Q2 2025 Coursera Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to corsair's second quarter 2025 earnings call. All participants are in listen-only mode, and this call is being recorded.
Following the prepared remarks, we will hold a question and answer session.
To ask a question. Please click the raise hand button and be prepared to unmute your line when prompted
Speaker Change: I would now like to turn the call over to cam Cary, vice president of investor relations, Mr. Cary, you may begin.
Good afternoon.
Speaker Change: Thank you for joining us for corsair's, Q2 2025 earnings conference call.
Speaker Change: Today, I'm joined by Greg Hart, our president and chief executive officer and Ken Hahn our Chief Financial Officer.
Speaker Change: Following their prepared remarks, we will open the call for questions.
Our earnings press release was issued after market close, it is available on our investor relations website at investor.org sarah.com where this call is being webcast live and where versions of today's materials, including our core release shareholder ladder have been published.
Speaker Change: 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 earnings, press release and supplemental materials.
Speaker Change: Please note all growth percentages, discussed refer to you over your change unless otherwise specified.
Speaker Change: All statements, made during this call relating to Future results. And events are forward-looking statements based on current expectations and beliefs
Speaker Change: Actual results and events could differ materially from those Express or implied. In these forward-looking statements due to a number of risks and uncertainties including those discussed in our earnings press release, shareholder, letter and SEC filings,
Speaker Change: Please refer to today's earnings press release for more details on our forward-looking statements.
Speaker Change: With that, I'll turn it over to Greg.
Greg Hart: Thank you, Cam and good afternoon, everyone. It's great to be with you all.
Greg Hart: Of course, Sarah delivered. A strong second quarter. We are executing at a renewed and Rapid Pace, delivering revenue of 187 million and increasing our growth to 10% year-over-year.
We also drove strong. Bottom line, performance generating, 29 million dollars of free cash flow, which was up 68% from the prior year.
Greg Hart: Given the early momentum. We demonstrated in the first half. I am pleased to share that. We are raising our expectations for full year revenue and adjusted ebita.
Greg Hart: We now expect to deliver 738 to 746 million dollars of Revenue. Raising the midpoint of our range by 17 million
Greg Hart: We are also increasing our annual adjusted ebitda margin. Target to 8%, delivering, 200 basis points of year-over-year improvement while deploying Investments intended to unlock more durable growth.
Speaker Change: As the pace of Technology, reshapes the labor market, I believe corsair's Market opportunity continues to expand fueled by the global demand to embrace new technologies and skills.
Speaker Change: In Q2 we attracted 7 and a half million new registered Learners. This was the largest number of quarterly new additions. Since 2020 growing our total cumulative Bass by 18% year-over-year to 183 million.
Speaker Change: Campuses.
Speaker Change: As 1 of the largest and most globally distributed learning platforms. Our data is becoming an increasingly powerful asset. That provides us with a unique lens to help our Learners on the consumer side, discover and master skills that can advance their careers.
Speaker Change: To support our Enterprise customers, looking for the best way to upskill their workforces at scale while navigating rapid changes in the labor market.
And to draw insights that inform our content, strategy skill assessments recommendation engine and product development Cycles. As we begin to transform The Learning Experience.
Speaker Change: As part of my initial observations last quarter, I shared that we were in the early stages of implementing. Thoughtful changes to our operating model.
Speaker Change: Focused on driving more Innovation, and engagement throughout our learner experience.
Speaker Change: More rapid product development Cycles.
Speaker Change: More Speed and Agility in our content engine.
Speaker Change: And a data driven approach to continuous Improvement in all aspects of our business.
Speaker Change: To support these efforts. I was excited to announce the appointments of Patrick supons as Chief product officer, and Grant, for samian. As Chief data officer, welcome them to my leadership team.
Both are seasoned Leaders with deep expertise, in building customer Centric, products scaling data, Transformations, and driving rapid Innovation. They have hit the ground running working alongside our teams to shape, our next chapter of innovation, unlock new avenues for growth and build new operational rigor that can accelerate our progress.
Speaker Change: Corsair's ecosystem is built on a strong Foundation of assets which I believe will help us shape the future of learning, by in, Reinventing, how skills are developed and reimagining, how education is delivered at scale.
Speaker Change: Our branded content is 1 of those assets.
Speaker Change: Our catalog now includes more than 10,500 courses, having expanded my board in 36% over the past year.
Learners come to corser to discover and master in demand skills taught by world-class instructors. Trusted for their academic. Rigor industry, expertise and career relevance
To meet the growing demand for AI skills are generative AI catalog. Now, includes more than 925 courses, having tripled over the past year.
We recently surpassed 10 million enrollments and generative AI courses seeing 12 enrollments per minute. So far in 2025
Speaker Change: In connection with this Milestone, we were proud to announce new courses and certificates focused on job. Specific generative. AI skills.
Speaker Change: Featuring offerings from AWS.
Deep learning AI, Google Cloud, IBM, Microsoft Snowflake and more.
Speaker Change: Earlier this month Corsa was named to the time 100 most influential companies list for our efforts and expanding access to generative AI skills for Learners around the world.
Speaker Change: Helping the global Workforce better understand, and apply this new technology.
we will continue to work closely with leading AI companies as well as our world-class universities, who share our commitment to broadening access to job, relevant education, so that Learners can navigate and succeed in a fast-changing labor market,
Speaker Change: Businesses can strengthen their Workforce to remain competitive, and campuses can better prepare their graduates.
Speaker Change: As part of this commitment, we also continue to expand our catalog of Industry micro credentials.
Speaker Change: In July, we announced 5 new entry-level professional certificates, from existing Partners, including ADP IBM, Microsoft, and sap, as well as our first certificate from Zoho.
