Thank you for joining us for Coursera's Third Quarter Fiscal Year 2021 Earnings Call. I will now pass the call to Cam Carey, Head of Investor Relations. Cam, please go ahead.

Hi, everyone, and thank you for joining our Q3 earnings conference call. With me today is Jeff Maggioncalda, Coursera's Chief Executive Officer; and Ken Hahn, our Chief Financial Officer. Following their prepared remarks, we will open the call for your questions. Our press release, including financial tables, was issued after market close and is posted on our Investor Relations website where this call is being simultaneously webcast. Additionally, downloadable versions of our prepared remarks and supplemental slides have also been made available. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP measures to the most directly comparable GAAP measure can be found in today's press release and supplemental presentation, which are distributed and available to the public through our Investor Relations website located at investor.coursera.com. Please note that all growth percentages refer to year-over-year change, unless otherwise specified. Additionally, I'd like to remind you that all statements made during this call that relate to future results and events are forward-looking statements based on current expectations. Actual results and events could differ materially from those projected due to a number of risks and uncertainties, which are discussed in our press release, SEC filings and supplemental materials. These forward-looking statements are not guarantees of future performance or plans, and therefore, investors should not place undue reliance on them. We assume no obligation to update our forward-looking statements. And with that, I'd like to turn it over to Jeff.

