Thank you all for joining us today for Coursera's First Quarter 2022 Earnings Call. I will now hand the call over to Mr. Cam Carey, Head of Investor Relations. Mr. Carey, please proceed.

Hi, everyone, and thank you for joining our Q1 earnings conference call. With me today is Jeff Maggioncalda, Coursera's Chief Executive Officer; and Ken Hahn, our Chief Financial Officer. Following their prepared remarks, we will open the call for questions. Our press release, including financial tables, was issued after market close and is posted on our Investor Relations website located at investor.coursera.com, where this call is being simultaneously webcast and where versions of our prepared remarks and supplemental slides are available. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP measures to the most directly comparable GAAP measure can be found in today's press release and supplemental presentation, which are distributed and available to the public through our Investor Relations website. Please note that all growth percentages refer to year-over-year change, unless otherwise specified. Additionally, all statements made during this call relating to future results and events are forward-looking statements based on current expectations. These forward-looking statements include, but are not limited to, statements regarding trends and their potential impact on our industry and our business; our ecosystem, platform, content and partner relationships; our strategy and priorities; and our business model mission, opportunities, outlook and long-term financial framework. Actual results and events could differ materially from projections due to a number of risks and uncertainties discussed in our press release, SEC filings and supplemental materials. These forward-looking statements are not guarantees of future performance and plans, and investors should not place undue reliance on them. We assume no obligation to update our forward-looking statements. And with that, I'd like to turn it over to Jeff.