Speaker Change: these certificates provide the necessary skills to start a career in various roles from AI product manager, to sales representative
Speaker Change: Increasingly, there are also eligible to earn college. Credit enhancing their value to our Learners and opening new more affordable Pathways to college degrees.
Speaker Change: Earlier this month, we were pleased to share that 17 additional percent, professional certificates from meta, Microsoft and IBM, were awarded ects credit recommendations in Europe, along with 5 from AC. Here in the US.
Speaker Change: We now have more than 30 micro credentials with ects credit recommendations with approximately 40 from AC.
Speaker Change: As demand for career line, education from industry grows. We Believe top universities will also view corser as a strategic platform to extend their reach.
Speaker Change: Last week, we were pleased to announce that the University of Cambridge is now collaborating, with corser.
Speaker Change: For the First Time, The University will bring a series of professional education courses to our platform.
Speaker Change: The first of these courses is now live with more expected to launch in the coming weeks.
Speaker Change: To summarize, we will continue to invest in building a faster more agile model that enhances the value of Our Brands, meets the rapid pace of skills development and empowers, our instructors with new tools to create and augment courses. That deliver a more engaging personalized and impactful learning experience for the millions of Learners and customers our platform serves
Speaker Change: turning to our product updates.
Speaker Change: Our team continues to make strong progress in developing new products and capabilities across our platform. And I would like to highlight a few notable recent Innovations focused on delivering more value to Learners and driving improvements in our conversion engagement and retention metrics over time.
First, an update on cser coach?
Speaker Change: Coach is our AI powered tutor designed to support and enhance The Learning Experience on corser.
Speaker Change: to date more than 2.6 million Learners have exchanged 36 million messages with Coach with the highest usage in the US, India and Columbia
Speaker Change: From our early data, we see that Learners using coach are 10% more likely to pass a quiz on their first attempt.
Additionally, Learners starting their careers are 40% more likely to use coach than those working to advance their careers.
Speaker Change: Demonstrating the potential impact of providing a more personalized interactive engagement across our platform.
Speaker Change: In June coach was recognized by the 2025, Newsweek AI impact Awards. Winning for AI education. Best outcomes for its ability to adapt to the needs of individual learners.
Speaker Change: By combining trusted content. With AI enabled, guidance, coach is becoming increasingly powerful at providing a more personalized and interactive experience grounded in the expertise of our instructors. And of course, there is deep data, driven understanding of learning progression and skills development.
Speaker Change: Our team continues to build upon the initial tutoring. Use case testing new capabilities and Discovery and onboarding career guidance interactive role-play and customer support.
We are excited about coaches potential to drive stronger engagement throughout our platform, and most importantly, to deliver better outcomes for our learners.
Speaker Change: Next is AI translations.
Speaker Change: Corsa has been leveraging AI to broaden access to our high quality catalog starting with text-based translations in 2023.
Speaker Change: Today, our platform offers more than 5,500 courses in up to 26 languages.
In April I highlighted that the next phase of our translation efforts AI dubbing would begin to bring native language learning to Corsair featuring the voices of our expert Constructors.
Speaker Change: We started with an initial 100 courses from 3 Partners at launch.
Speaker Change: Over the past few months we have tripled the number of available courses including many of our most popular titles from Google.
And have added support for a fifth language. Indonesian
Speaker Change: To date more than 120,000 Learners, have utilized AI dubbing to complete more than 400,000 learning hours with the strongest engagement coming from our Spanish-speaking markets.
Speaker Change: Preliminary feedback from our Learners highlights. Improved focus and understanding as well as the time-saving benefits of remaining on platform for translation capabilities.
Speaker Change: We will continue to expand access to the world's best instructors with added support for more languages and content creators in the coming months.
Speaker Change: It's a prime example of harnessing advancement in technology that leverage the scale advantages of our Global reach.
Speaker Change: These efforts expand our Market opportunities and rapidly build on the foundational assets that have propelled corsair's growth into 1 of the largest learning Platforms in the world.
Speaker Change: Third, our efforts to better serve. Our growing population of international Learners. Go beyond reducing language barriers.
Speaker Change: Discovery experience.
As a reminder, this includes more than 60 role description pages that utilize, corsair's career graph to provide credential recommendations across different levels of career progression and skill mastery.
Speaker Change: As well as localized salary, and job data for approximately 40 countries.
Speaker Change: This was 1 example of our broader efforts to reimagine the Learner Journey on Corsa encompassing improvements in search to Discovery and onboarding.
Speaker Change: Scale and data of our platform create powerful opportunities for personalization and localization, enabling us to tailor, content language recommendations and experiences to meet the needs of individual Learners and labor markets in different regions.
Speaker Change: This quarter, we started experimenting with preliminary enhancements to our go to market capabilities. Aiming to guide individual Learners more effectively through our funnel with an improved site, experience new Promotional and Geo pricing capabilities and better merchandising that articulates a clearer value proposition across our courses certificates and subscription offerings.
Speaker Change: The early results are promising, we're seeing positive impacts in our new, paid learner conversion including in international markets that drive substantial, top of funnel activity and provide meaningful opportunities for us to deliver more valuable experiences which can improve our paid conversion over time.
Speaker Change: I'm excited about our product roadmap for the rest of the year and look forward to providing updates, on our momentum in the coming quarters.
Speaker Change: Our second quarter performance marks an important step in laying the foundation for our next chapter of growth.
Speaker Change: As a reminder, our efforts will be focused on 3. Pryor. First product-led growth is key to our strategy.
Speaker Change: Our team is making strong progress. In enhancing our platforms capabilities, and I am confident in Patrick's and grants ability to accelerate our product development life cycles, leveraging Advanced Ai and data driven insights across all aspects of our business.
