Ladies and gentlemen, thank you for standing by, and welcome to Coursera's Second Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode and please be advised 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 turn the call over to Cam Carey, Head of Investor Relations. Mr. Carey, you may begin.

Hi, everyone, and thank you for joining our Q2 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 questions. Our press release, including financial tables, was issued after market close and is posted on our Investor Relations website located at investor.coursera.com, where this call is being simultaneously webcast and where versions of our prepared remarks and supplemental slides are 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. Please note that all growth percentages refer to year-over-year change, unless otherwise specified. Additionally, all statements made during this call relating 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 and their potential impact on our industry and 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 projections due to a number of risks and uncertainties discussed in our press release, SEC filings, and supplemental materials. These forward-looking statements are not guarantees of future performance and plans and 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. Several days after our first quarter call, we held our 10th annual Coursera Conference. Over 3,000 live attendees from nearly 150 countries, including leaders from higher education, business, and government came together to discuss, debate, and most importantly, collaborate on the most pressing issues facing the future of learning and work. We believe that cross-sector collaboration between businesses, governments, and academic institutions will be critical to addressing the scale of the skills gap crisis and lay the foundation for future of higher education amid rapid transformation. We shared concrete examples of the innovation and collaboration that is occurring amongst institutions in the Coursera community, demonstrating incredible progress toward creating more equal access to education. And I was personally excited to introduce new offerings like Career Academy for institutions. This career training academy leverages our entry-level Professional Certificates and Guided Projects, created by the world’s leading companies and experts, to deliver the skills and credentials that prepare learners for in-demand, digital jobs, even those with no college degree or prior work experience. It’s one of the ways that we are focused on creating greater access to high-quality education that can be delivered through institutions at accelerated speed and scale to unlock economic opportunity for learners around the world. And now turning to our results. In Q2, we grew total revenue 2%percent to $125 million. Our Enterprise segment delivered strong revenue growth across business, campus, and in particular, government customers, and our growing catalog of entry-level Professional Certificates continue to see strong demand from both individuals and institutions. Nonetheless, our overall revenue growth was lower than anticipated, particularly the performance in our Consumer and Degrees segments. In Consumer, we saw somewhat weaker conversion rates in several markets outside of the U.S., with a more pronounced impact…

Thanks Jeff and good afternoon, everyone. We continue to demonstrate strong progress across our platform, expanding our number of educator partners and their catalog of job-relevant content and credentials, growing our global reach with individuals and institutions, and delivering new innovations for learners, educators, and our Enterprise customers. In Q2, we generated total revenue of $124.8 million, which was up 22% from a year ago on strong demand for our entry-level Professional Certificates and sustained momentum across our Enterprise segment. As Jeff mentioned, our revenue performance was mixed this quarter, with strength in Enterprise offset by lower-than-expected growth in Consumer and Degrees, which I’ll cover in more detail shortly during the discussion of our segment results. Nonetheless, the long-term, structural trends driving our business have not changed. First, individuals and institutions are increasingly turning to online learning to supply the digital skills required in today’s economy. Second, we have a powerful combination of university and industry content that delivers the in-demand skills and branded, recognized credentials required by learners no matter the stage of their career. And third, our three-sided platform provides us with global reach and the ability to leverage our strategic assets across our segments to compete differently. Please note that for the remainder of the call, as I review our business performance and outlook, I will discuss our non-GAAP financial measures, unless otherwise noted. Our non-GAAP adjustments remove only stock-based compensation and related payroll tax nothing else. Gross profit was $79.2 million, a 63.5% gross margin, up 28% from a year ago. This margin was approximately three percentage points higher than the prior-year period due to the ongoing drivers we’ve discussed the past several quarters, particularly the positive changes in our segment content margin for both Consumer and Enterprise. Our Consumer segment’s content margin rate increased from…