Thanks, Cam, and good afternoon, everyone. Today, I'm pleased to report strong third quarter results, which reflect the continued trend of institutions and individual learners embracing online learning to develop skills for the future. In Q3, we grew revenue 33% to $109.9 million. Performance was strong across the business with double-digit revenue growth in each of our segments: Consumer, Enterprise and Degrees, and in every region. Since its founding, Coursera's #1 goal has been and always will be to serve learners. And as of the end of Q3, we have more than 92 million registered learners on the platform, adding 5.5 million in Q3 and more than 15 million year-to-date. Learners come to Coursera seeking new skills to advance their careers and improve their lives. In particular, we continue to see strong demand for our growing catalog of entry-level Professional Certificates. Since launching this category in 2018, we have seen more than 2 million learner enrollments in programs from industry partners like Facebook, Google, IBM, Intuit and Salesforce. With a professional certificate, learners with no college degree or background in the field can learn the skills needed for an entry-level digital job in less than a year. We're also excited about the impact these certificate training programs can have in reducing the gender gap in digital jobs. According to our latest Women and Skills Report, women's enrollments in entry-level professional certificates have increased from 25% of all enrollments in 2019 to 37% in the first half of 2021. But a career pathway isn't the only option. Content on Coursera is modular and increasingly stackable, so that bite-sized learning can build towards a broader course of study, including a college degree. We recently announced ACE Credit Recommendation for all Google entry-level professional certificates on Coursera as well as 3 from IBM. This means that learners who complete one of Google or IBM certificates are eligible to receive up to 12 college credits from participating colleges and universities. The University of London, the University of North Texas, and Northeastern University are among the institutions with programs already awarding college credit for these certificates. In a world reshaped by the pandemic, this is what the future of learning looks like for many adults, and it is being driven by several key trends at play. The first major trend is digital transformation. The forces of technology and globalization are transforming industry after industry, and the pandemic has served to only accelerate these trends. It has amplified the criticality of technology and digital tools. It has redefined the way that businesses and governments and individuals work. It has reshaped the global talent pool, opening new opportunities for companies to build more diverse distributed workforces. For example, at Coursera In the first half of this year, more than 2/3 of our U.S.-based new hires are fully remote, providing us with access to a broader, more diverse talent pool without the constraints of requiring proximity to a corporate office. The second major trend is skills development. Employers are rapidly digitizing work processes and automating jobs that are repeatable and predictable. The rapid pace of this digital transformation impacts everyone, and the need for change has never been more urgent. Businesses know that they must upskill, reskill and benchmark their talent to remain competitive in a changing economy. Governments understand that most at-risk jobs are typically held by lower-wage workers which threatens to leave millions of workers unprepared for the digital future. Campuses realize that they must enhance their offerings, as increasing competition from alternative credentials and the substitution effect of a strong labor market drives them to teach students skills for the future and deliver stronger employability outcomes. And individuals need to keep learning through their life, requiring access to flexible and affordable education to stay relevant in a fast-changing labor market. The third major trend dealing with our business is enabling the digital transformation of higher education. While technology is accelerating change and transformation around the world, it is also the means by which society is adapting. The digital transformation of higher education is upon us. Higher education, one of the largest industries in the world at $2 trillion, has seen relatively little innovation over the past 3 centuries. Traditional college degrees are not affordable to many people. Their monolithic 4-year structure doesn't meet the needs of lifelong learners. Degrees often lack relevance to today's employers. And degrees are often not designed for working professionals who don't want to quit their job or move their families to obtain a college degree. Unlike other platforms, we are an enabler and not a disruptor. We work directly with universities and industry leaders and governments, driving powerful institutional collaboration to better meet the needs of this new digital world. Our platform is transforming the way that learners learn. It is transforming the way that educators teach. And it is transforming the way that employers upskill and reskill their talent. Our 3-sided platform connects learners, educators and institutions in a global learning ecosystem with 3 primary advantages. First, the leading educator partners, including world-class universities and some of the best-known global industry brands, are attracted to Coursera to teach at scale. Second, the quality and breadth of the content and credentials that these educator partners create. And the third major advantage is the technology and data that power our platform. Let me share some recent highlights on each of these competitive advantages. We continue to expand our list of educator partners. Our large growing learner base and global brand make us an attractive partner to educators who want to reach a worldwide audience and deliver high-quality affordable education at a low cost. We now have more than 250 university and industry partners on Coursera. In September, we announced partnerships with 4 new top-tier institutions in India, our second-largest market by registered learners, for a total of 10 university partners in the country. New partners include IIT Bombay, IIT Guwahati, Indian Statistical Institute and Ashoka University. We're also excited to partner with a number of new industry leaders. Last week, we announced a new partnership with Oracle focused on helping learners develop cloud-related skills. The 5 new courses, taught by Oracle experts, cover a range of cloud infrastructure and database topics at varying levels of complexity, with hands-on labs allowing learners to practice in a live environment. We also announced a partnership with Juniper Networks in October. They are committed to driving skills transformation within the networking industry and launched the first of 4 anticipated new specializations on Coursera. Lastly, we welcomed United Service Organizations, a nonprofit serving U.S. military members and families; Philips India for Health Technology Solutions; and Voxy, an English language training company, as new partners of Coursera during the quarter. Our industry partners value Coursera's scale and reach in building a global community of developers and users critical to their ecosystems. Additionally, it allows them to address the growing job displacement and skills gap that their technology and automation creates. For example, in coordination with the ACE Recommendation, we also announced that Google's Professional Certificates on Coursera are available to U.S. community colleges and career in technical education, or CTE, high schools for free. Students participating in the program will receive job-relevant skills training for today's most in-demand digital roles as well as access to career services and job opportunities through a consortium of over 130 employers. And our SkillSets and Skill dashboards, originally developed for Coursera for Business customers, will now be offered through Coursera for Campus, allowing students to develop the specific skills required by employers for high-growth roles, and administrators to track student progress against their career goals and to benchmark these students against employees in the industry. Our second major advantage is the broad catalog of world-class content and credentials created by these educator partners. Our stackable system of branded, high-quality premium content enables