Speaker Change: Second. We will accelerate our content engine, the breadth and quality of our catalog. Enable us to serve both upskilling and reskilling use cases. I expect course Builder academic Integrity features and more AI production and ingestion capabilities will allow us to build a faster more agile content model. While preserving the value of our credible high-quality Brands and meeting.
Speaker Change: The rapid pace of skills development required by a real-time learner and business needs.
Speaker Change: Third, we will continue to improve our go to market capabilities.
Speaker Change: Our efforts to reimagine the Learner Journey are early and promising.
Speaker Change: By creating a more unified and integrated experience across our platform. We ensure that our investments in marketing and Discovery deliver a more personalized engaging and valuable experience for the broad audience of Learners and customers that we serve,
Speaker Change: I am excited to build on our momentum as the year progresses.
Speaker Change: Now, I will hand it over to Ken to walk us through the financial performance and Outlook in more detail.
Ken Hahn: Ken, please go ahead.
Ken Hahn: Thank you, Greg and good afternoon everyone.
Ken Hahn: We delivered another solid quarter, generating total revenue of 187 million of 10%, from a year ago, driven by growth in both our consumer and Enterprise segments.
Speaker Change: As Greg mentioned, our expectations for full year growth have improved as we begin to implement new operating capabilities and execute on a focused set of initiatives.
please note that for the remainder of this call, as a review, our business performance and Outlook, I'll discuss our non-gaap financial measures unless otherwise stated
Speaker Change: In Q2, gross profit was 105 million up 13% year-over-year with a 56%. Gross margin up 180 basis points from 54% in the prior year period.
Speaker Change: The expansion under gross margin rate, continues to be driven by increased learner demand and engagement with content launched under our more recent production Arrangements, which as we've discussed commonly include a lower Revenue, share and Associated content cost.
Speaker Change: Total operating expense was 93 million or 50% of Revenue and Improvement of 150 basis points from the prior year period on continued operating discipline.
9.6% of Revenue.
I remain pleased by our strong bottom line performance. As we leverage, our annual operating framework to enable the right long-term growth decisions over the course of the year.
it is a strong indication of our operating discipline and reflection of our capacity to invest in unlocking, our next chapter of growth,
Speaker Change: Turning to Cache performance and the balance sheet.
Speaker Change: Q2 marked our strongest quarter of cache performance today.
Speaker Change: We generated 29 million of free cash flow which included approximately 2 million dollars in purchases of content assets. Treated similarly to other categories of capital expenditures.
Speaker Change: As Greg outlined, we continue to enhance our content. Engine's capabilities with new Partnerships production arrangements and learning experiences that we believe will deliver increasing value for our customers over time.
Speaker Change: We also expect these Investments to produce longer term benefits to our business model and economics, including the recent expansion, in our gross margin.
Speaker Change: Our cache performance, enhanced our already healthy balance sheet.
Speaker Change: As of June 30th 2025, we had approximately 775 million of unrestricted cash and cash equivalents with no debt.
Our Capital allocation framework? Prioritizes the Strategic optionality afforded by our strong financial position.
Speaker Change: We believe this current prioritization is particularly valuable given the industry's rapid transformation in our ambition to grow and enhance our leadership position.
Speaker Change: Now, let's discuss the results of our operating segments.
Speaker Change: As a reminder, we now report a results in 2, operating segments consumer and Enterprise at the start of 2025. We refined our segment reporting structure by integrating the degrees product results into our other consumer segment products including courses. Specializations in subscriptions,
The simplification was straightforward and reinforced our commitment to building a more unified end-to-end platform, experience to benefit the broadest audience of global learners.
The simplification has no effect on the reporting of our Enterprise segment or Consolidated results.
All consumer, segment results, that refer to year-over-year change are comparable based on the reclassified historical results that we shared in connection with the transition last quarter.
Speaker Change: with that, let's discuss our strong consumer segment performance in Q2 we delivered consumer segment revenue of 123 million up 10% from a year ago
Speaker Change: Gross was driven by top of funnel activity as well as corser Plus subscription offerings. As Greg highlighted earlier we added 7 and a half million new registered Learners bringing our total base to 183 million. Additionally, we saw strong receptivity, to our Cera, Plus subscription offerings and marketing campaigns, including localized promotions and pricing that benefited. Our paid conversion rate.
Speaker Change: Consumer segment. Gross profit was 75. Million up 13% from 67 million in the prior year period.
Speaker Change: Segment gross profit margin was 61% up 160 basis points from a year ago as Learners engage with more recently. Launched content created under production Arrangements that provide more favorable Revenue, share economics,
Speaker Change: To summarize our consumer Trends are stable and progress is promising.
Speaker Change: We're operating with renewed level of prioritization and focus demonstrated by our execution, this quarter, as we seek to drive more significant growth, we're in the early stages of deploying Investments, across product content and marketing. That can create more valuable and engaging experiences for our individual and Enterprise Learners over time.
Speaker Change: I'm pleased with the early indications offered by our more responsive consumer model and look forward to sharing updates on our ongoing progress.
Speaker Change: Moving to our Enterprise segment.
Speaker Change: Enterprise revenue is 64 million up 10% from a year ago, driven by growth in our business and Compass verticals.
Speaker Change: Our second quarter performance was solid and like all companies we continue to monitor budgetary Trends amidst, the backdrop of a dynamic macro environment.
Segment growth profit was 45 million up. 12% from 40 million in the prior year period.
Speaker Change: And segment growth profit. Margin was 70% and Improvement of 170 basis points from a year ago driven by similar content engagement. Trends benefiting consumer.
