense Reduction Initiatives During 2024 and the first quarter of 2025, in alignment with our efforts to refine our business strategy and hone our focus, we reduced our expenses and prioritized investments in key initiatives expected to drive long-term, sustainable growth. In January 2024, we implemented a plan to restructure our Enterprise segment sales force. Related cash payments approximated the expense amount for the period and are reflected as cash used in operating activities within our Condensed Consolidated Statements of Cash Flows. In October 2024, we announced a commitment to further reduce overall expenses, focus our efforts, and prioritize future investments in key initiatives that we expect will drive long-term, sustainable growth. This initiative resulted in a reduction of our global workforce by approximately 9%, creating capacity for targeted investments, as well as incremental profitability. As a result of these actions, we recognized restructuring related charges of $2.1 million during the nine months ended September 30, 2024. There were no restructuring related charges during the three months ended September 30, 2024. Related cash payments approximated the expense amount for the period and are reflected as cash used in operating activities within our Condensed Consolidated Statements of Cash Flows. During the nine months ended September 30, 2025, we recognized charges of $0.7 million, made cash payments of $5.2 million, and also recognized a reversal of stock-based compensation expense of $1.6 million due to the forfeiture of RSUs and stock options. There were no restructuring related charges during the three months ended September 30, 2025. Factors Affecting Our Performance Our business growth and future success depend on many factors. While these factors present opportunities for us, they also pose challenges that we must address to sustain growth and improve our results of operations. Ability to innovate our products. Central to our strategy is the continued innovation of our products. We aim to expand access to in-demand skills and high-quality education that supports career advancement by focusing on enhancing our platform's capabilities. This includes accelerating product development cycles, leveraging data-driven insights, and applying AI tools to improve the experience for learners, customers, and content creators across our platform. Ability to source in-demand content. We believe learners and customers are attracted to Coursera due to the quality, trust, and job-relevance of our wide selection of educational content provided by our content creators. We intend to accelerate our content development efforts, continuing to source and produce in-demand content and credentials to attract, convert, and retain learners and grow our revenue over time. These efforts are designed to address evolving skill requirements and support workforce development at scale in collaboration with our content creators. Ability to attract and retain trusted content creators. We believe our reach, scale, and reputation position us as a valuable partner for leading organizations and institutions seeking to develop and distribute content and credentials to a global audience. To remain a preferred platform for trusted content creators, we continue to invest in growing and engaging our learner base, enhancing the learning and authoring experience through AI-powered product innovations (e.g., Coach, AI translations, and Course Builder), and providing a suite of academic integrity features to verify skills mastery (e.g., identity verification and anti-plagiarism detection). Additionally, we are focused on providing personalized discovery, career guidance, and recommendations, increasing conversion into paid offerings through efficient marketing, and enhancing data-driven insights and tools for learners, content creators, organizations, and institutions. Ability to enhance our go-to-market capabilities. To grow our business, we must efficiently attract learners and customers, offer a compelling value proposition, and increase engagement and retention on our platform over time. Learners are central to our ecosystem, as their participation helps attract content creators who value our global reach. To increase engagement and retention, we are investing in platform capabilities that serve a broad audience. We aim to create a more unified and integrated experience through personalized recommendations, localized discovery, and clear value propositions that support learners' educational and