Thanks Ken. We have entered a new and ever-evolving era of work that consistently requires new skills. Technology is creating new career opportunities, but students and workers need access to flexible, affordable, and fast-tracked learning and career pathways to transition into well-paying jobs of the future. This is particularly true for women and other underrepresented groups, who have been disproportionately impacted by the pandemic and automation. With many of our learners based in emerging markets, we partnered with the International Finance Corporation and the European Commission to publish a global study seeking to better understand how these learners, particularly women, have been learning online since the pandemic’s onset. During the fourth quarter of 2021, we surveyed nearly 10,000 learners on Coursera in four focus countries; Egypt, India, Mexico, and Nigeria, targeting learners that had completed at least one graded item between January 2019 to the end of June 2021. And nearly half of the respondents reported earning in their country’s bottom 50th percentile of income. Our research found women and other underserved populations view online learning as more accessible than in-person education. In fact, 45 percent of women and 60 percent of women caregivers said they would have had to postpone or stop studies if online learning weren’t an option, citing mobility, safety, and family obligations as their top deciding factors. Women also said that they faced more restrictions that limited how and where they learn, but that online learning had provided an opportunity for them to achieve their goals. The study also confirmed links between online learning and career outcomes in emerging markets. The IFC research found that online learning produces gains in the broader economy through direct and indirect effects, with one new job created for every 30 people trained on Coursera in our four focus countries. About one-third of the women learners surveyed said they found a new job, set up a business, or improved their job or business performance after taking online courses and 22% of women saw an increase in their income, with nearly 40% reporting an increase of 10% or more. Finally, 99% of respondents said they plan to continue learning either online or in a blended format after the pandemic. These results demonstrate why increasing access to online learning, in combination with broadband connectivity and remote work, have the power to advance equal opportunity in the post-pandemic economy. However, it will require significant collaboration from both the public and private sectors to address the scale of the crisis and build competitive, equitable, and sustainable workforces. People often say, talent is equally distributed, but opportunity is not. With our Coursera community, encompassing leaders in higher education, business, and government, we are working together to expand access to economic opportunities for learners around the world. Now, let’s open the call to questions.

[Operator Instructions] We'll now take our first question from the line of Stephen Sheldon with William Blair. Your line is open. Hey,

Hey, thanks for taking my questions. The first one here, just on the revenue guidance for the rest of the year, it seems like it assumes a year-over-year deceleration in the third quarter, and then some reacceleration in the fourth quarter. So can you talk about that? And I know you gave some segment level expectations from four years. Are there underlying segment level dynamics that you're kind of factoring in in the second half kind of in play there?

Yes. Hi, Stephen. No, it was it's simply based on mechanics are forecasting what we're seeing in the pipeline and the usual ratios that we use to determine our forecast. There's nothing unusual in that. We're ensuring or wanting to ensure that we're careful to hit our numbers this coming quarter. But there's nothing unusual in there from seasonality standpoint.

Got it. And then on the -- I think you previously talked about 50% growth, I think this year for Enterprise, right now you're talking to mid-40%s. And I think you called out some headwinds in EMEA. Can you give some more detail on I guess what, what those headwinds look like in EMEA, and just generally what's kind of changing there? Is it the slower new client wind? Is it churn? Maybe a touch, I mean, just what, what's driving the slowdown there?

Yes, hey Steve. It's a combination of things. I mean, when we look at Enterprise, we've got Coursera for Business, we've got Coursera for Government, and we've got Coursera for Campus and then we've got the different regions. What we're seeing in EMEA is more of a Coursera for Business Challenge, relative to what we were expecting. North America actually has been pretty solid on the Enterprise side across all three segments, and gov. Globally, the quarter for government has been quite paused. was. So it really is kind of Europe Coursera for Business and most of that is more like -- more in a pipeline development process, as opposed to the churn rates. But that it is kind of Coursera for Business in Europe where we're seeing the biggest sensitivity and we suspect that that is kind of due to macroeconomic factors of what's going on in Europe right now. But that seems to be where we're seeing the localized weakness.