The total number of paid Enterprise customers increased to 1,686 up 12% from a year ago and our net retention rate for paid and Enterprise customers was 93%.
Speaker Change: Per year weighted towards our consumer segment.
Speaker Change: For Justin ebita, we're expecting a range of 10 to 14 million dollars.
Speaker Change: As Greg highlighted for the full year 2025, we are raising our expectations for both revenue and adjusted ebit da given the solid first half we delivered.
For Revenue, we now expect a range of 738 to 746 million representing growth of 6 to 7% year-over-year.
Speaker Change: Is a 17 million increase from the annual guidance provided last quarter with the Improvement concentrated in our consumer segment by nature of its more, responsive Revenue model.
Speaker Change: As highlighted earlier, consumer growth has been driven by strong, year-to-date top of funnel activity as well as corser, Plus subscription receptivity, providing greater visibility into the back half of the year.
Our assumptions on the trajectory of our Enterprise segment have not changed as we continue to Monitor and assess, the current corporate spend environment, which could remain challenged for any macro uncertainty.
Speaker Change: For ebitda.
Speaker Change: We are now targeting an annual adjusted ebitda margin Improvement of 200 basis points to 8%.
Speaker Change: This reflects an additional 100 basis points of anticipated improvement. From our prior fully your target of 7% or said otherwise, an incremental, 9 million adjusted, ebita dollars implied by the midpoints of our current and prior Revenue, guidance ranges.
Speaker Change: We believe our long-term operating framework as it relates to ebitda, which enables us to Pace our investments over the course of the full year versus optimizing for any single quarter has been particularly helpful in 2025.
It is provided, the opportunity to assess our business and identify top investment priorities to drive growth.
Speaker Change: The capacity to deploy Capital toward our most productive near-term growth opportunities as well as strategic long-term initiatives.
Speaker Change: The ability to track and demonstrate our commitment to delivering scale and financial leverage in our operating model over time. And most importantly, the flexibility to make the right long-term decisions on behalf of our Learners customers and shareholders.
To close. I'm pleased with the solid execution. Our team is delivered year to date. Giving us the confidence to substantially raise our annual revenue and growth guidance.
Speaker Change: While at the outset of many of our efforts, we are demonstrating progress. In implementing new. Operational capabilities across all aspects of our business. While deploying targeted Investments. We Believe can differentiate the value of our platform and reignite, more significant durable, and long-term growth
I'll now open the call for questions.
Speaker Change: As a reminder, if you would like to ask a question, please. Click on the raise hand button at the bottom of your screen. Once prompted, please unmute your line. And after question,
We will now pause a moment to assemble the queue.
Speaker Change: Our first question will come from Steen Sheldon with William Blair please go ahead.
Steen Sheldon: Hey, thank you for taking my questions, great to see the, uh, the revenue growth acceleration. This quarter and for the guys that I think the guidance would imply about 8% year-over-year, growth of the midpoint and the third quarter, I think below 4% growth in the fourth quarter. So effectively deceleration against easier comps, is there anything specific driving that assumption? As? As you did see acceleration, this quarter in both segments, or is it more about just factoring in that continued macro uncertainty? Uh, especially in the Enterprise segment.
Speaker Change: Um, hi Stephen. Uh, thanks for the question. Firstly. Um, so what drove the Improvement in the forecast is primarily the consumer business. Um, the macro Trends and Enterprise, we we don't think we're getting any better visibility, which is something affecting broadly, the market. Uh, so it's the consumer segments. And if you look at the core consumer item, and as it relates to the Future quarters, um, we see strong growth going into next quarter as well. We see a little bit of a pullback seasonally about a 100 basis points for the traditional consumer. And as we mentioned before, we collapse the degrees segment into consumer, uh, degrees will decrease this year. So, the core consumer segment is is rolling along at exactly this Improvement. Um, and and anything less than that from a rate standpoint going forward.
Speaker Change: Got it. Uh, that makes sense. Um, and then maybe just a follow-up. What are you guys seeing in terms of big Tech? Making AI skills, education of bigger priority? You know, we saw the the Microsoft's uh, 4 billion fledged, I think announced earlier this month. And and then how are you thinking about positioning corser to be a key cog in big Tech plans? There you you already have a lot of them as content Partners. So is there more you can do there?
Speaker Change: Great question, Stephen, great. Uh, maybe I'll start with uh, a little bit of context overall and now that I've just gone through my first full quarter uh in the CEO role. So obviously it's still very early days but I'm very pleased with the progress we're making. I am even more confident than I was a quarter ago on the massive opportunity in front of us. For some of the reasons that you just mentioned. The pace of change is accelerating around the world and with it, the need for reskilling and upskilling really continues to increase for both individuals and for companies as you mentioned and so meeting that need really requires a scaled global technology leader in education. I think we are very well positioned with all the right foundational assets. We've got amazing trusted content from the best universities and Industry Partners in the world. We have an AI enabled learning platform. You've heard me talking to scripted remarks about some of the ways that we leverage AI to continue to improve.
Speaker Change: That platform we have Global reach with 183 million registered Learners. And then finally, we've got a very healthy and improving. Uh, fundamentals for the business. We're growing at an accelerated Pace generating, positive cash flow. We have a very strong balance sheet, no debt 775 million of cash, or cash equivalents. So that's a phenomenal set of assets. What we are seeing in our conversations with Enterprise Partners is that they all recognize that the pace of change is accelerating and they need to make sure that they are adapting their companies to meet that pace that requires, you know, thinking about what are the types of roles that they need and what are the types of skills that the people in those roles will need both today and tomorrow. So I think there is a large opportunity for us to play an important role in helping them address. That shift that they're going through. It's something that you know, we focus on internally here as well, but of course, Sarah, um, you know, we're making sure that we're not just leveraging AI, um, to offer it as
Sarah: Courses on AI and not just use it within the platform, but also use it to improve the productiveness and efficiency of everything we're doing across the business. And so I think we absolutely have a role to play in that transformation.
