Ladies and gentlemen, thank you for standing by, and welcome to Coursera's Fourth Quarter Full Year 2021 Earnings Call. At this time all participants are in listen-only mode. And please be advised that this call is being recorded. After the speakers' prepared remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I'd like to turn the call over to Cam Carey, Head of Investor Relations. Mr. Carey, you may begin.

Hi everyone, and thank you for joining our Q4 earnings conference call. With me today is Jeff Maggioncalda, Coursera's Chief Executive Officer; and Ken Hahn, our Chief Financial Officer. Following their prepared remarks, we will open the call for your questions. Our press release, including financial tables, was issued after market close and is posted on our Investor Relations website where this call is being simultaneously webcast. Additionally, downloadable versions of our prepared remarks and supplemental slides have also been made available. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP measures to the most directly comparable GAAP measure can be found in today's press release and supplemental presentation, which are distributed and available to the public through our Investor Relations website located at investor.coursera.com. Please note that all growth percentages refer to year-over-year change, unless otherwise specified. Additionally, I'd like to remind you that all statements made during this call that relate to future results and events are forward-looking statements based on current expectations. These forward looking statements include, but are not limited to statements regarding trends in their potential impact on our industry in our business, our ecosystem, platform, content and partner relationships, our strategy and priorities and our business model mission, opportunities, outlook and long-term financial framework. Actual results and events could differ materially from those projected due to a number of risks and uncertainties, which are discussed in our press release, SEC filings and supplemental materials. These forward-looking statements are not guarantees of future performance or plans, and therefore, investors should not place undue reliance on them. We assume no obligation to update our forward-looking statements. And with that, I'd like to turn it over to Jeff.

Thanks, Cam, and good afternoon, everyone. It's great to be with you all. A year ago at this time, I had the privilege of introducing the story of Coursera and this conversations leading up to our IPO. I shared that I've never been so excited about spending my time to build something so important. Today as I reflect on both our progress over the past four quarters, and our positioning for the years ahead. My excitement and optimism have never been stronger. Coursera is increasingly becoming a global destination for learners seeking job relevant skills to advance their careers, as well as the platform through which institutions are able to drive powerful collaboration to better meet the needs of our digital world. Together with our ecosystem of learners, partners and institutions, we're broadening access to higher education and creating a new and inclusive lifelong learning model. This year we reported $415 million of revenue, which represents 41% annual growth. This was on top of the 59% growth we delivered in 2020. Our diversified offerings and global distribution exposes us to multiple tailwinds being driven by the need for new skills and an accelerating digital world. Performance in 2021 was broad-based with momentum across our three segments and in all regions. But it is also reflected in our strong outlook for the year ahead, and a long-term growth prospects that we see across our platform. In 2021, we rapidly expanded our global reach and scale advantages, growing relationships with individual learners and institutional customers. We ended the fourth quarter with 97 million registered learners on the platform, adding nearly 21 million over the course of the year. Since the start of 2020, we've attracted more than 50 million learners, doubling the size of our learner base over the past two years.…

Thanks, Jeff and good afternoon, everyone. We are pleased to report strong financial results for our fourth quarter, capping off another exciting year of rapid growth for Coursera. In Q4, we generated total revenue of $115 million, up 38% from a year ago, with strength across all three of our business segments. As Jeff mentioned, we continue to see strong demand from individual learners, as well as our growing number of enterprise customers, including businesses, campuses, and governments. Our results continue to reflect a differentiated business model that benefits from our three-sided platform. It provides diversification, and exposure to multiple levers of growth. This includes our business segments, but also our ability to serve learners and grow with them throughout their studies, and careers. At the end of the day, enabling human capital creation for our learners is what defines our value proposition. It also allows us to leverage, our significant strategic assets across our segments to compete differently, including our large, rapidly growing learner base that attracts partners and acts as a channel, branded credentials, and the technology and data that underpin our businesses. And finally, it provides us with a unique advantage point that encompasses the needs of learners, employers and educators to navigate the trends shaping higher education. Please note that for the remainder of the call, as I review our business performance and outlook in the fundamental fashion we view it. I will discuss our non-GAAP financial metrics, inclusive of pro forma adjustments unless otherwise noted. Our non-GAAP adjustments remove only stock-based compensation and related payroll tax, nothing else. Gross profit was $71.9 million, up 65% from a year ago, a 62.5% gross margin. This margin was approximately 10 percentage points, or 1,000 basis points higher than the prior year period, a continuation of the dynamics…

