Ladies and gentlemen, thank you for waiting. Welcome to Coursera's Fourth Quarter and Full-Year 2022 Earnings Call. All participants are currently in listen-only mode, and this call is being recorded. After the prepared remarks from the speakers, there will be a question-and-answer session. Now, I will hand it over to Cam Carey, Head of Investor Relations. Mr. Carey, you may proceed.

Hi, everyone, and thank you for joining our Q4 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, 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 and beliefs. These forward-looking statements include, but are not limited to, statements regarding the potential impacts of trends affecting our industry and uncertainties in the current economic and educational environment; our ecosystem, platform, content, and partner relationships, our anticipated plans, and the anticipated benefits thereof; our strategy and priorities; and our business model, mission, opportunities, outlook, and future intentions. 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 or 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 welcome everyone. It’s great to be with you all. I’ve been a CEO for over 25 years. In that time, I have witnessed many economic cycles, societal challenges, and technological leaps that required individuals and institutions to embrace how to learn, change, and grow. The past year has proven to be one of those times. Organizations are exercising caution given the macroeconomic uncertainty. Students are demanding an education system that is more affordable, accessible, and relevant. As the year came to a close and ChatGPT mesmerized the world, we were reminded of the transformative power of technology to change how we teach, learn, and work. Despite the dynamic environment, I am inspired by our team and confident in our ability to deliver on our long-term strategy. We grew revenue 26% over the prior year, with total revenue of $524 million. We rapidly expanded the Coursera ecosystem, welcoming new learners, educators, and institutions around the globe, and deepened the advantages of our three-sided platform. The structural trends reshaping our world are not slowing down. Let’s discuss the latest on each, starting with digital transformation. The forces of technology and globalization have been accelerating the transformation of every institution in our society. The rise of remote work has led to a globalization of talent, reshaping the supply and demand for jobs, no longer confined to a specific city, state, or country. Over the course of my career, I have seen how eras of disruptive technology, be it the internet, cloud computing, social media, or mobile, have helped advance the world and create opportunity. But they’ve not been without consequences, including dislocation and job losses. I believe that AI is ushering in the next major inflection point, with implications that go beyond the traditional boundaries of automation. AI will impact the future of learning and the future of work more quickly and profoundly than many of us had been expecting. This brings me to my second major trend – skills development. Employers are rapidly digitizing work processes and jobs that are repeatable and predictable. Generative AI has the potential to impact an entire new class of knowledge workers, unleashing a new wave of reskilling imperatives. We believe that generative AI will require businesses to retool systems, processes, and talent while harnessing these new technologies to improve their customer offerings, increase productivity, and stay competitive. This will push universities to enhance their curriculums and learning experiences to make quality education more affordable, interactive, and relevant. It will drive governments to deliver job training programs at the speed and scale needed to keep pace with job dislocation and unemployment challenges. And it will push every individual in every job to keep learning to stay relevant. This leads me to the third trend driving our business – the transformation of higher education and adult learning more broadly. In a world where machines are increasingly capable of producing content at scale, we believe that trusted institutions will play an increasingly valuable role in education. The growth in online learning has provided more equitable access to learners around the world. But traditional systems of higher education have not kept pace with the changing skill requirements driven by technology and automation. Therefore, these higher education institutions must meet this challenge with rapid speed and scale, evolving to better serve the needs of students, graduates, and communities in an increasingly digital and distributed labor market. I’m excited to share that Coursera has partnered with the University of Texas System in a three-year, system-wide initiative. Students and faculty at all 8 UT campuses have access to the Coursera catalog, including our entry-level Professional Certificates created by some of the world’s best-known industry brands. Many of these industry micro-credentials come with ACE Credit Recommendation. Several universities have recently begun integrating content on Coursera into their for-credit curriculum, including UT Arlington, El Paso, San Antonio, and Tyler. We believe students will benefit not only from learning skills, but also from earning industry micro-credentials that complement the degree they earn from their local campus. The University of Texas System will be preparing the next generation of talent to meet the state’s workforce and industry demands. Historically, collaboration between industry and academia has been slow and piecemeal. By integrating industry expertise into university curriculum at the scale of entire systems of higher education and government, we begin to witness what our platform and ecosystem can enable. Coursera is increasingly becoming the platform through which institutions can drive powerful collaboration to better meet the needs of our digital world. We believe our platform has three distinct advantages that allow us to compete differently. First, our leading educator partners have created a broad catalog of branded, high-quality content and credentials. Second is our global reach and distribution. The third is the data and technology that powers our unified platform. Let’s discuss our recent progress for each of these. First, our educator partners. Universities play a prominent role in society, fostering education, research, and knowledge while teaching durable skills like critical thinking, communication, and collaboration. Curriculum can be complemented by practical, hands-on learning from industry partners, who are better equipped to keep pace with the fast-changing skills landscape and evolving job requirements. Coursera’s learning ecosystem includes a powerful combination of 300 university and industry partners, many of whom we welcomed to our platform over the last year. This includes top-tier universities around the globe, like Georgetown University, Indian Institute of Science, and King Abdullah University of Science and Technology, as well as industry