Thanks, Cam, and good afternoon, everyone. Today, I'm pleased to share that Coursera had a strong first quarter of 2022 as we celebrate two significant milestones. First, this month marks the 10-year anniversary of Andrew and Daphne's bold experiment, and it is inspiring to reflect on our evolution over the past decade. What began as a few popular computer science programs on the Internet has grown into a global learning platform where anyone anywhere has the power to transform their life through learning. For a decade, Coursera's catalog of world-class content and credentials has broadened access to educational opportunity, allowing individuals across the world to learn from anywhere. The pandemic worsened inequality across the world, but the legacy of the pandemic could do the opposite. Over the past two years, online learning accelerated, and we were ushered into a new world of remote and hybrid work. With online learning, anyone anywhere has more equal access to learning opportunities. And with remote work, anyone anywhere has more equal access to job opportunities. That's why we believe that the combination of online learning and remote work holds the promise of a more just world. Increasingly, learners are coming to Coursera for high-quality, affordable education that can unlock access to high-quality jobs, even if those jobs are not in their city, their state, or even in their country. This brings me to the second milestone. I'm excited to report that we have surpassed more than 100 million registered learners. Coursera's number one goal has been and always will be to serve learners. Our world-class catalog of branded content and credentials helps our learners discover, build, and demonstrate job-relevant skills required by employers to address the evolution of work. As you'll hear in this quarter's highlights, and more importantly, in the slate of public announcements planned in connection with Coursera's conference next week, we're working with our ecosystem of partners and institutions to broaden access for more learners across more countries around the globe. This is how we intend to deliver on the promise that Andrew and Daphne imagined ten years ago. Turning to our results. In Q1, we grew revenue 36% to $120 million. This was our 12th consecutive quarter growing above 30%, which we believe reflects our differentiated business model and indeed strong tailwinds that have propelled the growth of our business. Our diversified offerings and global distribution to individuals, businesses, governments, and campuses exposed us to multiple growth levers being driven by the need for new skills in a rapidly changing digital world. Let's discuss the latest on the key trends that we see at play. The first major trend is digital transformation. The forces of technology, globalization, and increasingly remote and hybrid work are transforming industry after industry. The impact of these forces has amplified the criticality of technology and digital tools, caused businesses, governments, and campuses to redefine the way that they operate, and reshaped both the supply and demand for jobs globally. In its simplest form, this ongoing transformation has created an accelerated rate of change that we believe will be a permanent feature of our increasingly digital world. The requirement for all of us to keep pace with this accelerating change leads to my second major trend, skill development. Businesses are rapidly automating jobs that are repeatable and predictable while investing to upskill, reskill, and benchmark their talent. Developing a competitive workforce requires that employers better understand the skill proficiencies of their team members while creating both internal and external talent pipelines to fill in-demand roles. Governments are looking to scale up their public sector employees and prepare their citizen workforce for a growing knowledge economy. While addressing unemployment was one initial use case, we are seeing larger, more strategic national and statewide initiatives focused on developing equitable workforces and driving long-term economic growth. Campuses are realizing that they must enhance the quality of their offerings, ensuring that students graduate with job-relevant skills, and deliver stronger employability outcomes more cost-effectively. And just about every individual in every job will need to keep learning throughout their life to stay relevant in a changing workforce. We believe this new hybrid model of adult learning and work will require a flexible, affordable, and responsive system of higher education that can keep pace with skill requirements as they evolve. This leads me to the third trend driving our business, the transformation of higher education and adult learning more broadly. As technology and automation accelerate a changing skills landscape, a new and inclusive lifelong learning model must meet this challenge with rapid speed and scale. Technology is a key driver of change, but it is also the means by which society is adapting with online education and remote work. But technology is only part of the solution. Adapting to change will also require institutional collaboration between academic institutions, industry leaders, and governments to meet the needs of this new digital world. That's why we frequently speak about the importance of Coursera's three-sided platform, which connects learners, educators, and institutions in a global learning ecosystem. Our platform has three distinct advantages that we continue to deepen and scale. First are the leading educator partners, including world-class universities and global industry leaders who've created a vast catalog of branded content and credentials. And the second is the global reach of Coursera, and the third is the data and technology that powers our Unified Platform. Let's discuss recent highlights for each of these. First, educator partners. More than 250 educator partners have come to Coursera to teach the world, and we're proud to have recently welcomed more. In the Middle East, we added 3 top-tier universities, bringing our total number of partners in the region to 8. These include Al Faisal University in Saudi Arabia, Khalifa University in the UAE, and the Jordan University of Science and Technology. The upcoming courses created by these universities have been curated to align with the region's broader skills development agenda, particularly equipping learners with the essential digital skills they need to contribute to a growing knowledge economy. In addition to bringing on new partners, we also expanded our relationships with existing partners. Pontificia Universidad Católica de Chile, or UC Chile, has announced 4 master's degree programs on Coursera. These programs build on the success of their 35 open courses to now provide Spanish-speaking students with world-class degrees in business analytics, data science, investments and applied finance, and global public health. Next, the University of Illinois announced 2 stackable graduate certificates. The certificates created by the Gies College of Business stack directly into their 3 existing master's degree programs, providing learners with job-relevant skills today and the building block toward a degree in the future. Finally, HubSpot, a longtime Coursera industry partner with several existing courses, launched its first entry-level Professional Certificate. The sales representative certificate prepares the learner for a new or growing career in sales. This includes hands-on projects using HubSpot's CRM software to apply skills as well as the creation of a portfolio to present to future employers. This is our 19th entry-level professional certificate and sixth industry partner to offer a credential in this rapidly expanding category. We are excited to share more on our catalog in connection with next week's Coursera Conference. Coursera's second major advantage is the global reach of our platform. We have consistently added approximately 5 million registered learners each of the past 6 quarters. Additionally, we've grown the number of paid enterprise customers to over 900 institutions. This large growing learner base attracts educator partners looking to teach both individuals and institutions around the world, but it also provides a unique set of advantages that allow us to compete differently. First, our high-quality premium content enables us to attract learners at low cost and serve them at a range of price points. As these learners look to progress in their careers, we aim to maximize lifetime value with premium credentials from our partners, including specializations, Professional Certificates, and college degrees from accredited universities. Second, our learner base provides leads for our rapidly growing Enterprise channel. And third, the rich data generated by our learners, including catalog performance, learner insights, and feedback from our institutional customers, enable our business customers to benchmark their talent and our educator partners to prioritize the content and credentials that they create for their students. Now our final advantage is the ongoing product innovation on our unified platform. The Coursera learning platform includes several core capabilities that are leveraged globally across our offerings and segments. They include our sales and marketing system, the broad catalog of content and credentials, our technology and tools, and the data generated by millions of worldwide learners, including our proprietary Skills Graph. These capabilities allow us to build products, features, and services that better meet the needs of our learners. Let me share a few recent examples. Last week, we announced an exciting new chapter for Coursera, immersive learning experiences powered by augmented, mixed, and virtual realities. We are working with the University of Michigan, one of our first university partners, to create 10 extended reality, or XR, courses exclusively on Coursera. These new courses will embrace XR technology to provide a new level of learning immersion, including a social learning environment for role-playing simulations and the ability to expand the access and affordability of practical skills training in higher-risk fields such as mobility, manufacturing, and healthcare training. The first 3 courses are scheduled to debut in early 2023. Importantly, all courses will be accessible on mobile devices requiring no VR headset to benefit learners worldwide. Next, we announced an expansion of LevelSets for our Enterprise customers. As the rate of innovation accelerates, the development of new skills will be imperative. LevelSets provides businesses with deeper visibility into the skills of their workforce and the ability to create tailored development paths for employees. The initial LevelSets offering announced this past fall enabled skill assessments of more than 20 data and analytics-focused skills. The recent expansion grows this assessment capability to more than 60 skills, allowing employees to test proficiency in other domains such as technology, finance, and marketing. Finally, we introduced our content ingestion solution for educators last year, which significantly reduces the time needed to author and launch a course on Coursera. More than 110 courses from over 25 partners have been ingested to date. And we recently enhanced the functionality to include self-service Canvas ingestion, a more efficient way for educators to import their existing content and courses from one of the most popular learning management systems. Our learning platform has expanded significantly over the past 10 years, but we believe the transformation of higher education is just getting started with many opportunities to drive growth in Coursera's next decade. Let me highlight some of the key strategies for growth that we're focused on. First, we will continue to invest in our fast-growing Enterprise segment, focusing on both new customer acquisitions and expanding existing relationships. This quarter, I'd like to share 2 recent Coursera for Government deals. In March, we announced our largest workforce development partnership to date with the Milken Center for Advancing the American Dream. The 3-year initiative is designed to prepare 200,000 Americans from underserved communities to enter well-paying digital jobs while earning credit eligible towards a college degree at no cost to the learner. It includes 8 of our entry-level professional certificates from industry partners, as well as degree pathways to partners like the University of North Texas, wraparound student support services, and job opportunities through the partners' hiring networks. Next, we shared earlier in the quarter that Coursera partnered with K-MOOC and the National Institute for Lifelong Education to launch a nationwide upskilling program in South Korea. Through this partnership, learners across South Korea will have access to 70 job-relevant Korean-language courses from top university and industry leaders worldwide, including Yale, Google, and DeepLearning.AI. The program, supported by the Ministry of Education, aims to help thousands of adult learners in Korea on the K-MOOC platform to develop the high-demand digital skills needed to advance their education or career in the new economy. In each of these programs, 3 key features of Coursera play a critical role, including our scale and reach, particularly our ability to serve an entire state or nationwide workforce initiative; the collaboration between academic institutions, industry, and government fostered by our three-sided platform; and the world-class content and credentials from leading university and industry brands. These programs demonstrate Coursera's distinctive ability to deliver on the promise of online learning at scale. Second, we are investing in the beginning stages of growing our Degrees segment with several focus areas in the years ahead. They include expanding our program catalog, including the types of degrees offered and a greater variety of subject matters and languages; growing the number of students in current programs; and continuing to expand our pathways for learners with increasing stackability and removing admissions barriers with innovations like performance pathways. Our third area of growth, we will continue to broaden our entry-level Professional Certificate catalog, sourcing new partners and expanding with existing industry leaders. Working with our partners, we're adding features like degree and career pathways as well as securing ACE credit recommendations across the catalog. And finally, we will continue to scale the Coursera platform, investing in growing our registered learner base, increasing our network of educator partners and their content and credentials, and expanding our reach into more countries and to more learners around the world. And now I'd like to turn it over to Ken.