us to attract learners at low cost and serve them at a range of price points. Learners come to Coursera for our freemium content and bite-size learning, including hands-on projects and short courses, enabling us to grow our top of funnel and attract registrants at low cost. As these learners look to progress in their careers by earning more valuable credentials, we aim to maximize lifetime value with our premium credentials from our partners, including specializations, Professional Certificates and accredited bachelor's and master's degree. And our catalog continues to grow. We recently announced 5 new certificates from university partners in India with topics ranging from 5G technologies in IoT, VLSI design, digital transformation, data-driven decision-making, and electric vehicles. Additionally, IBM launched their sixth entry-level professional certificate focused on data engineering. For degrees, we recently added 2 new programs, including a postgraduate diploma in applied statistics from the Indian Statistical Institute, and a Bachelor of Science in Business Administration from the University of London. With these recent additions, the Coursera catalog now includes over 2,000 guided projects that offer hands-on learning; more than 5,000 courses and 600 specializations; over 70 certificates, including our 15 entry-level Professional Certificates; and 33-degree programs, including bachelor's, master's and post-graduate diplomas. Now let's talk a little bit about product innovation. This is the thing that drives another key advantage, which is our unified platform. The world-class content created by our educator partners is delivered on a system of technology and data that underpins the Coursera learning platform. We continue to enhance the experience of our learners, institutions and educator partners. We introduced a number of platform improvements to better serve Indian learners, including a localized homepage for better discovery; geo-pricing on most individual courses; 5 new payment options, and bulk pricing for avid users. What we learned from our India-focused initiatives will further inform our international strategy. For institutions, our skills graph connects roles to skills to content. And we continue to leverage our broad catalog and the data underpinning our platform to provide better insights to our customers. For businesses, we recently launched the Leadership Academy, designed to help companies to deliver and measure world-class management training at scale and critical soft skills such as change management, talent development and collaboration. This was our sixth academy launch. Academies offer companies a skills-first approach to enterprise learning, focusing first on the most critical job roles; then specifying the skills and proficiency levels needed to do these roles; and finally, linking the skills to content that teaches at the appropriate proficiency level. But the value of these insights extends beyond corporate training. In August, we announced the general availability of SkillSets for all universities using Coursera for Campus. While the shift in the skills landscape is creating opportunities in the workforce, companies feel that there is often a mismatch between the skills students are graduating with and the digital skills required in the modern workplace. Universities are using Coursera for Campus to drive targeted skills proficiencies needed for today's in-demand jobs, leveraging our world-class content from university and industry partners. Additionally, these universities can track skills development at both the student and cohort level while benchmarking students against real employees in the industry. And for educators, at the end of June, we announced our new content ingestion solution. The feature allows educators to more quickly and seamlessly migrate content between a learning management system and Coursera. We've been pleased with the initial traction, with approximately 70 courses from 17 university and industry partners ingested into Coursera using this functionality. Our partners have been able to leverage the tool to significantly reduce the time needed to author and launch a course on Coursera, typically in one-third of the traditional timeline. Individually, our ecosystem of partners, world-class content and technology are important strategic advantages. But the real power is the way that these assets are reinforced by and leveraged across our unified platform. There's a flywheel effect as the growing selection of content and credentials attracts more individuals and institutions, which in turn motivates our educator partners to create even more content on the platform. This growing content, technology and data allow us to better meet the needs of learners, educators and institutions. And this in turn fuels our business, increasing scale, reducing our acquisition costs and ultimately maximizing the lifetime value of learners on Coursera. We believe that the transformation of higher education is just getting started, with many opportunities to drive growth for Coursera in the coming years. Before I turn it over to Ken, let me remind you of some of the key priorities that we're focused on to grow. First, we will continue to invest in our growing enterprise channels, focusing on both new customer acquisition and expanding relationships with existing customers. I'd like to highlight 2 examples that are illustrative of the institutional collaboration that our platform enables at scale. CINDE, the Costa Rican Investment Promotion Agency, implemented a nationwide training program with Coursera for Government in 2020. For almost 40 years, CINDE has helped attract businesses to Costa Rica, helping more than 350 companies to establish operations in the country. The organization was interested in leveraging Coursera to help reduce unemployment amidst the pandemic, while building a competitive workforce to drive sustainable future growth. CINDE teamed up with employers, Costa Rican government agencies and Coursera to help identify the most in-demand skills and develop curated learning pathways on our platform. Since the partnership began, more than 23,000 Costa Ricans have enrolled in over 80,000 courses, completing more than 40,000 courses and nearly 700,000 lessons. Given this initial success, CINDE recently expanded the program. Second, we announced a new partnership with the Oklahoma State Regents for Higher Education, enabling 15 universities in the state to adopt Coursera for Campus. The collaboration is focused on 4 key goals: enhancing academic program innovation, offering flexible blended learning options to faculty and students, setting students up for success and completion of their degree programs, and expanding alignment of academic programs with modern workforce needs. Oklahoma is the first U.S. state to launch a Coursera for Campus partnership with this wide-reaching scale, covering more than half of the state's public universities with the potential to impact tens of thousands of students, faculty and staff. Next, while we are only in the beginning stages of our Degrees business, The pandemic has fundamentally changed how universities are thinking about online degrees. Students want the flexibility to learn online, and universities are responding by scaling online degree programs using partners like Coursera to meet that demand. For example, in the month of September, our team was able to launch 8 degree programs from universities in the U.S., Russia and India, demonstrating the power of online platforms to deliver worldwide degree programs at scale. In August, we announced the new fee structure to support university partners looking to rapidly expand their online programs and reach more students around the world. With this new tiered structure, the service fee will progressively reduce from 40% to 25% for universities that grow their collective programs to more than $50 million of annual tuition on Coursera. This is driven by our freemium model, which brings in learners to Coursera and enables our efficient low-cost acquisition, a key competitive advantage enabled by our 3-sided platform. Finally, we will continue to scale the Coursera platform and reinforce our flywheel effect, investing in growth of our registered learner base; increasing our network of educator partners and their content and credentials; and expanding our reach into more countries, investing in localized experiences to better serve more learners from more countries around the world. Now I'd like to turn it over to Ken.