Good to hear. Thanks Greg, and Ken and, and nice results.
Speaker Change: We will take our next question from Taylor, mcginness with UBS your line is now open.
Taylor McGinness: Yeah, hi thanks so much for taking the question, can you hear me?
Speaker Change: Yes, yes.
Taylor McGinness: Okay, perfect. Um, congrats on the quarter, maybe just on like the consumer app performance. So if I look at the sequential dollar growth, I think it was, you know, the strongest that we've seen in some time and typically, you know, for you guys to Q tends to be the lightest quarter. So, when we look into 3 Q, I guess, is there any reason why sequential dollar growth, you know? Could it be stronger? Kind of, I think you made some comments earlier, you know, about some lighter seasonality. So could you just elaborate on that and then end the second, you know, part to the question, maybe you could talk about, you know, where you where you in terms of rolling out the product and go to market changes and consumer. And you know what's left to come? As we think about the growth trajectory and Catalyst from here.
Speaker Change: Sure Taylor. Um yes, so the the as as we mentioned uh before the total increase was 17 million dollars. Of course, uh Topline almost all of it focused on consumer. This is the forecast for the year, of course, um, we expect Q3 to be similar to Q2 from a growth standpoint for Consumer, and then to slow a little bit in Q4 with typical seasonality as as well as some pullback on.
Speaker Change: Degrees. So, um, that's how that 17 million spreads across the rest of the year.
Speaker Change: Improvements to the learning experience that drive, better conversion, better engagement and better retention. Uh, we're still in the early stages of, you know, rolling out the product that will flow from all of that Focus. Uh, so I, I think what you'll see is, uh, we're going to continue to have a very dedicated focus on continuous Improvement across those metrics.
Speaker Change: But we are going to not get ahead of ourselves and get over our skis. In terms of how we think about that business benefit, that, that can drive until we actually start to see it. We started to see some of those things, uh, in queue. We talked about that consumer business obviously has a more responsive Revenue model. Uh, some of the things that we're doing from a, uh, Geo pricing perspective and from a conversion perspective are helpful. Uh, obviously the fact that we increasingly have a subscription driven business, of course, our plus monthly course, our plus annual, we're seeing more and more shift to that that's helpful for our for looking Revenue visibility. Um, but it's still early days in terms of what we aim to accomplish on the platform. So that's a little bit behind how we think about it.
Great. Thank you guys so much.
Speaker Change: Our next question will come from Brian smile with JP Morgan?
Speaker Change: Great. Thanks for taking the questions. Uh, shifting gears a bit. Uh, to Enterprise, good to see the nrr improve as well. Sequentially, can you just talk about what you're seeing across government business and campus, I believe you called out business and campus as brighter spots, um, but just curious on Trends across each sub vertical and then Greg just shifting gears towards AI engagement. You know, with content up 36% year on year, 10 million plus AI enrollments. Can you just talk about monetizing AI tools as you drive deeper engagement across both consumer and Enterprise longer term? Thank you.
Speaker Change: Hey, Brian. This is cannot take the first part of your question, uh, which is the relative performance of the verticals. Um, so c4c has been a particularly bright spot for us. We have a particularly good product Market fit. And we've seen nice growth there over time, as it relates to nrr, the government business, we lacked, uh, some, some contracts this last year. So that helped in the calculation, uh, and, and see for B hasn't had as of course, there from business as much in proven, which is the largest vertical. Course, uh, as we've talked about the visibility, there is a little harder to see as many have seen across other Industries as it relates to corporate spend, uh, with uncertainty. So that's how the NR breaks out, um, and the 93 just for clarity. We're we're pleased it improved from last quarter, but until we get to a 100 plus, we are not going to be satisfied with that.
Speaker Change: Yeah, I would certainly Echo, uh, the last part of what Ken said, uh, we still have a lot of work that we need to do on that front to get it to where, uh, we're happy with it from an nrr perspective, in terms of, uh, the the catalog and its growth. Uh, you know, as you mentioned, 36% growth in the catalog to, you know, more than 10,500 courses. Now, uh, phenomenal interest in, uh, gen AI. Uh, we are seeing that reflected both in the number of courses that we have, because, obviously, we have Partners who want to meet that interest, uh, by creating new content. And so we've seen that, uh, triple the size of our course, catalog and Genai over the past year. Uh, and then we're also using, uh, Genai. Obviously, as a tool to drive better engagement, uh, with that content and so, uh, continuously looking to optimize, uh, the performance of our courses. You see that with things like uh coach dialogues, which is our AI driven tool that enables instructors to deliver. Uh,
Speaker Change: Socratic dialogue in the course based off of their course material. Um so there's a lot of continued effort on that. Um and uh I would say broadly, you know what we want to do with content is make our content engine more responsive both in terms of the breadth of catalogued content that we can bring in across different subject. Matters in terms of the duration of that content catalog, the modality in which it's offered the languages in which it's translated.
Speaker Change: Uh and we believe AI is a phenomenal tool to help us with with all of that.
Speaker Change: Great, thank you both.
Speaker Change: Our next question will come from Ryan McDonald with natum. Please go ahead.