Thanks, Ken. Early in the pandemic, online learning provides the means for educators, businesses and governments to respond to a global crisis that changed the way we learn and work. Two years later, new trends show that the combined forces of online learning and remote work are creating a powerful opportunity to provide not just skills, but the foundation for better access to education, and more equitable job opportunities for everyone worldwide. In 2021, we've highlighted the growing possibilities for learners who complete one of our entry level professional certificates. These certificates allow learners with no college degree or prior industry experience to develop the skills needed for an entry level digital job fully online in less than a year. And because of remote work, learns with these newly acquired digital skills are rewarded with a growing selection of job opportunities in high demand fields, no matter where they live. But in addition to these career pathways, learners are able to also pursue a degree pathway. Our partnerships with universities and ongoing efforts to expand ACE Credit Recommendation across the certificate enable learners to earn up to 12 college credits towards an eligible degree when they choose to continue their education using professional certificates on Coursera. In this sense, technology is both lowering the cost and increasing the benefit to education. And the potential of this return on investment is increasingly valued not only by individuals, but also by institutions who can deploy workforce development programs designed to keep pace with a fast changing labor market. This growing collaboration between universities, industry leaders and governments underscores the power of higher education infrastructure at scale. Over the past year, we announced a number of nationwide reskilling and upskilling initiatives, including the Saudi Arabia and Abu Dhabi examples I highlighted earlier, as well as programs spanning the globe from Barbados to Costa Rica, and Morocco, but this also applies at the local level. The California State Library recently announced a digital inclusion initiative that makes Coursera available for free to residents with their library card at over 1,000 libraries across the state. Californians can now visit their local library in-person or online and access Coursera training, including our entry level professional certificates, the same way that they would check out a book. But in this case, when they complete their course or program, they are invaluable branded credential to unlock job opportunities, advance their career, or build towards a broader course of study. Our mission is to provide universal access to world class learning so that anyone anywhere has the power to transform their life through learning. Opportunities like these are what inspires our team members, attracts our partners and ultimately creates value for all of our constituents. And with that, let's open up the call to questions. Thank you.

[Operator Instructions] Your first question comes from the line of Josh Baer with Morgan Stanley. Your line is open.

Hi, Jeff and Ken congrats on a strong quarter and the growth outlook. Question for me is on consumer. So I think a lot of times investors might group consumer businesses across and tech together, maybe assume there's this transactional revenue and kind of put everything in the same bucket. So I was hoping you could provide a bit of insight into the revenue mix within consumer, you have all those different product offerings with different price points? But also with different timelines as far as revenue recognition period, so I was hoping you could provide some context as far as the biggest contributors to consumer revenue, like what's the recurring revenue mix? And ultimately, how does that dictate your visibility into future consumer revenues?

Yes, hey Josh, let me start with maybe some of the environmental considerations to answer the question, and then maybe Ken you could take up some of the numbers answers. But environmentally, you know, I think it is pretty interesting what we're seeing and clearly, in the U.S., and around the world. I think coming out of the pandemic, you're seeing a lot of people reevaluating their lives, reevaluating their careers, and realizing - I can do something different, I think there's a better job for me out there. But if you don't have a college degree, or even if you do if it's not in the domain of like, you know, stem [ph] or computer science or whatever, you got to figure out not only how do I get the skills, but how do we get a credential that could signal to someone even though I don't have a degree or any background in that field, like I know how to do this job. I think that the major tailwind that we're picking up and I don't think it's totally unique to Coursera. But clearly we've been pushing hard on these professional certificates is that they're a long structured program, usually four or five, sometimes 10 courses they come from a branded entity, like a Google or an IBM or Intuit or a Facebook, they end up with a credential is pretty hard to get. And I think a lot of people are looking for that more structured, rigorous branded credential learning in order to signal to an employer that they're ready for this new job. Those I think are more distinctive offerings than what you might find, you know, generally on the internet or from other platforms, they're typically longer form. So there's more content there that people…

Yes, sure. And I might be a tiny bit repetitive to your question, Josh. But the consumer revenue is not all the same across different companies. If you look at where we sit on the spectrum, As Jeff mentioned, it's heavily branded content, the top universities, the top companies, and the entry level certs that Jeff talked about that become very, very popular for a number of reasons, tend to last over multiple months. So the revenue spreads over the period of the time when the student, of course, is taking this course. And so for us, because it's longer form content, it extends for a longer period of time. Additionally, we have Coursera Plus or subscription product, we don't plan to update the ratio on an ongoing basis, but last quarter we announced that we had an incredibly quick traction, since reduced - and since reducing it roughly a year before for that. And then we're up to about a quarter of the consumer revenue coming through Coursera Plus that continued to increase. But again, we don't plan to continue to update that we're comfortable where it is, and, and then broadly, again, on the spectrum, if we're looking at different players in the space, you'd see us on the deeper, longer form content, part of the spectrum. That is what we do, not necessarily that there's anything wrong with shorter form content, but it is a very different product.