leaders in technology, business, and health, like Accenture, Mayo Clinic, Nvidia, PwC India, and SAP. These partners continue to expand the Coursera catalog. We announced 14 new degree programs in 2022, including two recent additions since our last call. We welcomed the first liberal studies degree on Coursera from Georgetown University. This is a bachelor’s completion program that offers an affordable, flexible way for adult learners to finish their degree. Additionally, we announced our first degree from West Virginia University. It’s a Master of Science in Software Engineering offered at an affordable price for students around the world. We are rapidly expanding our catalog of entry-level Professional Certificates, adding new partners, job roles, and language translations while creating stronger connections to career and degree pathways. A year ago, we had 18 certificate training programs. Today, we announced 38, more than doubling the catalog, with titles from both new and existing partners. Recently, we announced the first entry-level Professional Certificates from two new industry partners, including SAP Technology Consultant and Goodwill Career Coach and Navigator. We believe that industry micro-credentials will be a critical component of the transformation of higher education. They provide learners with no college degree or prior work experience an affordable, flexible way to start or switch into a digital career. They offer a turnkey solution for campuses or entire systems to upgrade their curriculum with career electives and produce graduates who possess the skills that employers are looking for. They enable businesses and governments to deliver workforce and talent development at scale. Our second major advantage is our global reach. We have a large, growing learner base that attracts educators looking to teach individuals and institutions worldwide. Our freemium model, paired with the world-class brands of these universities and industry partners, allows us to grow our top-of-funnel, attract learners at low cost, and serve them at a range of price points. This year, we added nearly 22 million new registered learners, growing our global learner base to 118 million by the end of December. Learner growth continues to be broad-based, with double-digit percentage increases in all regions. We also grew the number of Paid Enterprise Customers to more than 1,000, including new business, campus, and government customers. The reach of our ecosystem continues to grow, and the data generated by our learner base allows us to identify and prioritize sourcing opportunities, deliver skillset insights to our Enterprise customers, and create products, features, and pathways that deliver more value to our learners, educators, and customers. This brings me to our final advantage, the ongoing product innovation on our unified platform. My first update focuses on the learner experience. Coursera is increasingly becoming a global destination for learners seeking job-relevant skills and recognized credentials that can unlock the next phase in their education or career. Our team has been focused on creating strong connections between our open content and career and degree pathways, starting with the discovery experience. As part of our Career Academy launch last year, we began surfacing credentials through the lens of career pathways, helping learners better understand job roles, openings, median salary information, and in-demand skills associated with our entry-level Professional Certificates. This quarter, we focused on degree pathways, rolling out enhancements to our catalog’s search and discovery, with “Credit Eligible” filtering and badging that allow learners to more easily identify content and credentials that can count as credit towards a college degree. This is directly tied to my second update on the American Council on Education, also known as ACE, which offers credit recommendations. From our campus survey in 2022, we learned that more than half of students want to earn a Professional Certificate that counts as credit towards their degree. We have continued to pursue credit recommendations across our catalog. These credit recommendations provide learners with the opportunity to earn academic credit towards a degree program typically at a much lower cost. Universities can consider offering credit for these industry micro-credentials, which can complement traditional curriculum with job-relevant skills, or what we like to refer to as “career electives.” This quarter, we secured ACE credit recommendations for two additional entry-level Professional Certificates, for a total of 14 now recognized for academic credit. We believe more of our Professional Certificates have the potential to receive this distinction in the future and we are pursuing similar credit recommendations from accreditation agencies in additional regions around the globe. My final update is for institutions. Our Academies product is a complete skills development solution, offering a personalized, skills-first approach to enterprise learning for critical job roles. Today, we offer six Academies spanning both technical and non-technical domains. Customers have shared that stronger leadership, change management, and human skills are needed across their organizations, especially with the unique challenges that remote work and hybrid work present. We recently created a new Leadership Academy featuring a targeted, more selective portion of the catalog, including 11,000 clips, 500 courses, and 70 Guided Projects. This has been designed for buyers looking to offer high-quality leadership training at scale for all levels of the organization. As AI accelerates change and puts more jobs at risk, one job appears to be more important and less at risk than ever—the job of the leader. Leaders are responsible for managing people through change, which is more important now, but also more difficult than ever. Leadership requires human skills and an awareness of change and context that AI will likely never replace. We see strong demand for Leadership Academy and believe that tailwinds will increase demand for this kind of workplace training. Before I turn the call to Ken for a closer look at our financial performance and outlook, let me remind you of several key priorities we are focusing on in the years ahead. We’re focused on growing our Enterprise segment across business, government, and campus customers, seeking to address their needs in this changing environment. We’re expanding our portfolio of degree programs, especially those tailored to meet the unique needs of working adults, including flexibility, affordability, and stronger pathways from open content and industry micro-credentials into degrees. We are broadening our entry-level Professional Certificate catalog, expanding with new roles, new partners, new languages, and credit recommendations. We are focusing on deepening our advantages while driving more scale and leverage across our platform. And we see exciting possibilities for the use of generative AI across our business model. Now, I’d like to turn it over to Ken. Ken, please.