Thanks, Jeff, and good afternoon, everyone. I'm pleased to report we had a strong first quarter with results that reflect the durable demand we continue to see for high-quality online learning. In Q1, we generated total revenue of $120.4 million, which was up 36% from a year ago on the sustained strength in our Consumer and Enterprise segments. As Jeff and I have discussed, there's a global trend of both individuals and institutions increasingly turning to online learning to supply the digital skills required to compete in today's economy. For individuals, our broad catalog of job-relevant content and credentials from recognized world-class brands is helping to meet the needs of learners no matter the stage of their career. And for institutions, products like our SkillSets, Academies, and LevelSets, powered by the data from millions of Coursera learners worldwide, are helping businesses, governments, and campuses better understand the in-demand skills of today and where they need to invest for tomorrow. Please note that for the remainder of the call, as I review our business performance and outlook, I will discuss our non-GAAP financial measures, unless otherwise noted. Our non-GAAP adjustments remove only stock-based compensation and related payroll tax, nothing else. Gross profit was $78.2 million or 64.9% gross margin, up 58% from a year ago. This margin was nearly 9 percentage points higher than the prior year period due to the drivers we've discussed in the past several quarters. As a reminder, there are two components of our cost of services. First is our content costs, which vary based on both the revenue mix among our three segments as well as the content margin rate within each segment. Our Enterprise and Degrees segments accounted for 43% of our overall revenue mix this quarter, up a couple of percentage points from the prior year. Additionally, we have continued to enjoy the positive changes in the Consumer segment content margin. Our Consumer segment content margin rate increased from 57% in the prior year to 71% this quarter. Learners have continued to consume a larger proportion of industry partner content, which tends to have a lower-than-average content cost. This positive variance also impacted the Enterprise segment content margin, although less pronounced. The second component of our cost of service is our non-content costs, which were 9.4% of total revenue this quarter. Total operating expense was $92.9 million or 77% of revenue compared to 71% in Q1 of last year. Sales and marketing expense represented 38% of total revenue, up from 35% in the prior year period as we invest more in expanding our Enterprise sales force capacity and marketing programs. Research and development expense was 23% of revenue, in line with the prior year period on a percentage basis. And general and administrative expense was 16% of revenue, up from 13% in the prior year period, given incremental costs associated with being a public company. Remember, we were a private company in Q1 of last year. Net loss was $15.8 million or 13.1% of revenue, and our adjusted EBITDA loss was $11 million or 9.1% of revenue. Now turning to cash performance and the balance sheet. Free cash flow was a use of $42.2 million compared to $8.6 million in the prior year with the decline driven primarily by the timing of receivables and incremental year-end vendor spend paid in Q1, so primarily working capital-related, much of which we expect to reverse in future quarters. We continue to maintain a strong cash position and expect to end the year with approximately the same cash balance with which we began. As of March 31, we had approximately $780 million of unrestricted cash, cash equivalents, and marketable securities with no debt. Now let's discuss our segments in more detail. Our Consumer segment continues to grow rapidly at scale with attractive economics. Consumer revenue was $68.1 million, up 31% from the prior year. We continue to see strong demand for our job-relevant portfolio of entry-level Professional Certificates and the ongoing adoption of our Coursera Plus subscription offering. Segment gross profit was $48.3 million or 71% of Consumer revenue as we continued to benefit from a lower content cost rate associated with higher consumption of industry partner content. And we added another 5 million new registered learners for a total base of 102 million. Next is Enterprise. Enterprise revenue was $39 million, up 59% from a year ago on broad strength across the business, government, and campus customers. The total number of paid Enterprise customers increased to 917, up 91% from a year ago. And our net retention rate for paid Enterprise customers was 109%. Segment gross profit was $28 million or 72% of Enterprise revenue, up from 68% in the prior year. And finally, our Degrees segment. Degrees revenue was $13.3 million, up 11% from a year ago on an increase in student cohorts in new and existing programs. Given the extended revenue model for Degrees, the slower start to the year was consistent with our expectations outlined in our previous earnings call in February. Our total number of Degrees students grew 22% from a year ago to 16,481. As a reminder, there's no content costs attributable to the Degrees segment, so Degrees segment gross margin was 100% of revenue. Now on to our financial outlook. For Q2, we are expecting revenue to be in the range of $128 million to $132 million. This represents a growth rate of 27% at the midpoint of the range. For adjusted EBITDA, we're expecting a loss in the range of $15 million to $18 million. Our Q2 outlook for adjusted EBITDA includes an approximately $2.3 million impairment expense related to the likely partial sublease of our Mountain View office with a non-binding LOI, which we expect to consummate in lease, but it is not guaranteed. In the spring of 2020, we moved to a work-from-anywhere strategy for our global team members, resulting in complete flexibility for our workforce and the ability to source and retain talent from anywhere in the world. As a result, we are optimizing our facility footprint after 2 years of learning and observing, allowing us to redeploy capital to accelerate our work-from-anywhere strategy and provide additional programs for in-person connection. For full-year 2022, we will see a net benefit of the sublease in Q3 and Q4 so that the total impact is about $0.5 million for the year. In 2023 and 2024, we'll see a benefit of about $6 million, with much of the savings expected to be redeployed to fuel our talent strategy and elevate the Coursera workforce experience. Now our outlook ranges for full year 2022. We anticipate revenue to be in the range of $538 million to $546 million or 31% growth at the midpoint of the range. This updated full-year outlook reflects approximately 2 points of headwind resulting from the suspension of business in Russia announced in early March. We manage Coursera for high growth across our business. However, we will not look to profit from operating in the region amid this humanitarian crisis. So in summary, we are still increasing the midpoint of our revenue range despite absorbing these impacts given the strong start to 2022. And for adjusted EBITDA, we're expecting a loss of $45.5 million to $51.5 million or a negative 8.9% adjusted EBITDA margin at the midpoint of revenue and EBITDA guidance ranges. Our messaging and operating framework with regards to the EBITDA margin has been consistent. We plan to demonstrate scale and leverage while targeting EBITDA margin improvement over time. At the start of the year, we set an annual EBITDA margin target and work within that plan to maximize our growth opportunities, for instance, a significant investment in marketing, our job-relevant credentials, particularly our increasingly successful portfolio of entry-level Professional Certificates. We do not optimize the business for any single quarter, and we will strategically invest throughout the year to position Coursera for the long term. Before Jeff's closing comments, let me recap the three key highlights of our financial framework. First, we have a unique set of strategic assets that allow us to compete differently. Second, we expect to have increasingly better forward visibility on our top line in the years ahead as our mix of revenue evolves. And third, in addition to our rapid growth, we expect structural gross margin expansion over the long term. We believe that our results continue to reflect a differentiated business model that benefits from our three-sided platform. It provides diversification and exposure to multiple levers of growth, and it provides us with a unique vantage point that encompasses the needs of learners, employers, and educators in order to promote institutional collaboration and navigate the trends shaping higher education. I'll now turn the call back to Jeff.