Thanks, Jeff, and good afternoon, everyone. We are pleased with our strong third quarter results, which reflect the sustained demand we continue to see for online learning. In Q3, we generated total revenue of $109.9 million, which was up 33% from a year ago. This strong growth was on top of the 70% year-over-year growth delivered last year, so we are quite pleased with the performance on top of a difficult comp. As Jeff discussed, we're seeing a global trend of not just individual learners but also institutions, including companies, campuses and governments, investing in digital and new skills required to compete in a post-pandemic economy. Please note that for the remainder of the call, I will discuss key operational metrics as well as non-GAAP financial metrics, excluding pro forma adjustments unless otherwise noted. Our non-GAAP adjustments remove only stock-based compensation and related payroll tax, nothing else. Gross profit was $68.3 million, up 56% from a year ago, for 62.1% gross margin as a percentage of revenue. This percentage was approximately 910 basis points higher than the prior year period, a continuation of similar dynamics that we saw in the second quarter. As a reminder, there are two components of our cost of services. First is our content cost, which varies based on both the revenue mix amongst our 3 businesses as well as the content margin rate within each segment. Our higher-margin Enterprise and Degree segments accounted for 39% of our overall revenue mix this quarter compared to 31% in the prior year period. This mix shift is key to our long-term financial framework, including structurally expanding margins over time. Additionally, we can see changes in the segment content margin rates depending on what learners consumed in any quarter. For Q3, this continued to be a positive variance primarily within our Consumer business. Our Consumer segment content margin rate increased from 54% in the prior year period to 68% this quarter as learners consumed a larger proportion of industry partner content, which tends to have lower-than-average content costs. Assuming similar levels of success with career certs and continued higher margin arrangements with industry partners, we anticipate that for the near term, our Consumer segment margins will remain north of 60% and that we will likely invest more operationally to take full advantage of the opportunity. The second component of our cost of services is our noncontent cost margins, which were up slightly on a year-over-year basis and 9.3% of total revenue. Total operating expense was $75.3 million, or 69% of revenue compared to 62% in Q3 of last year. Sales and marketing expense represented 35% of total revenue, up from a prior 30%. We expect our sales and marketing expense in 2021 to be slightly higher as a percentage of total revenue than in full year 2020, with a similar increase in the fourth quarter. Research and development expense was 20% of revenue, slightly lower than the year-ago period. We expect our overall R&D expense in 2021 to represent a similar percentage of revenue as the first half of this year. General and administrative expense was 13% of revenue versus 10% in the prior year, given incremental costs associated with being a public company. We expect this higher expense as a percentage of revenue to continue throughout 2021. Net loss was $8 million or 7.3% of revenue, and our adjusted EBITDA loss was $3.1 million or 2.9% of revenue. Similar to last quarter, our EBITDA margin continued to be quite strong. Importantly, I want to remind you of how we are managing the business. First, our messaging and operating framework with regards to EBITDA margin has been consistent since before the IPO. We plan to demonstrate scale and leverage over time while targeting EBITDA margin improvement over the long term. Second, we do not optimize the business for any single quarter and continue to see 2021 as an investment year, with our forward EBITDA guidance reflecting this focus. We intend to invest into our strong performance with the goals of: one, paving the way for future growth initiatives; two, deepening our competitive moats; and three, securing leadership in our large and rapidly evolving markets for the benefit of all our constituents. Now turning to cash performance and the balance sheet. Free cash flow was $7.1 million compared to a use of $4.2 million a year ago, and we ended Q3 in a strong cash position. As of September 30, we had over $800 million of unrestricted cash, cash equivalents and marketable securities, with no debt. Combined with the strong performance in the business, we are able to invest confidently in our future. Next, let's discuss more detail for each of the business segments. Consumer revenue was $66.5 million, up 16% from the prior year, over a tough growth comp of 81% in Q3 of 2020. We are seeing sustained demand for our entry-level Professional Certificates aimed at the global reskilling opportunity. In addition, adoption of our new Coursera Plus subscription continues to be strong. In the third quarter, we surpassed 25% of Consumer revenue generated from Coursera Plus subscriptions. Like other content subscription programs, Coursera Plus enables learners to consume a broader range of content without paying for each title. This has increased both consumption and retention amongst these learners. Segment gross profit was $45.5 million or 68% of Consumer revenue as we benefited from a lower content cost rate during the quarter. In addition to its financial contribution, our Consumer business is an important strategic asset. It attracts our educator partners, acting as a channel that allows them to reach a global audience of learners. It provides rich data visibility, enabling us to empower our institutional customers with the insights they value around skills and proficiency. And importantly, it serves as a top-of-funnel source for our Enterprise and Degree segments, allowing us to attract learners at low cost. As Jeff said earlier, we added 5.5 million new registered learners during the quarter for a total base of 92 million as of September 30. Next is Enterprise. Enterprise revenue was $31.8 million, up 75% from a year ago on the acquisition of new customers and expansion of our existing relationships. All 3 of our Enterprise customer categories, business, government and campuses, saw strong growth, demonstrating the progress we've made in creating a differentiated skills-based learning experience across our institutional customers. The total number of Paid Enterprise Customers increased to 711, up 124% from a year ago. And our net retention rate for Paid Enterprise Customers was 113%. Segment gross profit was $21.4 million or 67% of enterprise revenue, which was slightly lower on a percentage basis than the prior year primarily due to a larger share of revenue coming from our indirect customers utilizing our technology platform in Q3 of last year. Lastly, our Degrees segment. Degrees revenue was $11.6 million, up 59% from a year ago as prior cohorts continued to scale and students embraced our newly launched programs, including the eighth launch in September that Jeff mentioned. According to the National Student Clearinghouse Research Center, postsecondary enrollment for combined undergraduate and graduate students for the fall semester declined by 2.3% this year, likely reflecting the strong labor market and increased demand for shorter-form credentials like our Professional Certificates. Furthermore, at primarily online institutions, undergraduate and graduate enrollments dropped by 5.4% and 13.6%, respectively. Despite these headwinds, we grew our total number of degrees students 40% from a year ago to 16,068 and continue to be excited about our pipeline of programs from new and existing university partners. Degree segment gross margin was 100% of revenue as there's no content cost attributable to the Degrees segment. Now on to our financial outlook. As a reminder, we have fairly good visibility into revenue on a quarterly basis in both our Enterprise and Degree segments, so any significant variance to expectations is most likely to occur within our Consumer segment. For the fourth quarter, we are expecting revenue to be in the range of $109 million to $113 million. This represents a growth rate of 33% compared to last year at the midpoint of the range. For adjusted EBITDA, we are expecting a loss in the range of $16.5 million to $19.5 million, which translates to an adjusted EBITDA margin of negative 16.2% at the midpoint. For full year 2021, we anticipate revenue to be in the range of $409 million to $413 million, representing approximately 40% growth compared to last year at the midpoint of the range. And for adjusted EBITDA, we're expecting a loss of $32.5 million to $35.5 million or an adjusted EBITDA margin of negative 8.3% at the midpoint. Consistent with our prior discussion, we intend to strategically invest for the long-term sustainability of our business. As we did in 2020, we are investing heavily in growth in Q4 while performing better than our previous forecast for annual EBITDA. We manage our business on an annual cadence for expenses and adjusted EBITDA. And as I said earlier, we intend to demonstrate scale and leverage over time as our business grows. Our outlook for full year 2021 reflects ongoing investments in personnel-related costs, sales and marketing, product development, and general and administrative costs associated with being a public company. To summarize, we are forecasting a substantial improvement in 2021 EBITDA margin over 2020 even as we absorb significant additional overhead costs as a newly public company. Before Jeff's closing comments, I want to leave you with 3 key reminders about our long-term financial framework. First, we have a unique set of strategic assets that allow us to compete differently. Our freemium model, global scale and unified platform allow us to attract new registered learners at low acquisition costs. It is what allowed us to introduce our new fee structure for degree partners looking to do online programs at scale. Second, we expect to have increasingly better forward visibility on our top line in the years ahead as our mix of revenue evolves. Third and finally, in addition to our rapid growth, we expect ongoing structural gross margin expansion over the long term, driven by revenue mix shift to our Enterprise and Degree segments. In summary, we see an exciting opportunity ahead of us. As our results in 2021 have demonstrated, the impact of the pandemic was not temporary. It has accelerated the pace of automation and technology while highlighting the growing need for digital skills across every institution and individual. And with our unique assets in global learning ecosystem, we believe Coursera is the platform designed to meet this challenge.