Thanks Jeff, and good afternoon everyone. We are pleased with our fourth quarter results, which reflect the diversification inherent in our business model, including broad exposure to the needs of individuals, businesses, governments, and campuses, a global footprint, and the ability to serve learners at every stage of their career. In Q4, we generated total revenue of $142.2 million, which was up 24% from a year ago, driven by strong growth in our Consumer and Enterprise segments. Over the course of 2022, we closely monitored the changing economic environment. This included our partners’ and customers’ priorities, as well as the implications for our own business as we navigate lower growth rates in the near term. We implemented a series of actions to pace our investments and resources with our revised growth forecast, most recently reducing the size of our global workforce and sharpening our focus on key investments. For the remainder of the call, all non-GAAP measures have been adjusted to reflect one-time charges related to our workforce restructuring actions of approximately $10 million, reconciled in our financial tables and supplemental slides. Gross profit was $88.9 million, up 24% from a year ago and a 63% gross margin, which was in line with the prior year period. As a reminder, there are two components of costs of services: non-content costs that serve all three segments and the content costs paid to our educator partners. Our non-content costs have been largely consistent over time at approximately 10% of total revenue. The second component, our content costs paid to educator partners, will vary based on the revenue mix among our three segments, as well as the content margin rate of each segment. Given the strong growth in our entry-level Professional Certificates, we have seen a large, positive variance in our consumer content margin rate, associated with the increased consumption of industry partner content, which tends to have lower-than-average content costs depending on the partner’s goals. Some industry partners have prioritized additional spend, which is included primarily as part of our operating expenses to promote their brands, reach, or social impact initiatives, instead of a higher revenue share. In conjunction with securing a multi-year contract extension of our strategic relationship, our largest industry partner has chosen to receive a more standard revenue share in the future. This will result in higher content costs and lower operating expenses going forward, and I will provide more detail in the discussion of our financial outlook. Total operating expense for Q4 was $99.7 million, or 70% of revenue, compared to 83% in the prior year period. Sales and marketing expense represented 38% of total revenue, down from 44%. Research and development expense was 20% of revenue, down from 24%. General and administrative expense was 13% of revenue, down from 15%. Net loss was $6.5 million, or 4.6% of revenue, and adjusted EBITDA was a loss of $5.8 million, or 4.1% of revenue. For the full year, our adjusted EBITDA loss as a percentage of revenue was 7.1%, a 150-basis improvement over the prior year. We aim to show ongoing leverage in our operating model while also pursuing growth opportunities in our large and early markets. Our annual operating framework regarding EBITDA margin has been consistent. At the beginning of the year, we set an annual EBITDA margin target and work within that plan based on the trajectory of our business, which we demonstrated with our reset growth expectations and disciplined expense management in the second half of 2022. Now, turning to cash performance and the balance sheet. Free cash flow was a use of $7.9 million during the quarter, compared to a use of $1.9 million a year ago. This included cash payments of $4.8 million in Q4 related to the restructuring charges, with the remainder to be paid out in the first quarter of this year. We ended the year in a strong cash position. As of December 31, we had approximately $780 million of unrestricted cash, cash equivalents, and marketable securities, with no debt. We believe the strength of our balance sheet, in combination with the modest cash requirements for operating needs, is an asset that provides stability and strategic flexibility to execute our long-term strategy. Next, let’s discuss each of our business segments in more detail. Consumer revenue was $79.8 million, up 21% from the prior year. Segment gross profit was $58.2 million, or 73% of consumer revenue, compared to 69% a year ago. We added another 5.2 million new registered learners, despite Q4 being our historically lightest seasonal quarter for top-of-funnel activity. Our strong consumer performance continues to be driven by our expanding catalog of entry-level Professional Certificates, along with the growing adoption of our Coursera Plus subscription offering. Enterprise revenue was $50.5 million, up 41% from a year ago on growth across all three of our customer verticals: businesses, campuses, and governments. Segment gross profit was $33.5 million, or 66% of Enterprise revenue, compared