And of course, Steve your question was Enterprise that we saw similar weakness in EMEA in consumer on conversion rates. So, suspect that's part of the same trend, the general pressures on the economy's there.

Got it. All right. Thank you for the color.

Yes, thank you.

Your next question comes from the line of Taylor McGinnis with UBS. Your line is open.

Yes hi. Thanks for taking my question. Maybe to touch on what you were just referring to on the last question about some of the macro weakness and how that's materializing and what you guys are seeing in the pipeline and with consumers. So, can you talk about, I guess, one on like, the enterprise side, is that more a function of deals being delayed and pushed out? Or what -- I guess, how are you guys thinking about that in terms of it's the second half to have guide there, and then it's the second part on the consumer side? Maybe you can talk about activity levels on the platform, what you're seeing there and how that macro impact is materializing?

Yes, thanks Taylor, this is Jeff. So, on the Enterprise side, it's not a whole lot to add beyond what we mentioned to the Stephen. I think it is -- it appears to be a little bit of tightness with budgets in terms of how much do people spend, how quickly do they spend it? I feel like we kind of thought the opposite of that when COVID first happened, it just seemed like people were opening the walls, maybe with government money. And in Europe kind of moving pretty quickly, it almost feels like the opposite has happened. Now, people seem to be a little bit more careful with their spend. I would guess that's probably timing, as well as kind of purchase size. But not totally clear on exactly the distinction there. On the Consumer side, it's interesting because the professional surge are still performing really well, particularly in North America. In Europe, it's kind of more of a conversion rate challenge. And so, like Ken said, maybe it's the same kinds of effects. You asked about activity levels, I don't think that we're seeing any notable difference in activity levels. It seems to be an even a lot of top of the funnel seems to be similar between Europe and other regions. I will say that, generally speaking, search volume for online courses and online degrees. And this is not just on Coursera, which is general search volume is down. I think there's sort of a bit of a the economy reopening and people doing things outside their house that we're that we kind of see globally. And that probably is happening in Europe as well, but a lot of it sort of conversion rates on the Consumer segment in EMEA, and particularly Europe that we're seeing.

Got it. And then my next question is just on the Enterprise piece, I think, it looks like your net retention ticked up a little bit, but it looks like at least like the net logo ads in the quarter, maybe were the area that was a little bit weak relative to what we've seen in the past. So, can you talk about that, like the new versus existing and expansion activity? And when you think about the guide, like, where you're seeing more of the impact and how that influence it?

Yes, on this one, it is really a mixture of different sized companies that we sell, we do midmarket, we do some small, medium business, and then, of course, we have bigger accounts as well. Also when we look at deal sizes, they're different between a campus, a government, and a business. So, part of this is variability within the segment, part of it is variability in average deal size across sub-segments, if you will, of Enterprise. I would say that as we and we've seen governments growing faster than business in terms of in terms of revenue growth, and those are generally bigger ticket sizes. So, I wouldn't be surprised if what we ended up seeing is I guess what I'd say is general continued sort of variability, depending on the mix of what's growing fastest on the campus side, and we're seeing pretty good uptake of Career Academy. These are more narrow, simple focus SKU that might sell faster than the typical ones. We might have higher numbers with lower average ticket sizes, but it's really sort of a combination of mix across segments, I think that we're seeing mostly. Ken, I don't know if you want to add anything to that?

Just a little bit on the data side, looking at the number of paid, the net increase, which essentially you're referring to 41 versus 100, let's generalize over the previous four quarters, was definitely slower on the enterprise side, which is reflected in a lower forecast for the rest of the year. So it's part of the same, but there's absolutely a mix of, as Jeff said, between smaller and larger customers. But it's fewer conversions once again.

Great. Thanks so much for answering my question.

Sure Taylor.

Your next question comes from the line of Brian Peterson with Raymond James. Your line is open.