Thanks, Ken. Our mission is to provide universal access to world-class learning so that anyone anywhere has the power to transform their life through learning. Today, we launched our second Coursera Impact Report. Early in the pandemic, online learning shaped a global crisis response that changed the way we learn. More than a year later, the ability to learn without limits is unlocking new possibilities. New trends show that the combined force of online learning and remote work is creating a powerful opportunity to provide not just learning but more equitable job opportunities worldwide. As the 2021 impact report affirms, creating inclusive pathways to skilling, which prepare people for remote digital jobs, can pave the way for talent to rise from anywhere in the world. Together with our partners, we're excited to continue our efforts to fulfill this promise in our quest to build a more just world. And with that, let's get to Q&A. Could you please introduce the first question?

Your first question comes from Tom Singlehurst with Citigroup.

Tom here from Citi, and congratulations on the results. Just a couple of questions maybe to open up. First one on Coursera Plus, you mentioned last quarter that you had encouraging early adoption. And lo and behold, it's 25% of Consumer revenue. I suppose it would be great to get some more detail on where that, why that's suddenly gone so well, and also whether that drives structurally higher gross margins for the Consumer division. Any more detail or color on that would be very much appreciated. That was the first question. The second question was going to be on all of us looking at education companies suggesting the impact of rapidly falling community college enrollments and the impact that's having on some of the other names in the space. I'm just wondering whether you think the strength in Consumer is the other side of that coin? I think you referenced that, I believe in the comments, but I mean just firming that up a bit. Do you think community college enrollments are coming down because there is just broader adoption of courses like the ones you offer on the Consumer side of the business and in the completely new programs?

Yes, Tom. Thanks for the questions. Do you hear me okay?

Yes, loud and clear.

Great. On the first question about Coursera Plus, I see it primarily as a consumption model. I often liken it to early Apple iTunes; back then, you had to pay $0.99 for every song individually. While it was an innovation compared to going to a record store, you still had to commit to buying each song. In a similar way, Coursera's traditional pricing model requires you to know which specialization you want before purchasing. Coursera Plus changes this by allowing users to explore various courses and hands-on projects under one subscription. This not only encourages more frequent use but also improves retention rates since learners can keep discovering new content without needing to buy each course separately. Regarding the impact on gross margins, I don't foresee a significant change unless the easier exploration leads learners to content with lower costs for our educator partners, which seems unlikely at this point. As for community college enrollments, we are observing some trends in that area. We've launched key initiatives, like one with Google, allowing community colleges nationwide to access Google’s entry-level Professional Certificates on Coursera for free. This initiative highlights our commitment to supporting community colleges in providing competitive offerings, especially as job opportunities and wages improve. Many individuals who might have pursued an AA degree are now opting to enter the workforce right away, waiting to obtain further credentials later. Community colleges are increasingly aware of the need for micro-credentials, which reflects the situation you've mentioned. If learners can obtain relevant credentials quickly and affordably through platforms like Coursera, it could make Coursera a viable alternative to community colleges. We plan to collaborate with companies like Facebook and Google to feature their Professional Certificates on our platform. Additionally, the Coursera for Campus initiative, like the one we established in Oklahoma, ensures that all colleges have access to our resources at the same price, enhancing their curricula to compete with new micro-credential offerings. We're benefiting from this approach on various levels, which is one of the advantages of having a diversified revenue stream.

One follow-up or continuation on that theme, just wondering if the kind of shift or impact of enrollments that we've been hearing about, if it played a role in the Degrees business at all for you?

Our Degrees segment continues to experience strong growth, as Ken mentioned. However, when we analyze the ratios concerning how frequently someone exposed to a degree message clicks on it to review the degree description page, and subsequently how many start an application after viewing the degree details, we notice some trends. This may be partly influenced by a robust labor market and the fact that many individuals who joined Coursera during the peak of the pandemic weren't primarily technical learners; instead, they were more interested in courses related to well-being and learning strategies. This new group of learners differs somewhat from previous cohorts. While our traffic and registrations remain stable, interest levels appear to be shifting more towards entry-level Professional Certificates and somewhat away from college degrees. Nonetheless, master's degrees are performing relatively well compared to bachelor's degrees. Higher-tier and more selective degree programs seem to be less impacted according to the Clearinghouse data than lower-tier programs. Additionally, having more technical degrees from prestigious partners enhances our resilience to these shifts in the market. Yes, some of it does, Josh. Ken, do you have any visibility on any relative effects of platform stores on us?

