[Management View]
Coursera reported a strong Q2 2025 with total revenue of $187 million, reflecting a 10% year-over-year growth. The company generated $29 million in free cash flow, marking a 68% increase compared to the prior year. Gross profit reached $105 million, up 13% year-over-year, with a gross margin of 56%. Adjusted EBITDA was $18 million, or 9.6% of revenue. The company has $775 million in unrestricted cash and no debt. Management emphasized the record quarterly free cash flow and substantial improvements in both margin and operating leverage. Segment performance showed broad-based revenue acceleration in the consumer business across all regions.

[Outlook]
Coursera raised its full-year 2025 revenue forecast to $738 million-$746 million, a $17 million midpoint increase driven by consumer segment strength. Q3 revenue is projected between $188 million and $192 million, equating to 7%-9% year-over-year growth. The company plans to continue investing in proprietary content and technology, notably in AI-enabled product features and translation capabilities.

[Financial Performance]
Coursera's Q2 2025 revenue grew 10% year-over-year to $187 million. Free cash flow increased by 68% to $29 million. Gross profit was $105 million, up 13% year-over-year, with a gross margin of 56%. Adjusted EBITDA was $18 million, or 9.6% of revenue. Consumer segment revenue was $123 million, up 10% year-over-year, with a segment gross profit of $75 million and a 61% consumer segment gross profit margin. Enterprise segment revenue was $64 million, up 10% year-over-year, with a segment gross profit of $45 million and a 70% non-GAAP gross margin.

[Q&A Highlights]
Question 1: Did the revenue growth acceleration this quarter imply about 8% year-over-year growth at the midpoint in the third quarter and below 4% growth in the fourth quarter? Is there anything specific driving that assumption?
Answer: The improvement in the forecast is primarily driven by the consumer business. The macro trends in enterprise are not getting better visibility, affecting broadly the markets. The consumer segment shows strong growth going into next quarter, with a slight pullback seasonally in Q4 and a decrease in the Degrees product.

Question 2: What are you seeing in terms of big tech making AI skills education a bigger priority, and how is Coursera positioning itself in Big Tech's plans?
Answer: The pace of change is accelerating globally, increasing the need for rescaling and upscaling for individuals and companies. Coursera is well-positioned with trusted content from top universities and industry partners, an AI-enabled learning platform, global reach with 183 million registered learners, and strong business fundamentals. Conversations with enterprise partners show recognition of the need to adapt to the pace of change, requiring new roles and skills.

Question 3: Can you elaborate on the consumer app performance and the sequential dollar growth seen in Q2?
Answer: The total increase was $17 million, focused on consumer. Q3 is expected to be similar to Q2 from a growth standpoint for consumer, with a slight slowdown in Q4 due to seasonality and pullback on degrees. Growth accelerated in the consumer business in every region, driven by rapid product development and data-driven improvements in conversion, engagement, and retention.

Question 4: Can you discuss the trends across government, business, and campus subverticals in the enterprise segment?
Answer: Coursera for Campus (C4C) has shown strong growth and product market fit. The government business benefited from lapping contracts, and Coursera for Business (C4B) improved but faces visibility challenges due to corporate spend uncertainty. The enterprise net retention rate improved to 93%, but there is still work to be done.

Question 5: How sustainable are the improvements in consumer gross margins, and what should be expected structurally?
Answer: The improvements are driven by investments in content and better revenue share from newer content partnerships. These trends are expected to continue, with additional upside over time as product changes and investments enhance the learning experience.

Question 6: What is driving the growth in net new learners, and are there specific regions or demographics contributing significantly?
Answer: The fastest growth percentage comes from APAC, with India being the second-largest registered learner base. AI content interest is a significant tailwind, along with top-of-funnel activities, promotions, and pricing strategies. The team is focused on continuous improvement in these areas.

Question 7: Are companies holding back on L&D budgets due to uncertainty, or are they opening up more?
Answer: There is macroeconomic uncertainty leading to caution in corporate spending, balanced against the recognition of AI's impact on business and workforce. Forward-looking enterprises are leaning in to upskill and reskill their workforces.

Question 8: Can the new workforce Pell Grants for short-term high-quality workforce-aligned programs benefit Coursera's university partners?
Answer: The move towards skills-focused education aligns with Coursera's direction. The company is working with bodies like ACE, ECTS, and NSQF to make industry certificates credit-carrying, benefiting learners and universities.

Question 9: What are the concrete data points being monitored to understand business improvement, and what is the roadmap for new hires?
Answer: Key metrics include traffic, conversion rates, engagement, retention, and revenue from learners. The focus is on instrumenting every aspect of the business to understand the relationship between these metrics and drive improvements. New hires are expected to accelerate progress in data-driven product development and content creation.

Question 10: Can you generalize the user behavior for Coursera Plus subscriptions?
Answer: Learners include starters, switchers, and advancers, with differences in content interest geographically. India shows strong interest in Gen AI content. Broadly, the most interest is in AI, tech, data, networking, cybersecurity, and business courses.

Question 11: How is the pipeline for Coursera-produced content developing, and what areas are being identified for investment?
Answer: The company is investing more in its content engine, both in Coursera-produced content and tooling for partners. Investments in Coursera-produced content provide good economics and exclusivity, and serve as a test bed for platform-wide improvements.

[Sentiment Analysis]
Analysts and management displayed a positive tone, emphasizing strong growth, improved margins, and strategic investments in AI and content. There was cautious optimism regarding enterprise segment visibility amidst macroeconomic uncertainty.

[Quarterly Comparison]
| Metric | Q2 2025 | Q2 2024 | YoY Change |
|-------------------------------|---------------|---------------|--------------|
| Total Revenue | $187 million | $170 million | +10% |
| Free Cash Flow | $29 million | $17 million | +68% |
| Gross Profit | $105 million | $93 million | +13% |
| Adjusted EBITDA | $18 million | $15 million | +20% |
| Consumer Segment Revenue | $123 million | $112 million | +10% |
| Enterprise Segment Revenue | $64 million | $58 million | +10% |
| Net Income | $19 million | $16 million | +19% |
| Total Unrestricted Cash | $775 million | $700 million | +11% |

[Risks and Concerns]
- Macro-economic uncertainty affecting enterprise segment visibility and corporate spending.
- Seasonal fluctuations in consumer segment growth.
- Dependence on continuous investment in AI and content to maintain competitive advantage.

[Final Takeaway]
Coursera's Q2 2025 performance highlights strong growth driven by the consumer segment and strategic investments in AI and content. The company raised its full-year revenue and adjusted EBITDA guidance, reflecting confidence in its growth trajectory. While macroeconomic uncertainty poses challenges for the enterprise segment, Coursera's broad-based acceleration in consumer business and focus on innovation and engagement position it well for future growth. The positive sentiment from analysts and management underscores the company's robust fundamentals and strategic direction.