Hi, gentlemen, thanks for taking the question. So, I wanted to hit on the Degrees business for a second. And I understand some of the programs can have different enrollment times. But I was curious, what drove the enrollment change, particularly in the second quarter for some of these programs, I guess in the traditional cycle, maybe that's not the case. And then maybe looking ahead, how do we think about that potentially getting better? Doesn't sound like maybe that's the case and the outlook, but is there a possibility for those enrollment trends to change as we're looking ahead to maybe the fall semester of 2022?

Yes. Hey, Brian. So when we look at the Degree segment, I mean, clearly minus 4% in Q2 is lower than expected. A lot of that is lower than anticipated student enrollments, part of it is also lower overall student activity. So, the tuition paid depends on how many credit hours students are learning. Partly probably because of working maybe because of vacation, whatever it students have pulled back in the activity level. So if you look at where the Degree segment revenue comes from, currently, with our current portfolio Degrees, our four largest most mature Degree programs, they saw limited to negative revenue growth year-over-year and three of these four in the U.S. We think that what's going on when we look at our funnel and also sort of outside information of what's happening with other degree providers in the U.S. market, we think that there are economic trends, particularly in the U.S. associated with a strong labor market and the stronger labor market historically has led to lower enrollments. If you look country-wide, at sort of national data on graduate enrollment rates, is down 1% in spring of 2022 compared to plus 4.6% spring 2021. So, we do think that there's an impact in the U.S. because of that, and that's where the concentrated and more mature programs are. I would also say that some people are like we have, but there's a recession, this should be countercyclical, right? It's a funny recession right now, people are talking about a recession, but the unemployment rate is really low. And generally speaking, degrees are countercyclical with mostly unemployment. And so if unemployment goes up and a recession happens, that's where you get the most. We're kind of looking at a potential recession, but we're really low unemployment. So, I don't think that we're seeing yet the any sort of counter cyclicality because it's more associated with unemployment rates. The other thing I'll add and I'll turn it over to Ken, but when we look at the revenue sort of year-on-year, part of it, as I mentioned, is the student enrollments and then part of it is the average revenue for students. And so the more intensely that students are learning, the -- higher their tuition in a given period, the average revenue per student was lighter in Q2 because of lighter kind of learning loads, if you will, that students have been taking it. So that was another difference from what we're expecting. Ken I don't know if there's anything you want to add to that?

Not a lot, I just reemphasize that our revenue is quite concentrated in a few large U.S. and European Master's Degree programs, which is why you referred to graduate programs, that’s -- again, it's the large majority of our business today. So, the effect on those markets affects us disproportionately in that business. And also that everybody understands, I think the our degrees model, it takes a long time to build revenue from new programs. We've recently had the last few quarters, some great new program announcements, those are still building and don't show in revenue immediately. So, we're excited about that trajectory over time, but we don't see any near-term impact. What we're seeing now is specifically what's happening in the U.S. and Europe for Master's Degree programs.

You asked by the way, Brian, like, when's it going to get better? My best guess would be it'll be related to unemployment. That's my best guess based on historical patterns.

Understood, No, I appreciate all the context there and maybe a follow-up for you Ken. Just in terms of the growth environment, obviously, not certain macro we've referenced some cyclicality. How do you think about that balance maybe beyond 2022, in terms of the growth versus the margin? Appreciate you're not giving guidance for 2023 yet, but has anything changed in terms of the thought process on how you're looking at some of the investment posture? Thanks, guys.

Sure. No, that's an incredibly important question as to how we run the business. The environment has changed and the outlook has changed somewhat in the near-term. But philosophically, we're not changing our approach. We want to continue to scale the business, we want to build leverage in the business. So, we expect to see improving EBITDA margin. So, this last quarter, we just reduced, of course, the forward look on revenue and so we're reducing our rate of growth for the year, our rate of investment. We still want to fund growth, so we're not changing anything, we're in a great financial position from a cash standpoint, we're stable, we're burning $3 million a quarter that should continue at roughly that rate going forward. So, we control our own destiny with $783 million in cash and cash equivalents. But we do want to have the model start to scale, we plan to continue to do that regardless of the revenue rate. And so you'll see us continue to adjust our investments on a go-forward basis. So, I think next year what we'll say depending on the growth environment, at the end of the day, we need to win in this market, we need to own these markets, and we need to have long-term growth. We're not going to be confused about that. This is a growth company. But at the same time, we need to see leverage and so going forward, we don't have guidance yet, but you'll expect our EBITDA margin to be better next year. We've committed to that early on, as we went public and we continue to hold the same philosophy.