No, it has a little bit of effect on the cost for obvious reasons that are much broader than for Coursera. Nothing hugely material for us, and we haven't seen any kind of effect on the demand on the Consumer side. So pretty much a nonissue, not a negative or a positive for us.

First, it seems like you're continuing to see some nice wins on the government side with the win in Costa Rica being a good example. Can you talk some about the pipeline there and what you're seeing in terms of government focus and the ability to pay for kind of these broad upskilling initiatives?

Yes, we are observing an increase in engagement from government entities. In 2020, we launched the workforce recovery initiative, making Coursera for Government available to agencies through the end of the year. We experienced significant usage, with hundreds of agencies signing up for the free version. Like many organizations that transitioned to remote work and online learning, governments began to embrace virtual workforce training for the first time. Many were surprised at how much progress had been made compared to five or ten years ago. They realized they could access a broader, more flexible, and affordable range of curriculum online, tailored to various jobs, including entry-level positions. There is a growing recognition that many entry-level digital roles can now be performed remotely, enabling governments to explore quicker and more cost-effective ways to facilitate employment by teaching digital skills online. This approach has opened up exciting new opportunities. We are seeing positive trends on the government side, with many allocating substantial funds for retraining, reskilling, and reemployment efforts. We anticipate a strong year ahead in 2022, building on the positive outcomes from 2020.

Got it. And then it's great to hear it seems like you're seeing some nice traction so far with Consumer subscriptions, but I would be curious to give more detail on the type of individual learners that are signing up for subscriptions. Is it the consumers that were already highly engaged in paying on a per-course basis or a per-certificate basis? Or are you pulling in people to buy subscriptions that maybe weren't more engaged before? Would just love some detail on that.

Yes. I think it's sort of a combination of all of the above. Generally speaking, it certainly appeals most to those who are avid learners who were going to buy multiple courses anyway. Which by the way, is not a huge portion of our learner base. We don't think there's a lot of cannibalization. They're the happiest. They're like, "Wow, this is great. I get to learn a lot more stuff, and I don't have to pay for it every time." But I think more importantly for your learner that might have otherwise bought one technical specialization, those techniques are changing and the tools that are being used are changing. There are adjacent courses specializations, projects that can be done and maybe they wouldn't have otherwise bought them, but they're like, "Hey, I can do this adjacent program." The other thing that we're seeing with reskillers is still early days, but a lot of folks know that they don't want to be in their current job and want some other job, but they don't necessarily know what job is available. They don't know where the high-demand jobs are or what skills they're going to need or how to get those skills. For those who are switching jobs and thinking about a digital career, it's valuable to say, you don't have to pick a career to get started. Just come to Coursera. We have 15 entry-level Professional Certificates now from some of the best names in the world. If you want to do project management, great, here's a project management certificate from Google. If you want to do marketing, here's the social media marketer certificate from Facebook. We're seeing good traction with Intuit. They have a bookkeeper certificate. If you want to go into finance or bookkeeping, here's a certificate from Intuit. You don't have to pay right away, which changes the purchase decision. Because it's kind of like if you're not sure and you may want to try it before you decide what career to go to, suddenly that subscription model is a pretty attractive way to sample lots of different programs and sort of career skills before deciding that, "Maybe this is a path that's right for me." So I think it works for many types of learners, including those entry-level professional certificate seekers.

Congrats on the nice quarter. Jeff, you alluded to it in your last answer about individuals in the workforce knowing that they want to switch their careers and looking for ways to do that. I'm curious given what we've seen in terms of the voluntary turnover rates in the coined Great Resignation over the past few months, how that's impacting your conversations with Coursera for Business, and impacting L&D strategies with the enterprise organizations you're talking to?

Yes. Ryan, it's a great question, and it's still shaping up a bit. I mean what we're seeing, and you're seeing it too, is there has been a long tradition of U.S. businesses offering tuition reimbursement benefits. It's sort of education as a benefit, and there's a tax policy in the U.S. that makes it a little bit more attractive. Pretty much a U.S. thing. We don't see that very big in other countries. In U.S. Coursera for Business customers, we've seen that, and that's kind of with bachelor's degrees, for the most part. Usually for frontline workers who don't have a college degree, it's a way of providing them a benefit and also retaining them because it's typically a 4-year program. I think to a large degree, the conversation that's being had about micro credentials, job-relevant, job-specific skill training, the conversations we're hearing with individuals looking for something shorter, more affordable, more flexible, is also starting to trickle into L&D thinking as well. I've definitely been aware of a few of our customers who are relooking at their tuition reimbursement benefit and thinking, "Hey, education as a benefit, that's something we want to do, maybe even do more of." But when we think about what should be the architecture of how we do that, what kinds of education, what kinds of credentials, we think, at Coursera, that it's not degrees or micro credentials. With Coursera for Campus, we are helping universities build micro credentials right into their degree programs for credit and with degree pathways vis-a-vis the American College Education Credit Recommendations that I mentioned in the script, We now have 7 of the Professional Certificates having ACE Credit Recommendations, which is the American College Education telling universities and colleges in the U.S., "We have deemed this content to be creditworthy." The idea that you could start with a professional certificate, and by virtue of the blessings of the ACE, count that as credit towards a master's degree, we think that hybrid model of industry-plus degrees, where they can be more bite-size, more affordable, more job relevant, but have the option to have that degree pathway, we think that's a winning combination. And we think there's a big opportunity there.