career goals and help customers develop their workforces at scale. Impact of mix shift over time. The mix of our business between our Consumer and Enterprise segments shifts periodically, which can affect our financial performance. We typically incur content costs in the form of fees paid to our content creators, calculated as a percentage of net revenue generated from their content. In 2025, we began compensating our content creators based on learner engagement rather than enrollment rates. We expect this change to incentivize the development of more engaging content, support innovation in learning formats, and better align incentives across the diverse content types offered on our platform. Ability to convert free learners to paid learners. New learners often begin with free courses on our platform, which serve as a funnel to grow our learner base and generate referrals to paid offerings. We engage these learners through targeted marketing, personalized recommendations, and performance campaigns to highlight premium features and encourage conversion. Ability to grow in international markets. We see significant opportunity to grow our learner base, particularly in regions with large, underserved adult learning populations. As part of our growth strategy, we have invested and plan to continue investing in marketing, localized discovery, and translation efforts to support international growth and grow our global customer and learner base. We have adapted the front-end experience for Consumer learners, tailoring our pricing and checkout options, including offering local currency transactions in select markets. Our results will depend on our ability to effectively price and package our Consumer products to meet local demand and manage foreign currency risks. Ability to retain and expand our Enterprise customer relationships. Retaining and expanding usage within our existing Enterprise customer base, as well as attracting new customers, are critical drivers of our performance. The Enterprise market is highly competitive and subject to rapid changes driven by evolving customer needs, technological advancements, and shifting labor market dynamics. Emerging and evolving technologies, such as AI, may create opportunities for workforce training and upskilling, though the extent of their impact on demand for our platform remains uncertain. Our competitive position will be influenced by the strength of our product offerings, our pace of innovation, and our ability to deliver measurable outcomes for customers. 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 September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (in millions) Revenue $ 194.2 $ 176.1 $ 560.6 $ 515.5 Cost of revenue (1) 88.2 79.9 254.0 239.6 Gross profit 106.0 96.2 306.6 275.9 Operating expenses: Research and development (1) 30.0 31.6 88.8 99.9 Sales and marketing (1) 67.4 59.0 187.8 174.7 General and administrative (1) 24.2 27.3 76.0 81.9 Restructuring related charges (1) - - (0.9) 2.1 Total operating expenses 121.6 117.9 351.7 358.6 Loss from operations (15.6) (21.7) (45.1) (82.7) Interest income, net 8.3 9.3 24.1 28.2 Other income (expense), net (0.5) 0.2 (0.1) (0.1) Loss before income taxes (7.8) (12.2) (21.1) (54.6) Income tax expense 0.8 1.5 3.1 3.3 Net loss $ (8.6) $ (13.7) $ (24.2) $ (57.9) (1) Includes stock-based compensation expense as follows: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (in millions) Cost of revenue $ 0.6 $ 0.6 $ 1.9 $ 2.0 Research and development 8.5 10.1 26.0 32.0 Sales and marketing 5.3 5.8 15.7 22.2 General and administrative 8.6 8.7 29.0 26.9 Restructuring related charges - - (1.6) - Total stock-based compensation expense $ 23.0 $ 25.2 $ 71.0 $ 83.1 The following table summarizes our results of operations as a percentage of revenue: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Revenue 100.0 % 100.0 % 100.0 % 100.0 % Cost of revenue 45.4 45.4 45.3 46.5 Gross profit 54.6 54.6 54.7 53.5 Operating expenses: Research and development 15.4 17.9 15.8 19.4 Sales and marketing 34.7 33.5 33.5 33.9 General and administrative 12.5 15.5 13.6 15.9 Restructuring related charges - - (0.2) 0.4 Total operating expenses 62.6 66.9 62.7 69.6 Loss from operations (8.0) (12.3) (8.0) (16.1) Interest income, net 4.3 5.3 4.3 5.5 Other income (expense), net (0.3) 0.1 - - Loss before income taxes (4.0) (6.9) (3.7) (10.6) Income tax expense 0.4 0.9 0.6 0.6 Net loss (4.4) % (7.8) % (4.3) % (11.2) % Comparison of the Three and Nine Months Ended September 30, 2025 and 2024 Revenue Three Months Ended