Thanks, Ken. At Coursera, we believe that learning is the source of human progress, and we are committed to ensuring that learners everywhere have access to the highest quality education. Before we open up the call to questions, I want to highlight two recent initiatives. First, we announced several actions that we are taking to support learners in Ukraine amid the growing humanitarian crisis. These include partnering with the Ministry of Education and Science of Ukraine to offer Coursera for Campus for free to all Ukrainian higher education institutions and their students. To date, 7,000 learners at 95 Ukrainian academic institutions have logged over 40,000 hours of learning on Coursera. We're also making our Coursera for Refugee program available for free to nonprofits actively working to support Ukrainian refugees. We're also offering individual learners the ability to receive financial aid or scholarship waiver through the Coursera platform. Second, in March, we announced that Coursera has joined forces with the U.K. Prime Minister, Boris Johnson, and 10 other partners, including Accenture, Microsoft, Pearson, PwC, and others, to deliver a GBP 20 million initiative to improve girls' access to education and employment in developing countries. This is the U.K.'s first partnership of its kind. The Girls' Education Skills Partnership will deliver high-quality skills training to around 1 million girls initially in the countries of Nigeria and Bangladesh. The initiative will focus on STEM skills needed for in-demand sectors like technology and manufacturing, with Coursera providing 10,000 scholarships for our entry-level Professional Certificates at no cost. The U.K. government believes that private sector involvement will help to ensure that the training delivered corresponds to the requirements of employers, and our entry-level Professional Certificate catalog is precisely designed to help prepare these learners with no college degree or industry experience to enter digital careers. This is how leading institutions on Coursera are moving from ideas to action. Technology is one part of the solution. But it also requires institutional collaboration, bridging public and private sectors, university and industry partners, and national and regional borders to meet the needs of our evolving world. Together, we are providing greater access to world-class learning and more equal opportunity for all. Together, we are moving humanity forward. And with that, let's open up the call to questions. Thank you.