Speaker Change: Sure Ryan. This is Ken. Um thank you. Uh, so as it relates to Consumer, gross margin, what we're we're seeing uh, the benefit of a lot of the Investments we've made in content is 1 key area, which we've talked about a fair amount historically, uh, that has been very helpful in driving consumer margin and should continue. Uh, we we also with a lot of our newer content Partnerships have better Revenue. Share. So as we've evolved the model, and as we have a more substantial presence, uh, in the market, we're able to uh, and we helped produce. Um, we're able to secure, um, better economics and so um, we expect those Trends to continue um, it'll vary always a bit quarter to quarter depending on the mix. I wouldn't say every single quarter but by and large we've improved the operating model around consumer and if anything I think over time we're going to see additional upside there as
Speaker Change: We continue to invest and make product, uh, changes product Investments, uh, including just the core of the learning experience itself and just to build on what Ken shared, like 1 of the reasons that we are really focused on building out our capabilities. For the content. Engine is obviously it fuels the entire business. But also as we uh enable
Speaker Change: Content to be created, more rapidly, and to the and for the cost of that creation to come down and for content to be optimized, more readily across all of our courses that gives us not only the ability to drive a Better Learning, learner experience to drive, you know, higher conversion, higher engagement, higher retention, all of which translates to faster growth. As we do all of that that also puts us in a stronger position over time to get a larger share of that value, creation. And that economics,
Speaker Change: That makes complete sense. Uh, thanks for caller on that. Greg, maybe you have a follow-up as you think about sort of Learners on the platform. You know, I continue to be impressed about the magnitude even at this scale of net new Learners that you drive. If there's a few things you could pinpoint, you know, of what's really driving that or maybe demographically or geographically, like, where you're seeing sort of the greatest unlock, you know, are there a few things you can point to other than maybe just continued demand for Gen? AI content? Is it this new AI translation that's unlocking new regions or or are are the Career Academy is now starting to sort of unlock in different segments of the population? What what do you think is the greatest contributor there?
Speaker Change: Great question. So you know from a growth percentage perspective, we're seeing the fastest growth percentage come from APAC. Uh, not not surprisingly, just because it, you know, historically was a smaller, uh, part of our, uh, business, um, but it's also big and large numbers. You know, India has our second largest number of registered Learners, uh, after the US, um, I would say, broadly certainly AI is a Tailwind, uh, for us both in terms of interest in Genai content, and obviously from the perspective of how we leverage that to deliver that content and deliver a better learner experience,
Speaker Change: Uh, I I think also, as, you know, more and more of the world uses, uh, Genai to learn, uh, anything, whether that's learning with a lowercase l or learning with a capital l, um, they become far more familiar with it and then they want to learn more and they understand the implications that might have for them as an individual, uh, that certain is true with the corporate level as well obviously. So I think that that Tailwind is not going to go away. Um, for the, the edtech sector and certainly our content gives us a differentiated Advantage there, particularly in an era, when AI makes the creation of content far easier. So having trusted content from the best universities in the industry. Partners in the world is a very differentiated asset in our perspective and 1 that we intend to continue to build on um
Speaker Change: I I would say other than that, there isn't a specific thing that I would call out other than the fact that I think our team is doing a really good job on top of funnel. Um I think they're doing a good job. Also on looking at promotions and pricing and how we can use those levers uh, to drive better growth in the business. I still think we're early days in that and so, uh, you can look to see us do more on that in the back half of the year on the Enterprise side. Uh, I think you can also look to see us do more with what we've done in the past with the academy. Uh, that's an active area of investment. Uh, so stay tuned on that Forum as well.
Speaker Change: Awesome. Thanks for the killer congrats again.
Jeff Silver: We'll take our next question from Jeff silver with BMO, please. Go ahead.
Jeff Silver: So much. Um, wanted to focus, a little bit more on corser for business. Maybe you can talk generally about L & D budgets our, our companies holding back because of the uncertainty out there are they opening up a little bit more, any color would be great.
Speaker Change: Maybe I'll start and then, you know, Ken you can add in as you see fit. Um, I would say obviously there's a lot of macroeconomic uncertainty, you know, not just in the US but around the world. Um, and in those environments, uh, that tends to lead to caution from a corporate spends perspective. Uh, at the same time that is balanced against an increasing recognition from companies in all sectors, that AI is going to have a major impact on their business and their Workforce. And that they need to be ahead of it uh, to ensure that they're not left in the Dust by their competitors and that 1 of the ways that they can stay ahead of it is, by finding the right ways to upskill and or reskill their workforces to have, uh, the talents that they're going to need, uh, for the way that work will change. So, uh, I think you have those sort of balanced things happening. I would argue that some of the more, um, forward-looking
Speaker Change: Uh, Enterprises are the ones that are really leaning in. Uh, and so those conversations are a lot of fun, uh, because we get to spend time with those customers and talk about what might be possible, and how we can help them achieve that. Um, and obviously your best customers, always push you to be better. And so those are conversations that I really enjoy having. Um, but I would say you're seeing those 2 things, sort of happening and playing out in different ways at different companies. Uh, so there's definitely still a lot of caution out there, but then there are companies that are taking advantage of this time to really lean in.
Speaker Change: All right, that's really helpful. And if I could shift gears and and maybe get into the weeds a little bit, um, the tax bill that was signed earlier this month, um, opened up something called a Workforce pal, you get a lot of use tell grants for what they call short-term high quality Workforce, align programs. Um, it's got to be accredited, so I realized that your corporate Partners is probably not going to be eligible for it, but is it possible to see some of those funds being used through programs at University partners?
Speaker Change: I I won't be able to answer the specifics of that question. But what I will say is we believe that that generally is a move in the direction that we see, um, ourselves going anywhere, which is really focusing much more on skills, we view skills. As really the atomic unit that we are trying to provide on the platform. That's the reason that people come to Corsair to learn skills to help them grow their careers. That's the reason.