Great. As a follow-up, I wanted to ask about degrees. You mentioned 8 new programs being launched in September. Just curious if we can get a sense of how we should expect that sort of cadence of program launches as we start thinking about 2022. Obviously, you continue to add new partners here, I think up to 33. I would just love to hear more about how that sort of translates into the revenue stream as we look at the fourth quarter and into next year.

We don't plan to offer any guidance or forecasts on this. If you visit our website, you will often see that we announce degrees before they launch and begin taking pre-enrollment submissions. Some people check the site to see which degrees are announced but not yet live, and you can also find out when they will be available. You might notice that the gap between announced degrees and those currently in session was quite wide over the past six to nine months, but it has narrowed recently. We introduced several degrees that were in development. While there may still be future degrees in the pipeline, the eight that just launched represent a significant development. They were all registered at roughly the same time. Additionally, it's worth noting that our model allows multiple universities to create and launch degree programs on Coursera, which provides us with scalability and efficiency. It's possible for several programs to go live simultaneously since we don't invest our working capital into content creation, differing from other program management models. I wouldn’t necessarily expect that launching eight this quarter means we will launch eight next quarter. Keep an eye on the announced degrees, as we've consistently launched every degree that has been announced, which can serve as a good indicator for the degrees in the pipeline following their announcement.

Ryan, I'd like to emphasize what that model looks like in the degree revenue creation cycle. So first, it starts with the partnership where we land a degree; and then announce it, which is what you're referring to. It tends to take 6 to 12 months for the partner to launch the degree on our platform. Then we start generating revenue by filling cohorts, which builds over time until you get a full set of cohorts. A 2-year program typically takes roughly 3 years to fill. You start to lap. It takes 4 to 5 years to get full productivity, which means we have amazing visibility on revenue but you don't see an immediate impact from these announcements. So what we announced now, the landed partners, they will implement in the 6 to 12 months, and then we'll begin the revenue production cycle. So there's a long lead time, but a lot of visibility.

Staying on this topic of degrees, with the pricing announcement in August, I'd be interested in how your conversations are going with partners, whether new to the platform or existing? Is it international versus domestic, grad versus undergrad? I'm curious how those discussions are going.

Thank you, Jason. I think our recent announcement about the fee structure aimed to address concerns from schools that were considering offering one or two degrees but were hesitant due to post-pandemic shifts towards online degrees. The National Clearinghouse data indicated a slight decline in overall enrollments, although master’s degrees saw a minor increase. Institutions that focus solely on online degrees experienced more significant enrollment drops compared to traditional universities. Many online universities are less selective and tend to attract similar students as community colleges, who are also eyeing the labor market as an alternative to online degrees. Moreover, conventional universities are increasingly offering more online degrees now than they did a few years ago, when they viewed online programs as somewhat of a hobby. Our pricing model encourages them to consider expanding their offerings on Coursera. Many universities are evaluating how strategic this is for them, contemplating whether to develop programs in-house or outsource to a traditional provider. Coursera represents a middle ground, offering a platform for distribution, recruitment, technology, and data. This situation is still evolving, and we anticipate seeing how it unfolds. The pricing model has certainly generated increased interest globally, not just within the U.S. Additionally, we recently announced a Bachelor of Science in Business Administration at the University of London, following the successful launch of their Bachelor’s in Computer Science, which has drawn thousands of online students. They are a fantastic partner, and we're pleased to introduce our third bachelor's degree following the successful program at the University of North Texas. Overall, our bachelor's degrees are performing well.

Okay, and maybe I'll just sneak one more in. Thanks for sharing those enrollments. That's quite helpful. With the strong job market, learners certainly have options of working, learning or both. But aside from the drop of the expanding content of your platform, what controllable execution factors gives you confidence about your ability to attract learners to ramp these programs?

I think, sorry, are you referring to the degree program or the alternative credentials?

Degree program.

Yes, I think on the degree programs, can we help a university do a combination of get a degree program built using the tools and all the online pedagogy that's going to make it effective, get it launched and fill cohorts at low cost? Recruitment is definitely a major value driver for pretty much every university that we talk to. Maybe not the super duper uber elites, but kind of everybody else globally. The final piece of it is how well can you scale instruction and grading, and the whole learner experience. I think when it comes to execution, in order of importance, we have to make sure we can fill cohorts at low cost and fill it with a global audience because that's something that we do distinctly well. The hands-on learning and taking a lot of what we're learning from Coursera for Business to help universities make sure their programs are modern, on the cloud, all the hands-on learning is happening, I think that's another good differentiator. So building up Coursera labs, recruitment, and improving ingestion and offerings would be 3 of the things, I'd say, that we're trying to focus on in order to have our execution impact the growth of our Degrees segment.