With that, we'll take our first question this afternoon from Rishi Jaluria with RBC.

Wonderful. Wanted to start by looking at the NRR within the Enterprise segment. Obviously, Enterprise continues to show nice growth, but that NRR figure did tick down a little bit from Q4. Q4 itself was down from earlier in the year. Can you maybe help us understand some of the drivers of that number? How much of that is comps versus maybe just mix shift and going more towards government that might have a slower expansion rate? And then I've got a follow-up.

Yes. Rishi, this is Jeff. It's a few things. There's a little bit of it is institutional deals in Russia that we have suspended, and so that's a part contributor. And you put your finger on it; the different types of enterprise deals that we have with businesses, with governments, and with campuses are at different levels of maturity. So one of the things I will say is that the NRR is not the same among those three. And I guess what I would say generally is in segments where we are earlier to market and customers are experimenting with different use cases of how to use the content on Coursera to provide the learnings that they want to provide, some are more standard and mature and more predictable; they have a problem, we deliver it, and it's pretty predictable. In others, it's a little bit more sort of experimentation, and they're trying this or trying that. Sometimes it works a little bit better, sometimes it doesn't. So I think part of what it's reflecting is the early stage of some of these markets in the enterprise space.

Great. That's really helpful. And then on the Degrees side, I just wanted to turn to looking at the students. Surprisingly, it looks like that number actually was up about 280 sequentially in spite of you shutting off a number of universities in Russia, and that was a big surprise to us. Can you maybe talk a little bit about what you're seeing within that segment outside of Russia and specifically within U.S. universities? And then maybe any insight you'd be able to share on what you expect in the coming academic year, which would fall under this fiscal year?

Yes. No problem. So it definitely is the case that we are seeing what has historically been true, which is that Degrees generally are countercyclical. When there's a really strong labor market, people will sometimes defer their more expensive long-term education credential investments and go into the labor market and make more money in a job. We are seeing some of that, we think, in the U.S. Like you said, Russia is clearly what it is. We suspended our operations there. In other non-U.S., non-Russia markets, we're still in the earlier stages. But we've got Degrees in Latin America for a while; we just announced a couple more, and we are not quite seeing the same kind of headwinds because I think the economies and employment rates are in different sort of levels of intensity. The U.S., I will say, is exhibiting those countercyclical qualities that they have before. I mean, clearly, there's a lot of job availability, and that's showing up across the board in the U.S. across many providers and higher education institutions in the U.S.

We'll take our next question now from Josh Baer at Morgan Stanley.

I wanted to ask a couple on margins. We've sort of gotten used to seeing the Consumer segment margins coming in higher than expected, driven by the Professional Certificates mix. In the Enterprise segment, that jumped quarter-over-quarter, year-over-year. What's causing that big swing up in Enterprise segment, part 1? And part two on margins is beyond the mix of professional certifications, is there anything else that you're doing more proactively to work on the segment margins? Are you taking on more parts of the content generation process that would potentially have more favorable economics and revenue share for you?

Yes. Ken?

Thank you for the questions, Ken. We’ve seen an unexpected but early margin expansion, which has been a positive trend. Consumer performance, while surprising, is something we should now anticipate doing well. In the Enterprise segment, the situation is similar, centered around consumption metrics to determine how we allocate costs in relation to partners' revenue. The elevated margin in Enterprise stems from the popularity of high-margin specializations that have lower content costs. While Enterprise shows similar results to Consumer, it primarily relies on content usage, while Consumer is driven by purchasing. Furthermore, within the Consumer segment, we are exploring new strategies, particularly surrounding the increase in certifications. The response has been phenomenal, prompting us to consider sponsoring more content, which could enhance margins over time. This approach reduces risk for our partners and offers proprietary content, which isn’t typical for us, but we see its value.

Got it. And then just wanted to clarify or highlight maybe some of the comments on the cash balances ending '22. I mean, with some CapEx in there, is that sort of an implicit guidance for positive operating cash flow for 2022?