Ken one other thing I'll just mention, Josh, in terms of, you know, what is also special about this longer form entry level, professional certificate content. You heard it in the script quite a bit, were [ph] more valuable in ways that we think only Coursera can so trying to link these things with career pathways to hiring opportunities. Of course, that's why most adults learn anyway. But also these degree pathways, we continue to talk about American Council on Education, where we're getting credit recommendations, we're starting with this consumer entry level job content can be a way to earn credit towards a college degree. I will tell you, this is certainly happening in the U.S. It's not just the U.S., if you look on a global basis there are a number of countries at the Minister of Education level, who are saying we need more industry relevant content in the higher education. And we will create favorable regulatory policies to help facilitate the provision or the acceptance of credit for industry kind of content that would count towards your higher education degree. So we think this is a very big trend, and we think it really plays to some of our advantages.

Great, thank you.

Your next question comes from the line of Stephen Sheldon with William Blair. Your line is open.

Hey, thanks. Congrats on the big government contracts and enterprise, it seems like that - that's a pretty large opportunity. So wondering if you could talk more about the pipeline you are seeing there, plans for investing in more sales capacity that targeted and the level of competition you faced when pursuing these large government contracts? And simply - is the competitive environment, maybe for these government contracts different relative to what you normally face on the business side?

Yes thanks, Stephen. So we are definitely seeing something I think that was structurally changed by the pandemic, I think, yes governments had been realizing for some time, that for various reasons, and in different countries, it does vary but their industrial policy, their education policy, their labor policies need to be integrated so that they can develop a human capital base in their economy that sets up to be position where we want five or 10 years down the road. You look across the Gulf Coast countries and they are trying to position well create the backbone for an economy and human capital stock for economy that doesn’t depend so much on oil. You go to India, Philippines, Costa Rica, where they do a lot of multinational outsourcing where automation is starting to automate a lot of the jobs that those multinationals are asking them to do. They're starting to realize, you know, we've got to really upgrade the human capital stock in our country. What I think has changed because of the pandemic is that for the most part, these government training programs were in-person. And the pandemic forced governments to basically say how do, we take these learning programs online and when they did that, they realized that the speed and the scale and also the efficacy, because a lot of the online content is not just easier to access and lower cost, but it's also a lot more current. I mean, it teaches skills that are much more current and relevant in labor market. So I do see, government's realizing, hey, there's a tool that we didn't have in our toolbox before that we can now use and it's not an either or it's not just industry content versus my higher education system. It's really a…

Got it makes sense and that's incredibly helpful. And maybe just a follow-up on the degree side, appreciate the [indiscernible] metric for 50% of degree learners that come from the consumer side. I guess, is that is that actually improved, as I think that might have been closer to the mid-40s in 2020, if I remember correctly? And if so, I guess what's moving that higher, is it is it anything that you're doing better or is it is it just the broader benefits of scale on both sides?

I would say there's nothing structurally that we've really seen that we could look at and say yes, there's a clear signal that's coming from a, what we think will be a durable source, and therefore we can say that it will continue to go higher. I think generally, the model is working the way that we had expected. Of course, we do have more degrees on platform and even though it's pretty early stages, with some of the degrees that are being offered by our university partners in other countries and regions. We do think that there is a certain amount of latent demand that will be better met once you have degrees with a local branded university and a local language. And so, we think that there'll be, opportunities to leverage at the consumer base internationally once we fill out a broader portfolio. And that's why we really are looking for degree programs that are more global than where we started, which was mostly in the U.S. And Ken talked a little bit about some of the softness. I mean, frankly, the U.S. labor market - just is really good right now. And I think a lot of students are thinking, hey, I would rather you know, get some job opportunity and better income than to be earning. I mean the reason the U.S. have been counter cyclical, you know, pretty much I think, for a long time, maybe ever. And I think we're seeing some of that in the U.S., but diversifying internationally we think will be helpful.

Very helpful, congrats on the results.

Yes, thanks Stephen.

Thank you, Stephen.

Your next question comes from the line of Rishi Jaluria with RBC. Your line is open.

Wonderful, nice to see you continued success. Thanks for taking my question. In the interest of time, I'll just do one question here. But philosophically, wanted to get a sense for with all the bachelor degree program announcements that we've seen over the recent months, you know, really encouraging to see that? How would you, maybe characterize the institutional or consumer sentiment in terms of the attitude towards, online undergrad degrees, right. I mean, graduates, obviously become mainstream over the past several years or half a decade. But how are you seeing that that potentially driving a mix of online programs on the undergrad side? Thanks.