September 30, Change Nine Months Ended September 30, Change 2025 2024 $ % 2025 2024 $ % (in millions, except percentages) Revenue: Consumer $ 130.3 $ 115.7 $ 14.6 13 % $ 370.7 $ 338.9 $ 31.8 9 % Enterprise 63.9 60.4 3.5 6 % 189.9 176.6 13.3 8 % Total revenue $ 194.2 $ 176.1 $ 18.1 10 % $ 560.6 $ 515.5 $ 45.1 9 % Revenue for the three months ended September 30, 2025 was $194.2 million, an increase of $18.1 million, or 10%, compared to $176.1 million for the prior-year quarter. Revenue growth was primarily driven by an 18% increase in the average total number of Registered Learners, resulting in more paid learners, and a 10% increase in the average total number of Paid Enterprise Customers. This growth was partially offset by lower retention of paid learners and customers in both our Consumer and Enterprise segments globally. Consumer revenue for the three months ended September 30, 2025 increased by $14.6 million, or 13%, compared to the prior-year quarter. This increase was primarily driven by growth in subscription revenue from Coursera Plus, partially offset by a decline in direct purchases of Specializations. Enterprise revenue for the three months ended September 30, 2025 increased by $3.5 million, or 6%, compared to the prior-year quarter, attributable to an increase in new customers. Acquisitions of new customers drove an increase of $9.1 million, offset by a $5.6 million decrease due to contraction of existing customer spend. Revenue for the nine months ended September 30, 2025 was $560.6 million, an increase of $45.1 million, or 9%, compared to $515.5 million for the nine months ended September 30, 2024. Revenue growth was primarily driven by an 18% increase in the average total number of Registered Learners, resulting in more paid learners, and a 14% increase in the average total number of Paid Enterprise Customers. This growth was partially offset by lower retention of paid learners and customers in both our Consumer and Enterprise segments globally. Consumer revenue for the nine months ended September 30, 2025 increased by $31.8 million, or 9%, compared to the nine months ended September 30, 2024. This increase was primarily driven by growth in subscription revenue from Coursera Plus, partially offset by a decline in direct purchases of Specializations. Enterprise revenue for the nine months ended September 30, 2025 increased by $13.3 million, or 8%, compared to the nine months ended September 30, 2024, primarily attributable to an increase in new customers. Acquisitions of new customers drove an increase of $19.1 million, partially offset by a $5.8 million decrease due to contraction of existing customer spend. Cost of Revenue, Gross Profit, and Gross Margin Three Months Ended September 30, Change Nine Months Ended September 30, Change 2025 2024 $ % 2025 2024 $ % (in millions, except percentages) Cost of revenue $ 88.2 $ 79.9 $ 8.3 10 % $ 254.0 $ 239.6 $ 14.4 6 % Gross profit $ 106.0 $ 96.2 $ 9.8 10 % $ 306.6 $ 275.9 $ 30.7 11 % Gross margin 54.6 % 54.6 % 54.7 % 53.5 % Cost of revenue for the three months ended September 30, 2025 was $88.2 million compared to $79.9 million for the prior-year quarter. The primary driver of the increase was revenue growth, which resulted in an increase of $4.8 million in content-related costs and higher support services expenses and credit card processing fees of $2.3 million. Content costs for the Consumer segment were $50.6 million and $47.0 million for the three months ended September 30, 2025 and 2024, with content costs as a percentage of revenue of 38.8% and 40.6% for the same periods. Content costs as a percentage of revenue for the Consumer segment decreased due to higher learner engagement in content created under production arrangements with lower revenue share. Content costs for the Enterprise segment were $19.4 million and $18.1 million for the three months ended September 30, 2025 and 2024, with content costs as a percentage of revenue of 30.4% and 30.0% for the same periods. Content costs as a percentage of revenue for the Enterprise segment increased due to a one-time benefit from a significant contract that was enrolled in lower-cost content during the three months ended September 30, 2024. Gross margin was 54.6% for both the three months ended September 30, 2025 and 2024. Cost of revenue for the nine months ended September 30, 2025 was $254.0 million compared to $239.6 million for the nine months ended September 30, 2024. The primary driver of the increase was revenue growth, which resulted in an increase of $8.3 