to 68% a year ago. The total number of Paid Enterprise Customers increased to 1,149, up 43% from a year ago. Our Net Retention Rate for Paid Enterprise Customers was 108%. While we benefit from multiple channels of distribution within our enterprise segments, we are seeing customers, particularly businesses, exercise caution in their spending priorities amidst increased macroeconomic uncertainty. Finally, our Degrees segment. Degrees revenue was $11.9 million, down 11% from a year ago on lower student enrollments, consistent with our forward-looking commentary on recent calls, as Degrees growth in 2022 was challenged by enrollment headwinds associated with U.S. master’s degree programs where our revenue is concentrated today. The total number of Degrees students grew 12% from a year ago to 18,103. As a reminder, there are no content costs attributable to the Degrees segment, so Degrees segment gross margin was 100% of revenue. Before I turn to our financial outlook, I’d like to provide some detail regarding a recent, multi-year contract extension we secured with our largest industry partner this year. As we discussed previously, some industry partners prioritize additional spend to promote their brand, global reach, and social impact initiatives, included as part of our operating expenses, primarily as sales and marketing efforts and content production. The success of these partners has driven large positive variances in our gross margin, most pronounced in our Consumer segment margin, while also increasing our operating expenses. In consideration of our long-term strategic relationship, as well as the changing economic environment, our largest industry partner has chosen to receive a more standard revenue share arrangement as part of recent contract negotiations. We are excited about the opportunities this renewed commitment provides. I want to be clear about how this change will affect our financial outlook in 2023. First, the transition to a more standard revenue share will result in a geography shift within the P&L of an estimated 10 percentage points of total revenue from operating expense to cost of revenue. We now expect both total gross margin and our Consumer segment margin to be approximately 52% this year. Second, we will incur expenses of $25 million in 2023, similar in nature to our historic spend for the program, including sales and marketing efforts, content production, and product development. These payments will be spread evenly across the coming four quarters and will not recur after 2023. As we work through these near-term impacts, we believe the multi-year contract extension is better aligned with our mutual priorities, reaffirms our strategic partnership, and allows us to best serve our learners and customers in years to come. Now, onto our financial outlook. For Q1, we are expecting revenue to be in the range of $136 million to $140 million. For adjusted EBITDA, we are expecting a loss in the range of $12.5 million to $15.5 million, inclusive of the $6.25 million related to the industry partner contract change. For full-year 2023, we anticipate revenue to be in the range of $595 million to $605 million, representing approximately 15% growth at the midpoint. For adjusted EBITDA, we’re expecting a loss of $26 million to $34 million, or a negative 5% adjusted EBITDA margin at the midpoint, inclusive of the $25 million impact related to the industry partner contract change. On a quarterly basis, we expect an adjusted EBITDA loss in the first half of the year and anticipate positive EBITDA by our fourth quarter. Additionally, for the first time, we thought it would be helpful to provide our expectations regarding free cash flow for the year. We expect a use of $12 million to $18 million, compared to a use of $52 million in 2022. Finally, as we enter a new year, we like to provide some color on the composition and pace of the business, particularly given the varying impacts of the changing environment across our platform. This includes one-time, segment-level annual growth expectations to help you better understand how we plan to deliver on our overall guidance. For Consumer, we believe that learner demand for our branded industry credentials will continue, with our initial outlook anticipating more than 10% growth. For Enterprise, it is clear that businesses are being more cautious with their spending priorities, and we expect growth of approximately 20% to 25% as we monitor the environment closely. For Degrees, we anticipate a return to growth in 2023 of approximately 10%, with modest declines at the start of the year inflecting as we enter the second half. We are confident that the structural trends driving our business have not changed and look forward to providing an updated view of our long-term strategy, key initiatives, and financial targets at the March Investor Day. We enter 2023 in a position of financial strength and are committed to driving sustainable growth, with our outlook reflecting an increased focus on scale and leverage to position us for the future. I’ll now turn the call back to Jeff for closing comments.