It's great to see the continued progress, especially given the challenging comparisons. I want to revisit the entire conversation about the tight labor market and labor shortages. Can you clarify how it affects different segments? For Enterprise, it seems logical that companies would want their current employees to enhance their skills, which should benefit that area. How should we approach this from the Consumer side, particularly as this situation persists for a while? Is it that a stronger job market for potential employers leads to decreased demand for our services? Or are there other positive factors that might counteract this effect? I have a follow-up question as well.

I think you got it right on the Enterprise side. There are 3 different customer types. The businesses seem to be increasing their budgets. They seem to be doing more automation, digital transformation. There’s a little bit of a substitution effect too in that businesses are spending more money training their people. The likelihood that I have to go back to formal education, when my employer is helping me get semi-formal micro credentials might be a little bit of a substitution effect. But employers are leaning into it. Campuses, we are starting to see a much bigger sense that, "Hey, we're facing competition and we need to make sure our graduates have some skills to get a job when they graduate." A lot of it is differentiating themselves from micro credentials and boot camps. We're seeing a nice tailwind on that part of the Enterprise business. On the Consumer side, we continue to see good traffic coming and good registration rates. As our portfolio of entry-level Professional Certificates grows, we're seeing more conversion. We kind of start with what jobs are in demand that don't require a college degree. Then we say, who is an industry partner out there that knows the stuff cold and has a good brand that consumers would like? We work with the industry partner and build out the certs. That recipe is just working nicely. When we link the degree pathways so that this is also the beginning of a college degree, it’s also a pretty nice option for people. A lot of folks, when they're thinking about career switching, are interested in the employment side, to what degree could we link employability to these Professional Certificates? Google has done a good job of this with a consortium of hiring partners that’s over 100 companies stating, "We're looking for people who have these skills who come from nontraditional backgrounds. Maybe they don't have a college degree. We're interested in them." There are a lot of jobs that can be obtained without a college degree with these professional certs. The pathways to a degree and to specific employers looking for more diverse nontraditional talent are all tailwinds. I don’t want to say the Consumer business is guaranteed to keep growing really great because it’s a little hard to predict, but so far in 2021, it has exceeded my expectations.

Got it. That's really helpful. Moving on to the Enterprise sector, it continues to impress. Could you provide us with some insight into the size of the sector? Would you say that the success in Enterprise is largely due to refining your go-to-market strategy, or is it more influenced by a general favorable trend across the industry?

Yes. I would say on Coursera for Business, I'd characterize that mostly as a broad secular tailwind. Businesses all around the world are investing in digital transformation. I think that our SkillSets and academies are really resonating. This idea that you don't start with content. You start with which jobs need certain skills, like, "I need my software engineers to know machine learning." That skills-first approach is resonating with us. I don't think we're driving a ton because of bigger ticket size in Coursera for Business. The government side has a pretty big average selling price. Those are generally a little bit more lumpy, and when they come in, they're a little bigger than business. On Coursera for Campus, my view is that for many colleges, the choice is either adapt and integrate modern curriculum or students will start leaving. What’s tricky about Coursera for Campus is that there's often not a buyer and a budget. This isn't something that universities are used to doing. Universities have to get their head around, "Hey, we need to supplement our curriculum with this online capability. Our NPS scores are extremely high, and our upsells are quite healthy on Coursera for Campus." But we're early in that market. I'd like to say that we're kind of making that market, so that one might take a little bit longer.

I just have two. First, could you just talk a little bit more about the strength in content arrangements with industry partners that drove the strong Consumer margins in the quarter? Is this something that can continue to be a tailwind to margins over time? Do you see the opportunity for a 70% gross margin in the segment at some point in the future? Second, could you just talk a little bit more about whether you see the opportunity for Coursera Plus to continue to increase as a mix of Consumer revenue? 25% was really impressive. Are you working to increase that over time? How does that improve revenue visibility for you guys?

Yes. Sure. No problem, Michael. With respect to industry partners and the content fees, a lot of this really comes down to the interest, sort of the strategic interest of the educator partner; and then to some degree, like who does the work and who adds the value. I will say that for industry partners who are taking more of a social impact point of view on it, and they ask us to do a lot of the heavy lifting in getting these things built at high quality with their names on them and in partnership with them, that will tilt more of the economics towards us. Generally speaking, lower content fees will lead to higher segment margins. That being said, I could see structurally for a longer period of time those types of industry partners raising our segment gross margin in the Consumer segment. We also have industry partners, though, who are interested in actually making money off of selling content. Many technology companies have training divisions and they have P&Ls, and they need to earn revenues. They really want the reach from Coursera, but they have expert teams, they build a lot of content, it's very high quality, and they need to post revenue on their P&L. It’s not quite as simple as industry partners will always be higher segment margins than other university partners. I expect it’s not going to trend to 70%, but I do think we are ...

Michael, more importantly, as part of the script, we talked about we expect to see 60%-plus. We're not forecasting any increases. Immediate improvement is seen in our brief time as a public company. We want to let people know we didn't expect it to revert, but we're not expecting explosion in the margins. North of 60%, though, is what we committed to in the near term.

There are currently no further questions at this time. I'll turn the call back to Cam Carey for any closing remarks.

That wraps our Q&A. A replay of the webcast will be available on our Investor Relations website, along with the transcript in the next 24 hours. We appreciate you joining today. Take care.

Thanks, Cam.

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