million in content-related costs. Additionally, amortization expense of content assets increased by $3.8 million. Content costs for the Consumer segment were $143.3 million and $137.0 million for the nine months ended September 30, 2025 and 2024, with content costs as a percentage of revenue of 38.7% and 40.4% for the same periods. Content costs for the Enterprise segment were $57.4 million and $55.3 million for the nine months ended September 30, 2025 and 2024, with content costs as a percentage of revenue of 30.2% and 31.3% for the same periods. Content costs as a percentage of revenue for both segments decreased due to higher learner engagement in content created under production arrangements with lower revenue share. Gross margin was 54.7% for the nine months ended September 30, 2025, an increase from 53.5% for the nine months ended September 30, 2024. The increase in gross margin was driven by lower content cost rates in both our Consumer and Enterprise segments. Operating Expenses Three Months Ended September 30, Change Nine Months Ended September 30, Change 2025 2024 $ % 2025 2024 $ % (in millions, except percentages) Operating expenses: Research and development $ 30.0 $ 31.6 $ (1.6) (5) % $ 88.8 $ 99.9 $ (11.1) (11) % Sales and marketing 67.4 59.0 8.4 14 % 187.8 174.7 13.1 7 % General and administrative 24.2 27.3 (3.1) (11) % 76.0 81.9 (5.9) (7) % Restructuring related charges - - - nm (0.9) 2.1 (3.0) nm Total operating expenses $ 121.6 $ 117.9 $ 3.7 3 % $ 351.7 $ 358.6 $ (6.9) (2) % Total operating expenses for the three and nine months ended September 30, 2025 were $121.6 million and $351.7 million compared to $117.9 million and $358.6 million for the three and nine months ended September 30, 2024 . Research and development expenses for the three months ended September 30, 2025 were $30.0 million compared to $31.6 million for the prior-year quarter. This decrease was primarily due to lower personnel-related expenses of $2.6 million, including $1.7 million in stock-based compensation expense, resulting from our October 2024 expense reduction initiative and shifting resources to lower-cost regions. Research and development expenses for the nine months ended September 30, 2025 were $88.8 million compared to $99.9 million for the nine months ended September 30, 2024. This decrease was primarily due to lower personnel-related expenses of $11.4 million, including $6.0 million in stock-based compensation expense, resulting from our October 2024 expense reduction initiative and shifting resources to lower-cost regions. Sales and marketing expenses for the three months ended September 30, 2025 were $67.4 million compared to $59.0 million for the prior-year quarter. This increase was primarily due to an increase in performance marketing and advertising expenses of $9.4 million. Sales and marketing expenses for the nine months ended September 30, 2025 were $187.8 million compared to $174.7 million for the nine months ended September 30, 2024. This increase was primarily driven by higher performance marketing and advertising expenses of $22.9 million. The increase was partially offset by lower personnel-related expenses of $9.7 million, including $6.5 million in stock-based compensation expense, resulting from our 2024 expense reduction initiatives, and a $2.0 million decrease in consulting services expenses. General and administrative expenses for the three months ended September 30, 2025 were $24.2 million compared to $27.3 million for the prior-year quarter. This decrease was primarily due to a $3.1 million loss contingency recorded in the prior-year quarter related to certain significant and non-recurring legal matters. General and administrative expenses for the nine months ended September 30, 2025 were $76.0 million compared to $81.9 million for the nine months ended September 30, 2024. This decrease was primarily due to non-recurring expenses recorded in the prior-year period, including $3.4 million in loss contingencies related to certain significant legal matters and $3.4 million third-party advisory, legal, and other professional fees associated with evaluating a significant M&A transaction. The decrease also reflects lower attributed facilities costs of $1.7 million. These reductions were partially offset by an increase in personnel-related expenses of $2.8 million, largely related to our CEO transition, including $2.1 million in stock-based compensation expense. Restructuring related charges for the nine months ended September 30, 2025 were $(0.9) million, primarily