Thanks, Ken. Growth in online learning, in combination with remote work, digital jobs, and broadband connectivity is reshaping the supply and demand for jobs globally. For many companies, human capital is their most important asset, and they now find themselves competing on a global stage for in-demand skills. This presents a challenge, but possibly a larger opportunity. Remote work provides direct access to the best talent in the world, no matter where it resides. Online learning can build the next generation of talent with the skill sets needed for future job roles. I want to wrap up today’s remarks with a Coursera for Business customer example that is drafting a blueprint for how forward-thinking companies manage their holistic talent needs. Sanofi, one of the world’s largest pharmaceutical and healthcare companies, has been a Coursera customer since 2017. Over the years, our partnership has deepened and scaled. Early on, Sanofi focused on providing high-quality training around the latest data, digital, and IT skills. Later, this expanded into a broader talent development solution that reached more of their organization and demonstrated their commitment to employee well-being. Recently, their ambition extended beyond their organization, looking to make direct investments in marginalized communities and to grow a future pipeline of diverse healthcare professionals. As part of this effort, our partnership now includes an eight-year initiative to offer 20,000 training licenses for Career Academy. By leveraging Coursera as the delivery platform, they are broadening access to job-relevant training and enabling new career and degree pathways to learners in their company and their communities as well. This is a complete talent solution: Advancing training for cutting-edge skills, learning as a benefit for broader organizational needs, and future talent pipelines with diverse representation and a commitment to the communities in which they live and work. I’ve said many times that Coursera’s mission inspires our team members and attracts our partners, but it also enables our customers to fuel their human capital needs and improve lives through learning. With our Coursera community, encompassing leaders in higher education, government, and business, we are working together so that talent and opportunity can rise from anywhere in the world. Now, let’s open the call for questions.