Yes, thanks Rishi. There's a supply side of this question, there is a demand side of the question. On the supply side, you know, the elite schools, your top ranked schools, is going to be a lot lower likelihood that they're going to put their undergraduate programs online, because I think a lot of they're very selective. And there's a residential experience that, frankly, you know, the students who play those programs - really appreciate. I think though, when you start seeing undergraduate programs from relatively highly ranked schools that are available, that are more affordable, and also come from a regionally recognized brand, and the thing about that is, I mean, students in high school are thinking, Oh, where do I want to go to college? If there's an online Bachelor's degree from a university that they've never heard of before, it's a lot less likely they're going to do it, because they're like, I don't know what and [ph] who went there. And I don't know that any employers would recognize that. I do think that there - with Bachelor's degrees, I think that there is a regional brand element to this, where if you can get a degree, you know, maybe faster, more conveniently more affordably, but from a top branded, or maybe not elite, but like a well-known regional brand. I think that you could be in the labor market and earning a bachelor's degree, I think that might open up the opportunity a bit. I mean, we do have a number of Bachelor's degrees that we've been announcing we're working hard to get more. I think the elites will be in doing their own thing with residential education. But frankly, I think the availability of regionally branded high quality online Bachelor's degrees will be a really attractive option over the longer term. And I think chip [ph] - you talked about something pretty similar to like the Bachelor's. And personally what I think is that these people are going to need to differentiate their talent more and more. And so, if you do have a college degree versus if you don't have a college degree that will be one basis of competing in the labor market. So I'm still bullish on degrees on I'm bullish on Bachelor's degrees.

All right, really helpful. Thank you so much.

Yes sure, Rishi.

Your next question comes from the line of Eric Sheridan with Goldman Sachs. Your line is open.

Thanks for taking the question. Maybe also, in the interest of time, I'll just ask one on hiring in the enterprise. Can you give us an update on what you're seeing in the broader landscape in terms of the ability to onboard salespeople at effective ROI and whether there's been any change in terms of the type of people you're getting or seeing and the path to productivity in the sales force on the enterprise side? Thanks so much.

Yes, thanks Eric. When the pandemic happened almost immediately, before we even shut the office in March of 2020, I said, I had people at Risk, Jacqui and I, we sat down, we're like, look, let's just game plan this out. Once people get a chance once employee to get a chance to work from anywhere, they're not all going to want to come back in. So we should immediately adopt this talent strategy that says we can recruit people, from anywhere that has served us really well. I mean frankly, we're seeing good success hiring in all positions, and with a broad level of diversity and representation. So I think we're feeling good about the ability for Coursera to attract good talent when we announced our B Corp. designation. We part of that was its consistent with our mission. Part of it is we are we know we're competing in competitive talent markets, and we think we're looking really - we're feeling really good about our ability to attract people. So that's pretty much anywhere in the world. And in terms of the onboarding and productivity, you know, of course, we have ramping models. And, the exec team, our view of this on the ramping piece is part of it is how effective are your training programs, but a lot of it is how simple is your product like, if you have a very simple product that you could sell to a certain type of customer, you don't need a lot of training and a lot of playbooks to do it. So when - I'll give you one little piece of color, we have we have enterprise sales forces that are product specific and regionally specific. So it's one of the great scale advantages is that we can cover a lot of surface area and play in the multiple markets. But because we have the scale that we do, we can have designated Gulf people in the Middle East and designated campus people in Latin America. And so frankly, we're not having trouble, hiring them. And we can be pretty specific about how we onboard train and get them into the market, get them productive. So we're feeling pretty good about it.

Thanks so much for the color and to the whole team. Thanks so much for all the commentary and the rehab, really appreciate it.

Yes, and just really quickly on that, Eric, Ken and I've been around for a long time. Our job is to build a successful company, and with respect to Wall Street, educate people on how it works and what we're seeing. And so, we're just going to try to be as helpful as possible for all of us to understand as the world changes, and there will be more for business, like what's happening and kind of what can we expect? So - not only are we happy to do and I think that's our job is part of our job is to build a great company and educate people about how it works.

Your next question comes the line of Jason Celino with KeyBanc. Your line is open.

Great, thanks guys for fitting in. Maybe in the essence of your comment, you know, Jeff, on the education side, with the degree guidance for 2022 in the commentary around the first cohort, maybe just a reminder on how do these degrees ramp, and then maybe what this means to visibility for future years? Thanks.