consisting of the reversal of stock-based compensation expense for the forfeitures of RSUs and stock options, mostly offset by personnel expenses, such as employee severance and benefits costs, related to our expense reduction initiative initiated in October 2024. This compares to $2.1 million for the nine months ended September 30, 2024, primarily consisting of personnel expenses, such as employee severance and benefits costs, related to our expense reduction initiative initiated in January 2024. Refer to Note 14, Restructuring Related Charges , included in Part I, Item 1 of this Form 10-Q for further information. Other Income (Expense) Three Months Ended September 30, Change Nine Months Ended September 30, Change 2025 2024 $ % 2025 2024 $ % (in millions, except percentages) Interest income, net $ 8.3 $ 9.3 $ (1.0) (11) % $ 24.1 $ 28.2 $ (4.1) (15) % Other income (expense), net (0.5) 0.2 (0.7) nm (0.1) (0.1) - nm Total other income, net $ 7.8 $ 9.5 $ (1.7) (18) % $ 24.0 $ 28.1 $ (4.1) (15) % Total other income, net for th e three and nine months ended September 30, 2025 was primarily comprised of interest income earned on cash and cash equivalents. Interest income, net decreased during both periods compared to the prior-year periods, primarily due to lower interest rates and a reduced average rate of return on investments in U.S. Treasury securities. Other income (expense), net for the three and nine months ended September 30, 2025 and 2024 were primarily comprised of unrealized foreign exchange gains and losses. Our foreign subsidiaries' operating costs are typically denominated in local currencies and are subject to foreign currency fluctuations. We also maintain foreign-currency cash and cash equivalents in our foreign subsidiaries to support their ongoing operations. Income Tax Expense Three Months Ended September 30, Change Nine Months Ended September 30, Change 2025 2024 $ % 2025 2024 $ % (in millions, except percentages) Income tax expense $ 0.8 $ 1.5 $ (0.7) (47) % $ 3.1 $ 3.3 $ (0.2) (6) % Income tax expense for the three and nine months ended September 30, 2025 and 2024 was primarily related to state and foreign taxes. Liquidity and Capital Resources Overview As of September 30, 2025, our principal source of liquidity was cash and cash equivalents totaling $797.7 million. Since our inception, we have financed our operations primarily through proceeds from the issuance of redeemable convertible preferred stock, our initial public offering completed in April 2021 (the "IPO"), and cash generated from business operations. Our principal uses of cash in the three and nine months ended September 30, 2025 and 2024 include the funding of our business operations, investments in our internal-use software, purchases of content assets, and repurchases of our common stock. We believe that our existing cash and cash equivalents, along with 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. If 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. Moreover, 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. Contractual Obligations and Commitments Except as discussed in Note 6, Leases , and Note 9, Commitments and Contingencies , included in Part I, Item 1 of this Form 10-Q, there were no material changes outside of the ordinary course of business in our commitments and contractual obligations for the three and nine months ended September 30, 2025 as compared to those 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, the Board approved a share repurchase program with autho rization to purchase up to $95.0 million of our common stock, excluding commissions and fees (the "Repurchase Program"). In May 2024, we completed the purchase authorization under the Repurchase Program, which was funded with our existing cash and cash equivalents. During the nine months ended September 30, 2024, we repurchased an aggregate of approximately 3.1 million shares of our common stock for $36.7 million under the aforementioned program. Cash Flows The following table summarizes our cash flows: Nine Months Ended September 30, 2025 2024 (in millions) Net cash provided by operating activities $ 102.9 $ 76.2 Net cash provided by (used in) investing activities (22.4) 41.7 Net cash used in financing activities (10.4) (54.3) Net increase in cash, cash equivalents, and restricted cash $ 70.1 $ 63.6 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, content creator fees, marketing and advertising expenses, third-party cloud infrastructure expenses, and indirect taxes. For the nine months ended September 