To be honest, we're not trying to be exactly precise on it. What we've been saying is we burned minimal cash last year, and we expect that to continue on the operating side. However, there is still a mix of stock exercises and stock sales. We'll make some incremental investments in our programs that may appear on the balance sheet. So roughly, yes, I’d agree with your statement. But I want to be clear that our intent is not to be that precise. We have $780 million in the bank and minimal cash burn. We're focused on growth. As a result, with the growth and some leverage we're experiencing, we expect the cash burn to be minimal on the operating expense side. It’s not our immediate focus, but that’s the outcome we're observing.

We go next now to Terry Tillman at Truist Securities.

Yes. Jeff and Ken, congrats on the Consumer and Enterprise strength. And just all the color on this call, there's a lot of detail, really much appreciated. I have two questions. The first one actually has two parts, and maybe it's for you, Jeff. Anything you can call out in terms of certificate strength that's like really kind of surprising you and outlier-oriented? And then the second part of that first question is just where are we with Coursera Plus? And any more kind of quantification on the kind of success you're having? And then I have a follow-up for Ken.

Yes. Really quickly on the certificate strength, it is, as we've talked about, a major factor that's been driving good performance of Consumer segment revenue growth. Part of that is good conversion characteristics. It looks like people who are thinking about switching careers have a little bit more intent to not just watch a 10-minute video but to really learn skills to get a new job, and they'd like to have a credential that they can show to an employer that says, 'Hey, I don't have a college degree, I don't have any experience in this prior experience in this industry, but I completed this course of study. I've learned the skills over the course of maybe 4 or 5 courses with the Professional Certificate. I've got the certificate that says I've demonstrated my skills.' Increasingly, we have projects built into them where there's a portfolio of work that someone can show to land that job. And I think that those learners are more likely to buy and more likely to retain. And so part of what we're seeing is a margin enhancement because, as we talked about, we invest a bit more in producing these. We've seen better conversion rates; we've been seeing better retention rates. On the question of Coursera Plus, I think we continue to see interest in that as people are maybe thinking about switching careers. They're not sure what career they want to get into, but they just know they want more flexibility in their job and they want higher pay. They might explore 3 different jobs or careers. And so that would be a consumption across multiple Professional Certificates, for which Coursera Plus really helps. So yes, we're seeing that. Are there any particular outliers? I mean, obviously, Google IT Support Certificate was the first back in January of 2018. They have followed that up with three additional certs in the first quarter of last year. They continue collectively to do really well, but we are really excited about the number of jobs for which we now have Professional Certificates. And these Professional Certificates have been increased. We mentioned HubSpot. But the number of different brands and different domains that are helping prepare someone who wants to switch jobs to a greater range of possible career options, all of which are digital jobs that pay well; they don't require a college degree; they don't require prior experience. And increasingly, the skills can be learned online, and the jobs can increasingly be done online. So we're just really leaning into these sector tailwinds that we don't think are going to abate anytime soon.

Yes. Ken, I'm going to ask you the real hard question. In terms of the net revenue retention, there was a question on it. I think, Jeff, maybe you talked about it. Look, there's actually three tails to that story in terms of the three different parts of the Enterprise business, and they do have varying kind of retention rates and just different kind of maturity dynamics. But as we look through the rest of the year, should we expect maybe kind of stability? Is that what you're modeling for NRR? Or could it drift a little lower or maybe just a little higher? Just any color there would be helpful.

Yes. Sorry, firstly, it's something difficult to forecast, but we've looked at the numbers. I'd expect it around where it is now for the rest of the year. Most importantly, that mix that Jeff was talking about in the area that's newer, hence, most volatile, almost by definition, that's growing quite rapidly. And so my guess is we'll stay right around these levels. The other businesses, as we start to grow the other businesses on a relative basis, I think we'll start to see some expansion there. But I'd look for that a year out. I would tag on, however, to the conversation around Coursera Plus just to give you a little bit more data. We talked about it being 25% of Consumer revenue. A couple of quarters ago, I think, is when we were talking about that. And at the time, we said, 'Look, we're not focused. We're happy with the result. It's done a lot for visibility around the business and really utility for the consumer, if you think about the economics around that pricing.' And as Jeff mentioned, it's been driven a lot by people wanting to see multiple career-related specializations. And so that has continued to grow. We're seeing north of 30% there now of Consumer revenue. So again, nice from a stability standpoint and visibility standpoint on the Consumer segment. We're not forecasting that going up or down necessarily, but we are really very, very pleased with that result.

Yes. One other thing I'll just add, Terry, that might not be obvious to folks. There's obviously a lot of content out there, that's pretty obvious. The vast majority is short-form content created by lots of different people. It turns out, it takes a lot of money to build a full college degree that is a two-year program. It also is a considerable investment to build a five-course Professional Certificate. That's not short form. That's not something that a bunch of individuals will sort of piece together. There's a really nice sort of, I think, combined effect of long-form learning to get into a new career that creates higher monetization and longer persistence. And also, it's a more distinct type of content, and the credential matters because you're trying to get into a job. That's where the brands matter. So another reason we really like these Professional Certificates is they're pretty distinctive. They're not the only things in the world that kind of are bigger than a 30-minute video and shorter than a college degree, but we're seeing a really nice big segment of long-form credential branded learning for career advancement that we're leaning into pretty hard.