And Ken on -- sort of to continue on that a little bit about sort of where are we continuing to invest. I mean, we did pull back on the pace of expense growth, to try to match the lower than expected revenue growth, to try to kind of hold just adjusted EBITDA margin roughly the same. We're still leaning in heavily a building direct salesforce to land and expand in Enterprise, growing top of funnel, the distribution, providing more localized learner experiences around the world. Some of the product innovation that we talked about, notably the Career Academy, most Professional Certificates, the Eclipse, which is sort of the shorter, more accessible learning. These are all things that we're continuing to invest in, because it seems like there's good demand for this and they're pretty differentiated. And so we don't really want to pull back on that.

Understood. Thanks guys

Sure.

Your next question comes from the line of Josh Baer with Morgan Stanley. Your line is open.

Great, thank you for the question. I wanted to ask a couple follow-ups on Enterprise and the step down and the net new account additions quarter-over-quarter from that 100 level to 41. Like is that all in the EMEA region or was there impact in other geographies -- in North America?

Yes. Our North America enterprise was pretty consistent with what we were expecting and I'm not sure exactly the number of deals maybe, Ken, you can grab that. But when you look at overall bookings, like that was pretty solid. Assuming that ASPs weren't changing a whole lot, I know that our new and expansion, the new logos in Europe was where it was really the latest. I don't know if that accounts for the full amount of it, certainly on the revenue expectations, that's where we're seeing the weakness for the rest of the year. Ken, any additional color that you provide in terms of the net logo adds and kind of where those showed up?

The as you referenced, the focus is on ACV. It's on contract value, it's how we measure the Salesforce and measure our success over time. So, the -- so we were lighter in the as Jeff said, the performance in North America was fine. It's an ACV total contract value focus that we look at as opposed to a number of new ads for them to look that up. But it's not something we necessarily forecast to be fair, we've run the business on contract value.

Okay. Got it. And with Enterprise in mind and the guidance, I guess, just wondering if you're seeing some of these -- if you're seeing deals that are pushed out? Or are you -- or is there a change in. I guess, again, for like the new account additions, is there a change to win rates? Essentially, like, are you -- is this just a little shift in macro and in EMEA and demand that's getting pushed out? Or is there any other changes to note in the competitive landscape or anything else to note there?

Yes, Josh, we didn't mention competition in the script. But I'm feeling pretty good about our competitive position, especially in Coursera for campus and Coursera for government. And with this career academy, the professor's these long form job training certificates, we are willing that portfolio quite quickly. And that is just really resonating with governments are trying to get people trained for jobs, and are looking for an affordable way to do that with good quality and good brand. And then frankly, academic institutions who are seeing, competition from others and saying, if I'm going to attract students, I've got to, I've got to provide something that make them more job ready when they graduate industry micro-credentials is becoming quite a buzz word around, the higher the academic space. And not to say, there's no competition, but we really feel good about our competitive position in both the campus environment and the government environment. See, for me, honestly, not really much change that we've seen. And, and so I nothing stands out as being be more exceptional than these macro-economic factors that we're talking about.

So Josh said your stat on briefly two-third one piece D. So it would be more pushing out a lack of closure, particularly in Europe as what we've seen, not that we're losing the competition, I'm always a little hesitant to say it's pushed out and it's delayed, because the deal that doesn't happen might not ever happen. You're being realistic, but we're not losing. It's just we're not closing immediately. And again, that affects primarily in Europe.

Got it. Thank you.