30, 2025, net cash provided by operating activities was $102.9 million, primarily resulting from improved operating leverage and working capital driven by (i) deferred revenue growth and (ii) an increase in accounts payable and accrued expenses resulting from invoice and payment timing. For the nine months ended September 30, 2024, net cash provided by operating activities was $76.2 million, primarily resulting from improved operating leverage and working capital driven by (i) an increase in accounts receivable collections and (ii) deferred revenue growth. Cash provided by operating activities increased by $26.7 million during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily resulting from improved operating leverage. Investing Activities For the nine months ended September 30, 2025, net cash used in investing activities was $22.4 million, due to (i) capitalized internal-use software costs, (ii) purchases of content assets, and (iii) purchases of property, equipment, and software. For the nine months ended September 30, 2024, net cash provided by investing activities was $41.7 million, due to (i) proceeds from maturities of marketable securities, partially offset by (ii) capitalized internal-use software costs, (iii) purchases of content assets, and (iv) purchases of property, equipment, and software. Financing Activities For the nine months ended September 30, 2025, net cash used in financing activities was $10.4 million, primarily due to (i) payments for tax withholding on vesting of RSUs, partially offset by (ii) proceeds from the exercise of stock options, and (iii) proceeds from our employee stock purchase plan. For the nine months ended September 30, 2024, net cash used in financing activities was $54.3 million, primarily driven by (i) payments related to repurchases of common stock under the Repurchase Program and (ii) payments for tax withholdings on vesting of RSUs, partially offset by (iii) proceeds from the exercise of stock options, and (iv) proceeds from our employee stock purchase plan. 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 September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (in millions) New Registered Learners 7.7 7.0 22.3 20.2 September 30, 2025 2024 (in millions, except percentages) Total Registered Learners 191 162 Total Registered Learners year-over-year ("YoY") growth 18 % 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 nine months ended September 30, 2025, approximately 94% of Enterprise 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 segment and future Enterprise segment revenue trends. September 30, 2025 2024 Paid Enterprise Customers 1,724 1,564 YoY growth 10 % 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. 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 was 89% for the three months ended September 30, 2025 and 2024. 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 September 30, 2025 2024 Net Retention Rate for Paid Enterprise Customers 89 % 89 % YoY change - % Segment Revenue We generate revenue from two reportable segments: Consumer and Enterprise. Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (in millions, except percentages) Consumer revenue $ 130.3 $ 115.7 $ 370.7 $ 338.9 YoY growth 13 % 9 % Enterprise revenue $ 63.9 $ 60.4 $ 189.9 $ 176.6 YoY growth 6 % 8 % Total revenue $ 194.2 $ 176.1 $ 560.6 $ 515.5 YoY growth 10 % 9 % 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 segment content costs paid to content creators; segment gross margin is the quotient of segment gross profit and segment revenue. 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, mix shifts between our two segments can be a significant factor of our overall gross margin, financial performance, and profitability. Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (in millions, except percentages) Consumer gross profit $ 79.7 $ 68.7 $ 227.4 $ 201.9 Consumer segment gross margin % 61.2 % 59.4 % 61.3 % 59.6 % Enterprise gross profit $ 44.5 $ 42.3 $ 132.5 $ 121.3 Enterprise segment gross margin % 69.6 % 70.0 % 69.8 % 68.7 % Consumer segment gross margin increased to 61.2% and 61.3% for the three and nine months ended September 30, 2025 from 59.4% and 59.6% for the three and nine months ended September 30, 2024. The increases were primarily driven by lower content cost rates in our Consumer segment, resulting from higher learner engagement in content created under new production arrangements with lower revenue share. Enterprise segment gross margin for the three months ended September 30, 2025 and 2024 