We'll go next now to Stephen Sheldon with William Blair.

So the consistency of registered learner growth, I think, has been pretty notable. So it would be great to get some more detail on maybe two things. One, what's kind of working on the marketing side to support this and how you're finding learners or, I guess, maybe it's more that they're finding you? And then two, anything notable about the location and demographics of recent learner additions? Or has it been pretty broad-based?

Yes. Regarding the growth in registered learners, it's been interesting to observe the big announcements this earnings season, especially those linked to stay-at-home activities, which are currently facing challenges as the pandemic stabilizes and people engage more in outdoor activities. As a result, online activities have decreased compared to the heights of the lockdown. We're experiencing similar trends. To some extent, our consumer revenue growth does not reflect a significant increase in new users compared to during the pandemic. Instead, it indicates higher willingness to pay and persist. That said, what has been effective aligns with our past strategies. We do not invest much in paid marketing, and we have never done so. Our content fees are justified by the partnerships we have with reputable brands that are developing courses and offering them widely. The videos can be accessed for free, and this high-quality free content attracts many learners. Additionally, the content creators have strong domain authority on search engines, which benefits us when they link back to their courses. Therefore, our SEO and other organic methods for attracting learners remain robust, as we prefer not to invest heavily in paid media, which has become challenging for customer acquisition. As for locations, I don't perceive any significant shifts in any specific region. Ken, do you have any insights on that?

Exactly. It's been fairly even across the board. I think the one thing I'd highlight is India and Asia Pac have been growing a little bit faster than the other three, but it's been relatively evenly distributed, the overall growth.

Got it. Yes, that's really helpful. And then just as a follow-up, I just would love an update on where you guys are at in terms of expanding the availability of local language content on the platform.

Yes, we have several methods for expanding local language content. The most cost-effective and high-volume method is through machine learning. Some language pairs and domains are easier for machines to handle, especially those commonly used by major cloud companies to train their algorithms. We primarily create subtitled language pairs using machine learning, which is improving. Currently, we have around 3,000 in Arabic, mostly completed through machines. However, some large institutional clients require full course translations with high accuracy, which we achieve using human translation services. These services are significantly more expensive, and we don't anticipate them becoming a high-volume activity for us. We believe that as machine translation improves, the need for human involvement will decrease. Strategically, we won’t attempt to replicate every major title in every language since it is not cost-effective and compromises quality and brand integrity. Instead, we prefer to translate substantial global brand content and supplement it with shorter native language projects created by experts in their regions, using local tools and contexts. This approach allows us to operate at a much lower cost. Overall, we're adopting a bifurcated language strategy that relies heavily on the advancing capabilities of machine translation, and we feel optimistic about our direction. We expect these techniques to unlock larger markets while maintaining high quality at lower costs.

We'll go next now to Brian Peterson with Raymond James.

So Jeff, there were a lot of partnerships that you guys announced this quarter, and the Michigan one is near and dear to my heart. But curious on, I guess, the breadth of the number of, I guess, university partnerships that you may look at for Degrees. And how has that changed versus a year or two ago? And I know you expanded or enhanced the Canvas partnership there. What do you think the impact could be of that enhanced data ingestion?

Yes, it's quite interesting. At a fundamental level, Brian, we made a strategic decision well before my time here, about five years ago. It was primarily Daphne and Andrew who started this when they launched Coursera with five universities. From the outset, Coursera has focused on institutional partnerships, as we believe these institutions excel in several areas. They possess the resources and the brand required to produce high-quality content. Additionally, institutions provide an effective means to reach a broad audience. We have numerous institutional partnerships; on the content front, it's about the brands developing the content, while for distribution, we collaborate with governments and operate at various levels. For example, in Ukraine, the Ministry of Education is connecting us with academic institutions to engage learners who have been displaced. Similarly, in the Philippines, we are working with government agencies that coordinate with businesses and campuses to ensure that education policies and skill development are aligned with the needs of employers. Currently, we are witnessing an increasing number of institutions approaching us, eager to engage in this ecosystem. Regarding Professional Certificates, given the recent workforce changes and the emphasis tech companies place on training developers, many businesses want to become involved in education as they see the competitive advantage of upskilling their employees. Campuses are also recognizing the need to move online. There are various reasons institutions are seeking partnerships with us. As for Degree partnerships, we are observing a growing interest in online degrees on a national scale. The U.S. has been somewhat ahead in this aspect due to traditional online program managers, but other countries have begun to realize the potential for offering online degrees post-pandemic. In India, for instance, there is considerable regulatory support for establishing online degree programs, and we are seeing positive trends in this area. Canvas represents a different type of institutional collaboration, where we aim to simplify the process for institutions to transfer content created in one system to our platform. This approach focuses on reducing costs and accelerating the publishing of content on Coursera, as we can swiftly integrate it into our system for the benefit of learners. Yes, I believe part of what is happening involves institutions working one at a time. Some universities enter into agreements with us, and each school has its own dean. They may start with one school where, for example, a business school expresses a need to teach its students Java and computer science, but the professors from other schools may not be available to assist. We are witnessing a rise in multidisciplinary applications within universities. On the government side, there is an interesting trend where a group of institutions, like academic entities, function as part of a higher education system. We are beginning to observe not just changes at the institutional level, but systemic changes as well. For instance, a Ministry of Education can decide to upgrade multiple institutions simultaneously by changing policies and offering financial support, ensuring that the entire higher education system can access workforce development and job-related skills training that can be facilitated online. This kind of systemic change is bringing Ministers of Education into the equation. We are indeed observing a significant acceleration in digitization globally, and institutions responsible for entire systems are recognizing the need to adapt quickly in response to these changes. We are fully engaging in that process.