Yes.

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

Hi, Jeff and Ken. Thanks for taking my questions. I had a question on the consumer segment, you talked about some pricing experiments during the quarter that perhaps had a bit of a negative impact or not the impact you're expecting? Can you can you provide a bit more color on what you were doing there? And perhaps corrective actions you're taking that gives you more confidence in sort of a back half step up in the consumer revenues? Like you're implying in the guidance? Thanks.

Sure. Not a problem. Yes, there was the number of pricing and packaging experiments that we ran? Some of them which came from some work we did in India, with some shifts in how we handle subscriptions within certain credit card rules there, where we saw some promise, actually some improvements in some of our metrics that are related to revenue. And so we ran experiments in other parts of the world, primarily Europe. And instead, we saw a decline. And as a result, we change those back to what we were doing. So yes, we've kept this quarter on an ongoing basis, we've factored any ongoing effects from them, although we've corrected it. And we did take some steps. It's a young company, we're growing, we try to be as aggressive as we can, in figuring out where there's opportunity for growth. But you know, we're ensuring a few new sign offs as we look at future experiments. So cheers for the team for looking for more growth. And we've upped the operational game a little bit in that group, so that will not have the recurring effects beyond our forecast.

And as Ryan, this was something that we actually saw in Q1. We ran some tests in Q1, right. This looks pretty interesting. It might be a way to stimulate, new pain learners, with, albeit potentially a risk on the retention side. And the themes that we should run these a little bit more broadly. So basically, we took some that worked in Q1, we ran a bit more broadly in Q2, basically, in May, we said, we don't like the back end of this on the retention side, we should pull this back. But to Ken's point, there'll be some persistent but diminishing effect over the rest of the year. And so we factored that in.

Excellent. Thanks. And maybe just a follow-up on enterprise. Obviously, you've talked at nauseam about Europe and sort of delay of deals. I'm just curious, when you talk with your customers, what you're seeing in terms of headcount and retention there, obviously, we've seen in sort of May in June, start to see some tech layoffs and mass in the US and some hiring freezes. Just curious what you're hearing in terms of potential expansion opportunities from a pure headcount perspective at your existing customers? Thanks.

Thanks. Yes, sure, Ryan, this is one I think that is a little bit more specific to Coursera. Generally speaking, when we sell into companies, it's a higher price tag than the competition is usually not an enterprise license agreement that covers all heads based on the number of heads, people usually buy seat licenses at a higher price for a target population. That's a generally a small portion of the overall company. Often, what they're doing is they're up-skilling people in very high demand roles, like data science and tech and in like digital marketing and things. So I think with respect to your overall layoffs, I don't think that that's going to impact our Rescue sort of revenue retention, if you will of enterprise accounts, because we don't typically have those broader enterprise license agreements. I mean, it might certainly have caused a pullback. And maybe we might be seeing some of that in terms of new spend or sort of cross selling into other organizations. But anecdotally, we are certainly seeing customers have their organizations restructured, downsize, and some, in some cases, the point of contact that we've had, are being moved around. And so it looks like and again, in Europe, there are there are changes that companies are making it seemingly in response to the environment. That's really pretty anecdotal. I mean, I couldn't give you an exact count on that.

Thanks for the color.

Sure. Thanks, Ryan.

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

Great. Thanks for filling me in. Can you just talk a little bit about the linearity of the headwinds that you saw by segment, how they kind of developed in the quarter? Did these materialize very early on or towards the end? Just trying to understand kind of how it played out.

Yes. I think that this is going to be different by segment. One of the things about enterprise is it's typically very back-end loaded that's kind of when the deal gets done. So you don't get a lot of visibility in the last usually a few weeks. On consumer, it's a little bit more continuous. And then degrees, frankly, is based on one of the close date for the application process. And so across each segment, the dates are a little bit different, but generally it's back-end loaded on enterprise towards the end of the quarter. So I think, as I mentioned, on the consumer side, it was sort of a gradual sort of recognition of the conversion rates in Europe and then these pricing cuts, which are kind of midway in the quarter. On enterprise, we didn't really see anything until more the later part of the quarter because we just don't get a lot of visibility. It's not equal and linear process. And on degrees, it was more sort of the cohorts and seeing are they filling up or not when the closed bases come. Ken, anything you add to that?