Yes, thanks, Jason. So Ken go through I think the cohort building but generally speaking, large swaths. First piece of the puzzle is sourcing a degree that A) is source of all that's the supply plan, like does a college want to give you the degree, the most elite ones are harder to get. And then the - second question is for the degrees that you bring on well students in that region or on the platform actually bite on the demand side. When we go out to source, generally, it takes, you know, some number of years often, what you'll see, and I mentioned this as to Ken in the past. We are successfully bringing on more reprograms from the same degree partners. And we like that, that's great. That was part of that tiered pricing model that we went after we're definitely playing for both scale and scope, we believe that you can create variations of degrees on Coursera, when a university has more degrees on Coursera. Because you can mix and match courses, electives, a pieces like that. So generally speaking, it's harder to get started. But once you do, and you have a portfolio of degrees, you can mix and match them with a little bit more flexibility. And the way that the cohorts go, you know, first you have to generate initial awareness and interest. And if it's a new degree in a new region, it takes a little bit longer. And then typically, there are three starts per year, ideally has, you know, more than that, but often there's three starts per year. And then those degree programs are often two years, sometimes three, if it's a British bachelor's degree for it's a U.S. degree, although these completion degrees could be done more quickly, but they're multiyear. And so, you get a student in early cohort, maybe there's the first cohort. They'll be around, ideally for a couple years, three years, and then the next cohort starts 90 days later, and then they will layer on so it builds over time. And I think when we enter new regions I think the initial cohort size starts growing. And then you get more cohorts in there, as you kind of start filling up these slots and typically happens over multiple years. Ken anything you'd add to that?

Not much really, it tends after we land the program, tend to take six months to a year for the partner to put the degree on the platform. And so that is when we begin the cohort process and so maybe using some slightly different words, right, let's say we have a two year program, oftentimes, that'll fill over a few years because students taking online might take three years to finish a two year. We charge by the credit hour, we don't charge by the degree by the year and so each year, it increases of course, as we layer cohorts till it gets the full capacity. And so, a three year program will take three years before it's filled up with essentially each class.

Excellent, thank you.

No problem. It's a quite a bit of visibility - quite a build but a lot of visibility.

Last question comes from line of Ryan McDonald with Needham. Your line is open.

Thanks for taking my questions. Congrats on a great quarter. I wanted to ask about gross margins, Ken consumer business continues to be extremely impressive in the gross margins that it's producing? You know, how should we think about in the 2022 guidance here? Sort of the implied gross margin or what confidence do you have sort of in the ability to, you know, stick with these 68%, 69% gross margin levels that you're hitting on the consumer business? Thanks.

Sure, it's a great question. The answer is we have a very high level of confidence, we're continuing to build out these programs, and we set it in the script. But the reason for the continued shift is as consumers consume more as we have more success with these specializations, those tend to have lower content costs for us. Our partners do these for a number of reasons, it's a lot more than just revenue, it's building their brands, it's creating their ecosystem. And so it's a little bit different. So we continue to have great success. Jeff talked about the number of programs, we see more being added this entire year. So it's really a bit of a mixed question in a way. And we see a very bright future. I mean, these work, it's what the consumer needs, you know, this is part of the result of the pandemic, so many people want to think about the pandemic with, you know, people stuck inside the edutainment, and you fill your time, if you will, if you go back to the early stages, that's not what it has been for us. For us, it's been the increase in the rate of change of skills required in the consumer. So it's the consumer needing to update their skills. That's the pace of change. That's the real fact of the pandemic for us. And all we see is that strengthening, and for that reason, I feel very comfortable that's what - we're going to see, going forward…

Yes and I'll just add in Q2, when you started seeing some of that expansion in the consumer segment, gross margin, we were like, well, you know, this was a little bit of a surprise. We don't know if this is going to persist. And then over the next few quarters, we're like, well, it does seem like consumers seem to be tilting towards these professional certificates. It looks like they're trying to get new jobs, start new careers, the brands are playing really well. I think, you know, you never know for sure where consumers going to go. But we're now kind of feeling like right, we've seen this for three quarters. I think it's really - like Q4 was pretty darn high. I don't know if you should expect this stuff - to keep going up in terms of growth, the gross margins, but we do think there is probably some durable nature to this idea that people are switching careers and are looking for these jobs skilling programs, which generally do have lower content fees from us because they come from our industry partners.

Thanks, Ryan, that wraps the Q&A. A replay of this webcast will be available on our Investor Relations website along with the transcript in the next 24 hours. We appreciate everyone joining us today. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.