We go next now to Eric Sheridan with Goldman Sachs.

Maybe I wanted to follow up on the conversation from last quarter where you talked about wanting to lean in against investments for the longer term because you continue to see the opportunity set continue to expand, and you talked a lot about the learner base and how that creates a flywheel effect. Can we get an update on how you're thinking about balancing investments versus harvesting for profitability against the growth opportunity for the long term? We noticed that continues to come up as a pretty consistent investor debate broadly across all of technology. But I wanted to bring it back to what we talked about last quarter thematically.

Yes, absolutely, Eric. I'll begin by sharing our perspective on this matter, and then Ken can discuss the implications for some of the ratios. We are committed to long-term investments. Ken and I, along with the Board, are aligned in our thinking. We just had a Board meeting yesterday, and everyone is focused on ensuring we pace ourselves for growth. We plan to invest when there is a reasonable timeframe and a clear path toward that growth. Our performance is solid, and we are continuing to invest robustly. When you examine our R&D expenses as a percentage of revenue and compare it to others, it's clear that we're not merely a content company. We believe that winning involves not just content but also credentials and high-quality content from reputable brands, along with significant technological support for large-scale administration, skills measurement, and benchmarking. As for new developments, Brian mentioned Michigan, and we're beginning to explore new teaching methods using VR and XR technologies. We're also investing in our sales force due to the significant opportunities we see across various regions and sectors, including business, government, and education. That represents a considerable investment. I’ll hand it over to Ken now to discuss the potential effects of these strategies on our operating margins and revenue percentages as we progress through the year.

Sure. I will explain how we view and manage the company for profitability, focusing on our EBITDA margin for the year. We are continuously assessing our investment opportunities, adjusting spending on a quarterly basis. This was our practice even when we were a private company. We aim for a final goal and make necessary adjustments throughout the year. It's crucial that we don't limit growth while also building the business to scale. We are fully aligned on this approach, including support from the Board. As we progress, this scaling will likely lead to margin expansion, regardless of our intentions. We anticipate further scaling next year, especially if we continue to exceed expectations as we have in the past. However, we are cautious not to make commitments prematurely. If growth opportunities arise that provide a significant competitive advantage, we will continue to invest. We expect improvement overall, but we will closely monitor and optimize the rate of that improvement alongside our growth.

And ladies and gentlemen, we have time for one further question this afternoon. And that question will come from Ryan MacDonald with Needham.

Congrats on a great quarter. Impressive to look at the reiteration of the outlook despite a two-point headwind to growth given the macro environment here. I'd be curious, maybe for Ken as well, to understand how you think about the three segments of growth. I believe last quarter, we talked about sort of 20%, 50%, and 20% across the three segments. Obviously, some strong outperformance on the Consumer side. But maybe you can perhaps give us an update and if there's any updated thoughts on how you think of that segment to growth rate. And perhaps maybe what segments are expected to feel the brunt of that headwind?

Sure. Well, relevant question. As we rolled out some guidance, to try to be helpful for everybody as they put models together for the year so that you were in our shoes and knew how you thought about our view on the different segments, one of the things I think we emphasized was we didn't expect to have ongoing three-segment guidance. But we can still give you a little color because it's been consistent with what we have expected. We've continued to do great on the Consumer side. It's kind of the standout in the space, frankly. Enterprise continues to be a robust market. We're really excited about each of the three subverticals and what they're doing there. Degrees have not been as strong from a growth perspective, but we told you that was going to be the case last quarter. So nothing's changed. What we said on the Degrees side specifically is that the first two quarters, we expect it to be slower and then approximately a 20% growth rate for the year, plus or minus. Again, we won't reiterate guidance. But I think in the near term, it will be shorter. But that's how I think we're feeling similar to where we were three months ago. It's early in the year.

And Mr. MacDonald, did you have anything further, sir? We lost your audio.

So we can wrap up the Q&A for today. Great. So 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 us today.

And again, ladies and gentlemen, thank you for joining us, and that will conclude today's Coursera's First Quarter 2022 Earnings Conference Call. You may now disconnect.