Speaker Change: The Enterprises work with Corsa to help their Workforce gain the right skills, uh, that they need for whatever vertical they might be in and whatever their job. These are. Um, and so I think broadly that is a move that will benefit us and that we're 100% aligned with. Um, you know, I would expect that over time just given the direction that policy is moving in the US, in the very least. Uh, we see that having other benefits for us. It's too early to, you know, forecast exactly how that might play out. But certainly, if 1 of the reasons that we are very focused on working with, you know, bodies like AC here in the US or ects in Europe or in Europe in India, to really take the micro credentials that we offer the industry certificates and work to get those to be credit carrying. Um, we think that that is, uh, good for Learners. It's good for, uh, uh, universities that can augment their existing curriculum with industry-driven credentials that are highly relevant for the jobs that are being hired for in the workforce today.
Speaker Change: All right, appreciate the caller. Thanks so much.
Speaker Change: We'll take our next question from Brian Peterson with Raymond James. Please go ahead.
Brian, your line is open. Feel free to unmute.
Uh, I'm sorry guys, uh, Bamboozled by that mute button there but uh, congrats on the strong quarter, just just a couple for me. Uh, is there anything that you can kind of share on the linearity of what you saw at the top of the funnel over the course of the quarter? And then some of the efforts that you're working on on the conversion side? Do we still feel like there's more room to gain there and it can maybe just a follow-up. How should we be thinking about the trajectory of the nrr on the Enterprise business? Thanks, guys.
Speaker Change: Sure, Brian. Um, so, uh, there there wasn't a notable difference in linearity during the course of the quarter, we've been improving steadily on the conversion side and there is room for more. Um, so we're excited about the direction that's taken and, um,
Uh, we're not, we're not done with improvements there yet, and there's been a lot of specific focus on conversion. And I think we'll, we'll enjoy, uh, enhancements along the way as the product as we as we enhance the product as well. Um, with regards to nrr, um, we're we're not forecasting improvements going forward, not yet, we don't again have enough visibility. This last quarter, uh, was again particularly good partially because of some mechanical wapping in the government business. Um, but it it's an area, you know, we need to improve upon and upon which we're pretty focused. I might just add a little bit, uh, on the, on the consumer side, but it applies to, to Enterprise as well. Which is, you know, we don't have a complicated business. It's top of funnel conversion. Then getting those converted Learners to engage and then as they engage, uh, you retain them for longer and you drive.
Higher archive.
Speaker Change: We have not historically been nearly as focused on the relationship between what we do in product and on the platform and those metrics as we have the potential to be, we are only a quarter or so into reorienting. Everything we do around that. How do you drive a better platform and a better product experience? How do you deliver that product faster and how does that product delivery translate into improvements in every single 1 of those metrics? And so
Speaker Change: My goal is for us to continue to improve over time on those things, the pace at which we do that, what moves in any given quarter, we're not going to be able to forecast, but by bringing more rigor to that approach, by having it be very data driven. And by speeding up, our pace of execution, I'm hopeful that we can uh you know, deliver that over time and see that reflected in our results in future quarters.
Speaker Change: Great caller. Thank you.
Speaker Change: Our next question will come from Yule with counterfeit Gerald?
Yule: Thank you for taking my question and congrats on the strong executive order. So my question revolves around the pair of new hires uh you know most recently with Chief data officer Grant and chief product officer. So Patrick, um, Greg you all you know, previously you talked about using a more data driven approach to smash the business I guess. Can you help us elaborate on? What are the points concrete data points? You are looking to monitor to, to to, to understand. Hey, the the business is, uh, going better fundamentally and I also have a more follow uh, for the financial stuff.
Yule: Sure. I I in some ways that a macro level I sort of just mentioned them like you know what traffic? Are we getting? How good a job? Are we doing it converting that traffic from a visitor into a paid learner
Speaker Change: How good a job are we doing at engaging that paid learner helping them complete courses and then retaining those learners for longer? And as you do that, obviously that increases the revenue you receive from those Learners. And that is also broadly true on the Enterprise side although that, you know, the the mechanisms might be somewhat different. Uh, and so what we are really focused on doing is making sure that every single aspect of what we do is instrumented, so that we understand the relationship between all those things. And so if we make this change to the way that the first module of a course, uh, uh, gets consumed by a learner does that increase engagement if we do that and it does increase engagement. Does it actually lead to higher retention? Does it lead to better outcomes for that learner? And so that's a, you know, really high level way of thinking about everything we're doing. But my belief is, you know, you can improve what you can't measure. And if you're not paying attention to the measurement, you're not going to improve it. And so we need
Speaker Change: To make sure that we're doing that across all of our platform, uh, and that's what's behind the focus on our content engine because that is the fuel of our business, uh, behind our Learner Journey, which is all the ways that people interact with, and engage with Corsair outside the specific Act of learning itself, uh, and then Workforce learning at scale building better Integrations with lmss and Alex, PS better tools for Enterprise, uh, admins better dashboards. You know, all of those types of things to really make sure
Speaker Change: That enterprises that leverage Corsa are getting the right outcomes from their perspective. My belief is all of that starts with data, all of that starts with really rapid product, development Cycles, hiring Grant on the data side hiring, Patrick on the product side are both meant to uh really accelerate our progress on those fronts.
Speaker Change: Hey, Greg. Can you just tease us on that? I, I understand that.
Speaker Change: Ugh, gross, margin size. 61% on the consumer we're seeing in section of the Enterprise size. For 70% was wondering to help us on the modeling. Can, like, what, uh, what should we expect on the optimization? Like, going forward? We understand. It's improving its going, uh, more positively, and it's more to go. We just want to, you know, like uh uh, make sure our models are are reasonable going forward, expectations.