remained relatively unchanged. Enterprise segment gross margin increased to 69.8% for the nine months ended September 30, 2025 compared to 68.7% for the prior-year period, primarily due to lower content cost rates in our Enterprise segment, also driven by higher learner engagement in content created under new production arrangements with lower revenue share. Non-GAAP Financial Measures Non-GAAP Gross Profit, Non-GAAP Net Income , and Non-GAAP Net Income Per Share We define non-GAAP gross profit and non-GAAP net income as GAAP gross profit and GAAP net loss excluding: (i) stock-based compensation expense; (ii) amortization of stock-based compensation expense capitalized as internal-use software costs; (iii) payroll tax expense related to stock-based compensation; (iv) M&A related transaction costs; (v) costs and settlement (gains) losses related to significant and non-recurring legal and regulatory matters, net of insurance recoveries; and (vi) restructuring related charges. Non-GAAP net income per share is calculated by dividing non-GAAP net income 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: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (in millions) Gross profit $ 106.0 $ 96.2 $ 306.6 $ 275.9 Stock-based compensation expense 0.6 0.6 1.9 2.0 Amortization of stock-based compensation capitalized as internal-use software costs 1.4 1.3 4.3 4.2 Non-GAAP gross profit $ 108.0 $ 98.1 $ 312.8 $ 282.1 Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (in millions) Net loss $ (8.6) $ (13.7) $ (24.2) $ (57.9) Stock-based compensation expense 23.0 25.2 72.6 83.1 Amortization of stock-based compensation capitalized as internal-use software costs 1.4 1.3 4.3 4.2 Payroll tax expense related to stock-based compensation 0.8 0.4 2.4 2.8 M&A related transaction costs - - - 3.4 Significant and non-recurring legal and regulatory matters 0.1 3.4 1.5 4.6 Restructuring related charges - - (0.9) 2.1 Non-GAAP net income $ 16.7 $ 16.6 $ 55.7 $ 42.3 Weighted-average shares used in computing net loss per share-basic 164.6 157.6 162.6 156.8 Effect of dilutive securities 7.9 3.5 6.1 7.3 Weighted-average shares used in computing non-GAAP net income per share-diluted 172.5 161.1 168.7 164.1 Net loss per share-basic and diluted $ (0.05) $ (0.09) $ (0.15) $ (0.37) Non-GAAP net income per share-diluted $ 0.10 $ 0.10 $ 0.33 $ 0.26 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 GAAP net loss excluding: (i) depreciation and amortization; (ii) interest income, net; (iii) income tax expense; (iv) other (income) expense, net; (v) stock-based compensation expense; (vi) payroll tax expense related to stock-based compensation; (vii) M&A related transaction costs; (viii) costs and settlement (gains) losses related to significant and non-recurring legal and regulatory matters, net of insurance recoveries; and (ix) 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 September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (in millions, except percentages) Net loss $ (8.6) $ (13.7) $ (24.2) $ (57.9) Depreciation and amortization 7.3 6.0 21.8 18.7 Interest income, net (8.3) (9.3) (24.1) (28.2) Income tax expense 0.8 1.5 3.1 3.3 Other (income) expense, net 0.5 (0.2) 0.1 0.1 Stock-based compensation expense 23.0 25.2 72.6 83.1 Payroll tax expense related to stock-based compensation 0.8 0.4 2.4 2.8 M&A related transaction costs - - - 3.4 Significant and non-recurring legal and regulatory matters 0.1 3.4 1.5 4.6 Restructuring related charges - - (0.9) 2.1 Adjusted EBITDA $ 15.6 $ 13.3 $ 52.3 $ 32.0 Net loss margin (4.4) % (7.8) % (4.3) % (11.2) % Adjusted EBITDA Margin 8.0 % 7.6 % 9.3 % 6.2 % Free Cash Flow We define Free Cash Flow as net cash provided by operating activities, less capitalized internal-use software costs, purchases of content assets, and purchases of property, equipment, and software, as we consider these capital expenditures necessary to support our ongoing operations. 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: Nine Months Ended September 30, 2025 2024 (in millions) Net cash provided by operating activities $ 102.9 $ 76.2 Less: capitalized internal-use software costs (13.3) (13.6) Less: purchases of content assets (8.0) (10.2) Less: purchases of property, equipment, and software (1.1) (0.5) Free Cash Flow $ 80.5 $ 51.9 Critical Accounting Estimates Our Condensed Consolidated Financial Statements (Unaudited) and the related notes thereto included elsewhere in this 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.

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