No, I think that captures that exactly.

Okay. And then just to clarify, the third quarter guidance, I imagine, it assumes for these trends to kind of remain consistent or get worse or any thoughts there?

Yes. Sure. No. So of course, we forecast with all available information where we think the trends are going. It also depends on segment, as Jeff referred to, is the same as visibility. So it depends how we do each of those existing, but we assume, we had assumptions on all of the key factors of the conversion rates and certainly did not factor improvement on any of them. We -- it's important for us to hit our numbers, so this quarter is a little bit painful. But we took into consideration everything we know and did not assume anything in an optimistic fashion.

Great. Thank you.

Thanks, Jason.

Your next question comes from the line of Terry Tillman with Truist Securities. Your line is open.

Yes. Thanks for fitting me in as well on the call. I had a couple quick questions. I'll try and make it brief. So we've got about a 10 percentage point downtick in enterprise revenue. And I'm not trying to harp on that, but you're talking about enterprise sales capacity expansion and quota carrying headcount expanding. So it's kind of interesting that those are happening at the same time. Is that enterprise sales capacity levered to the European market where that seems like a softness or is it in another markets worked more resilient? And how quickly could that provide some offset in terms of assuming they become productive? And then I had a follow-up?

Yes, a great question, Terry. So we -- so the answer is yes, the performance by the reps has vary by region, in by reps and by product, as Jeff mentioned before, no secrecy which we're very excited about has been slower in Europe. And so as we look will reallocate quotas, we have not pulled back on the number of reps were on an overall basis happy with the performance of the reps any time you have a slower quarter, of course, you have lower productivity. But it's -- the one thing, we're not cutting capacity, because we have any doubts of productivity going forward. We certainly did see variance by region. But that's typical. And so performance in Europe was weaker as one would naturally expect with results that weren't as good. But that's what we've seen. We've seen a bit of variability by product rep, because the reps are striped by the product and a little bit by region.

Okay. And final question, and thanks for that, but follow-up question. And thinking about ton of positive opportunities, your Career Academy, maybe you could talk a little bit more about the actual pipeline, how many are signed up in terms of kind of referenceable customers and the ticket size for Career Academy? Thank you.

Yes. Sure, Terry. The Career Academy, we launched it on May 5 at conference. So it was really pretty much the two-thirds of the quarter, maybe half the quarter that was out there. We were pretty happy with the progress kind of right out of the gate. It is a sort of narrowly specified product. It's kind of add -- the basic claim is add industry micro credentials for your students, so they can get jobs when they graduate. On the average ticket size, I'd say, it's a relatively limited number of pieces of content, that long form, usually 50 to 75 hours for these Professional Certificates. But it's about 22 Professional Certificates out of a catalog of 5,000. So it's a much more focused part of the catalog. And it is a much more sort of simple and standardized offering. The average ticket price is lower than then a standard one, because it's a more focused offering. And we're expecting and so far the evidence suggests that this is the case that the ability to move deals through the pipeline for Career Academy will be a little bit quicker, because it's just simpler, it's easier, it's a little bit less expensive. And there seems to be a resonance of this idea of get ad industry micro-credentials to help my students to compete for students, and then help my students get jobs when they graduate. So, I think we're looking at some favorable characteristics, although to your point. And what I was kind of trying to allude to in one of the earlier calls, if the average ticket price comes down, we couldn't see an increase in the number of deals assigned clients. But that might grow faster than the overall revenue, if the average size of the ticket is lower, it's likely going to be with Career Academy, at least in Coursera for campus.

Okay. Thank you.

Yes.