Sure on um, you know, you mentioned a couple different things coach, uh, AI translation AI dubbing uh, Etc. So, broadly, we are going to be investing in coach forever, uh, because it is the way that we can make every single course on Corsair since it is an AI driven tutor. Uh, a more personalized, more interactive, more engaging experience. And so we want to pour as much energy into that as we possibly can because we see that the Learners who engage with Coach have higher completion rates, they have higher quiz Pass rates and it leads to better outcomes for those Learners. The same is also broadly true and not surprising uh on AI translations and AIW. We now have 5,500 plus courses that have been translated into 26 different languages we have 350 courses that have been dubbed into now 6 different languages.
The cost of translating and dubbing is unbelievably cheaper because of AI uh and also the outcomes are better, not surprisingly a learner learns better in their native language than they do in English. Uh and so we see that when we translate content into you know more and more languages we get better engagement and better completion rates from Learners in those geographies uh and in those languages. And so you know those are just 2 examples of you know some of the things that we're going to continue to invest in.
Andy this this is Ken specifically on the consumer gross margin. We do for all the reasons Greg just mentioned. Um we do expect that to expand over time. I there's no near-term improvement. We're going to forecast for the coming quarter. We, we have, uh, increase the forecast of course, for the ebit, dot margin for the year which is pretty significant. Uh, and up a couple hundred basis points over the last year, which which follows on a 760 basis Improvement the year before and 550 to the year before that, um, your newer to the story, but it's something that we've we've kind of pledged to improve every year and then we invest the excess into more growth. Um, we were a little overwhelmed with the Improvement in the gross margin in total in absolute dollars and couldn't when we have the
Speaker Change: In a fashion. We were able to reinvest some but not as much. So we expect that Trend to continue on the ebitda margin line uh again a couple hundred basis points. But in in this current year um we don't have uh an increase in the consumer margin that we're planning but we do expect it again to continue to increase over time.
Speaker Change: Our next question will come from Josh bear with Morgan Stanley. Please go ahead.
Josh Bear: Great. Thanks for the question. Uh, wanted to dig into the consumer, plus, uh, subscription. That was called out, uh, several times. Can you kind of generalize the, uh, user? The subscriber just as far as what, stage of life or stage of career geography, and then the behavior. Like, once turning on that subscription, what courses and content are they grabbing, you know, gravitating to, is there a way to generalize some of those behaviors?
This is a great way to generalize that just because Learners come in all different flavors from all over the world, but I would say uh broadly you have uh you know, kind of starters uh switchers and advancers, right? So people who are at the very beginning of their career and looking to gain skills, that help them, be better prepared for a first job. Um,
I would say that you have.
Josh Bear: Differences, geographically around types of content. Um, and so, but not not radical differences. Um, uh, India is 1 of our fastest growing, uh, locations for interest in gen AI, uh, content. Um, uh, I'm not super surprised, uh, by that, um, you know, just given the industry India has, you know, a strong emphasis on education and obviously has a strong Tech, uh, background from a Workforce perspective, um, and also it's a massive country from a population perspective, so, uh, it's not surprising that you would have more, uh, enrollments coming, uh, from there and given that it's our second largest, uh, registered learner base. Um, beyond that, I think, you know, it gets really hard to make generalizations. Obviously broadly, we see the most interest in courses that are in AI Tech data. Networking cyber security business. Um, uh, and that's
Josh Bear: You know, sort of been our historic uh, sweet spot.
Thanks Greg. And any update on uh, scale size of the subscription or growth?
Speaker Change: Uh, Jeff, we haven't broken down the consumer product like that externally.
Okay.
Ken Hahn: Thanks Ken uh, great quarter. Thank you. Thank you. Thank you.
Speaker Change: Our next question will come from sangora with telsey Advisory Group.
Speaker Change: It's around. Your line is open. Feel free to unmute.
Speaker Change: Thank you. Uh, great quarter as well, uh, from my side. Uh, my question is on the course, era produced content. I know a lot of professional certificates came into this quarter and a lot of, you know, branded content came as well, but just curious on how is that pipeline developing on the Corsair produced content. And how do you see that scaling? Um, are there any specific areas you? You know, as you have progressed over the past couple of months, are there any areas you have identified for CPC? Just any color over there? Would be helpful, thank you.
Speaker Change: So at a high level, you know, 1 of the things that was really clear when I came into the role was we need to make sure that we're investing more into our content engine. Uh, both creating, of course, our produced content but also, just all of the tooling that both we use to create content. But also all of our partners use to create content to enable better agility. You know, uh, faster production Cycles, uh, more format uh, um, flights.
Speaker Change: Ability and and obviously on the Corsair produced content, uh, that provides, you know, some good economics uh, for us. Generally there's exclusivity as well on that. Uh, we have better control over it and also we use corser produced content as a test bed for things that we can apply across all of our content and all of the platform. And so, you know, we've uh, invested 17 million, uh, last year and of course, Eric produced content. Uh, we recognized 6 million, uh, dollars of investment in the first half of the year. Uh, our goal is to increase our year-over-year investment overall, uh, for 2025, uh, you know, we, we haven't, you know, sat down and gone through the forecast for 2026 yet. Uh, but I would expect that generally given that we're seeing success and that we'd like, uh, the Dynamics of that aspect of the business that that is going to continue to be an investment area for us.
Speaker Change: That's great. Thank you. And good luck ahead.
Sean: Thank you. Thanks Sean.
Speaker Change: That wraps today's Q&A session. A replay of this will be available on our best relations website in the next 24 hours. We appreciate you joining us.
Speaker Change: This concludes today's conference call, you may now disconnect