Online learning platform Coursera (NYSE: COUR) reported revenue ahead of Wall Street’s expectations in Q1 CY2025, with sales up 6.1% year on year to $179.3 million. Guidance for next quarter’s revenue was optimistic at $181 million at the midpoint, 2.4% above analysts’ estimates. Its non-GAAP profit of $0.12 per share was 52.6% above analysts’ consensus estimates.
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Coursera (COUR) Q1 CY2025 Highlights:
- Revenue: $179.3 million vs analyst estimates of $175.3 million (6.1% year-on-year growth, 2.3% beat)
- Adjusted EPS: $0.12 vs analyst estimates of $0.08 (52.6% beat)
- Adjusted EBITDA: $18.7 million vs analyst estimates of $10.36 million (10.4% margin, 80.5% beat)
- Revenue Guidance for the full year is $725 million at the midpoint, roughly in line with what analysts were expecting
- EBITDA guidance for the full year is $50.75 million at the midpoint, below analyst estimates of $51.02 million
- Operating Margin: -8%, up from -17.6% in the same quarter last year
- Free Cash Flow Margin: 0%, down from 4.1% in the previous quarter
- Market Capitalization: $1.23 billion
“Stepping into the role of CEO of Coursera, a company at the forefront of transforming learning, has been thrilling. We welcomed more than seven million new learners, marking a first quarter record and underscoring the global demand for job-relevant skills and trusted education,” said Coursera CEO Greg Hart.
Company Overview
Founded by two Stanford University computer science professors, Coursera (NYSE: COUR) is an online learning platform that offers courses, specializations, and degrees from top universities and organizations around the world.
Consumer Subscription
Consumers today expect goods and services to be hyper-personalized and on demand. Whether it be what music they listen to, what movie they watch, or even finding a date, online consumer businesses are expected to delight their customers with simple user interfaces that magically fulfill demand. Subscription models have further increased usage and stickiness of many online consumer services.
Sales Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last three years, Coursera grew its sales at a solid 16.4% compounded annual growth rate. Its growth beat the average consumer internet company and shows its offerings resonate with customers.
This quarter, Coursera reported year-on-year revenue growth of 6.1%, and its $179.3 million of revenue exceeded Wall Street’s estimates by 2.3%. Company management is currently guiding for a 6.3% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 3.4% over the next 12 months, a deceleration versus the last three years. This projection doesn't excite us and implies its products and services will face some demand challenges.
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Cash Is King
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Coursera has shown mediocre cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 4.9%, subpar for a consumer internet business.
Taking a step back, an encouraging sign is that Coursera’s margin expanded by 16.4 percentage points over the last few years. We have no doubt shareholders would like to continue seeing its cash conversion rise as it gives the company more optionality.
Coursera broke even from a free cash flow perspective in Q1. The company’s cash profitability regressed as it was 10.7 percentage points lower than in the same quarter last year, prompting us to pay closer attention. Short-term fluctuations typically aren’t a big deal because investment needs can be seasonal, but we’ll be watching to see if the trend extrapolates into future quarters.
Key Takeaways from Coursera’s Q1 Results
We were impressed by Coursera’s optimistic EBITDA guidance for next quarter, which blew past analysts’ expectations. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. On the other hand, its full-year EBITDA guidance slightly missed. Overall, we think this was a solid quarter with some key areas of upside. The stock traded up 3.6% to $7.96 immediately following the results.
Coursera may have had a good quarter, but does that mean you should invest right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