Your next question comes from the line of Brett Knoblauch with Cantor Fitzgerald. Your line is open.

Hi, guys. Thanks for taking my question. First one on the enterprise side, I don't think you guys have added less than 3 million in enterprise revenue in the quarter since 4Q 2020. If you add 3 million, both 3Q and 4Q, you had call it 49% growth for the year. So I guess what is with the mid 40% guidance? Is that a result of conservatism? Do you expect to increase churn? And to that point, we've seen a lot of companies flag deal cycles lengthening, have you seen that across Coursera for business, campus or government?

Yes. Again, it's not -- it hasn't been renewals. It's been new bookings where it's been slower. On the revenue side, again, primarily Europe, but a little bit across the board. We've seen the effect, more in secrecy, and cheaper the -- but both are doing well. It was a deceleration versus historic. We still are confident in the enterprise business. I want to be clear about that. We feel very good about where we are and the additional products we're introducing. So I wouldn't read into this a broad weakness in our enterprise business. That's not what we believe we're seeing. We think we've seen some slowdown in region. And again, we're continuing to -- it's the one area we've chosen to continue to invest, particularly, as we right size some of our investments going forward. Does that answer your question? Or is there anything more specific?

Yes. That's -- there’d be another question on just the segment margins. I think the consumer segment margin has kind of continuously kind of maybe outperformed your guys expectations, definitely mine, seems like that mix is really saying at the industry side from a content perspective, I guess, is that something you expect to persist, especially as you seems to ramp more your business towards entry level for Professional Certificates? And do you think if maybe unemployment kicks up, you'll see the university content, maybe see that uptake a bit more? How should we think about that dynamics?

Yes. I generally say on the consumer segments, it's kind of just what kind of content are individuals around the world looking for these days? It seems like what we're seeing is people are coming because they wanted to get a new job. A lot of people want to become data analysts and computer scientists and people who make money. They have more flexibility in a job. So a lot of that kind of content does skew towards industry. I think that if we continue to see growth in consumer because of people looking to start and switch careers, which is what we've been seeing, and that has not abated, and there's not an obvious reason, why would abate. The kind of content that they will be looking for is this sort of career switchers, Professional Certificate content. And so yes, I remember when we first started talking about this, as we started seeing it showing up in May was Q2 of 2021, it has continued to not just persist, but grow a bit. Unless consumers switch away to a different kind of content, I think it'll persist. I also -- I do want to say that we are reinvesting a lot of the money into supporting and promoting these programs. And so we're trying to build up the best, fastest of what the best set of entry level Professional Certificates as possible. We're marketing them pretty heavily. And so what's not showing up on some of the content fee cost of sales line is showing up a bit on the sales and marketing where we're promoting these, and also someone R&D, where we're capitalizing some of the costs of the content development. So it's not that it all would just naturally be formed at the bottom of the line. We are reinvesting some of this in building out more content and making sure that we really promote this. We just think that this is a time when a lot of people are looking for this kind of content. And frankly, this kind of content is pretty unique to Coursera, and generally speaking.

No, I agree. And maybe just quickly, one last question on Coursera Plus. I think last quarter, you said it was 30% -- north of 30% of the consumer revenue. Was there any weakness related to Coursera Plus? And I guess any update on how or that metric as a percentage of consumer revenue?

So there was no specific weakness in Coursera Plus, if Coursera Plus is grown throughout this year. It's still north of 30%. We're not looking to get specific guidance on the Coursera Plus composition of the total on an ongoing basis, but general colors where we like to provide, I'll confirm or north of 30%. And it's grown throughout the years. So we feel great. It's continued to be adopted. Where does it cap out? We don't know. It's great revenue. It's nice to have recurring revenue and makes it easier for the consumer team to continue to grow their revenue. So that's been great. But yes, so all is well in Coursera Plus.

Awesome. Thanks, guys. I appreciate it.

Sure.

Great. Thanks, Brian. 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 you joining us today.

This concludes today's conference call. You may now disconnect.