Thank you, Mr. Maggioncalda. We’ve taken our first question this afternoon from Stephen Sheldon of William Blair.

Hey thanks. First, just wanted to ask about enterprise trends. As you talked about seeing more caution from business customers there, can you give some more detail about – on what that looks like? Are you seeing customers reduce the scope of contracts much or just being cautious about expanding, and also curious if you've seen any changes in gross retention, especially for some of your smaller customers?

Hi, Steve, this is Jeff. We, obviously going into Q4, weren't sure exactly how the year was going to finish up. It was pretty solid; we felt pretty good about it. To your point, there's definitely, especially in certain regions, increased sensitivity on budgets, with budgets tightening. In some cases, that has led to people saying they want to pull back on the scope of their buy. That is not total churn, but we saw pressure among many accounts, and that did put some pressure on the NRRs, but we actually felt pretty good. Generally, we saw that the NRR was lower in emerging markets, where services need to be incorporated early in higher education learning, and it was generally better in larger mature markets, like Coursera for business. So, I would say we feel pretty good coming into this year, but that doesn't mean that we didn't see some pressure.

Got it. That's helpful. And then on this, regarding the large partner, the extension and change in the contract, just to clarify, does that have any impact on total revenue, or how much, or is it just more about what — it sounds like it might be a shift in expenses from, you know, out of OpEx into cost of revenue, but then also maybe a total increase. I guess can you walk through that one more time just to make sure we understand?

Yes, sure. We wanted to clarify that. It was a shift in geography, primarily from operating expense to cost of sales, affecting margin, of course. There is also, for 2023, roughly $25 million that will remain in operating expenses as incremental expense, if you want to think about it that way. So, there's a transition period where some expenses will still be in OpEx, but the majority is simply a shift as you referenced from OpEx to cost of sales.

Okay, got it. And that will not continue in 2024. So, if we kind of looked at the guidance and strip that out, then you'd be more or less I guess, yep, please.

Yeah, more or less, that’s the answer. You're understanding it perfectly.

Thank you. We'll go next now to Josh Baer of Morgan Stanley.

Great. Thanks for the question. Jeff, you outlined some of your key priorities for this year coming up. I was hoping we could fast forward to Q4 2023 earnings when you'll be reviewing 2023. What would a great and highly successful year for Coursera look like in your eyes?

Yeah. I think it comes down to two things. Obviously, how do we perform in the year? Do we perform well against the expectations that we're setting with you all today? Most of that is the top-line growth, but we want to ensure we continue to exhibit leverage. I've come away feeling pretty good right at the start of the year. There are many changing factors that I think will play well into our advantages and differentiation. We want to focus on quality and brands, and the collaboration among institutions. By the end of the year, I hope we're bringing on more brands, especially for entry-level job seekers and career switchers. These credit pathways we talk about helping people into either career pathways to a job or credit to a degree, is a powerful system effect we can create among institutions like governments, businesses, and campuses. We see a real opportunity to help learners develop skills while getting clearer paths to jobs. I also hope that we can take advantage of generative AI, which is interesting when merged with high-quality branded materials. All in all, I'm optimistic that by year-end we'll have exciting things to discuss.

Thanks, Jeff. A quick one for Ken on segment margins. I think the strength in consumer segment margins is clear and understood. I'm wondering, on Enterprise segment margins, why they were down year-over-year and quarter-over-quarter? Was that mix driven, or was there anything else to consider around pricing or discounting?

No, it was down just a bit. It was a mix issue, but nothing more—a relatively minor factor in the larger context.

Just one thing I want to add. On the degree side, you can probably see from the mix here that specific types of degrees resonate well with working adults who are thinking about career changes, similar to the folks who are taking professional certificates and the Career Academy. I would like to see that we've figured out a design of a degree that stands out from general online degrees and that therein lies a growth rate that meets the needs of working adults that are unmet by more traditional degree programs.

Thank you. We'll go next now to Terry Tillman of Truist Securities.

Yes. Hey, good afternoon, gentlemen. Thanks for taking my questions. Hopefully, you can hear me okay. Yes, I guess maybe Jeff, the first question for you is... I think you said 18 certificates, kind of beginning of the year to 36, did I get them right or 38?

I think the 38 is the total now. We've got to get these rolled out, but we've had a pretty good track record of that, so yes, we’ve had more than doubled to 38 certificates.

Okay. It feels obligatory for me to ask about AI on every call—so, what's the exposure to data science and AI amid your certificates mix? And would you all be willing to discuss cohort analysis of each certificate and how revenue ramps from each of those?

With respect to AI’s impact on these certificates, I’ll differentiate two things. One is the impact on the jobs that these certificates train for. That's a tougher one, but clearly, with tools like co-pilot from Microsoft, what can be done is quite impressive; however, it's expected that the bar will be raised for those jobs. As for the content and demand, clearly, if jobs decline, fewer will take those certificates. We continue to broaden our portfolio of certificates because the demand can be so dynamic. Diversifying and expanding is a key piece of our strategy, ensuring we're training for high-demand entry-level jobs. I believe credentials will grow in importance, and those from trusted brands will remain vital.

So, regarding the 25 million OpEx, I mean partnerships are two-way streets. What do you want out of this additional investment? What can it bring to your business?

We've renewed our strategic relationship to emphasize job readiness. There will be more investments in the program overall, and we are excited about the growth it will yield. It may slow our path to EBITDA breakeven, but we are still improving our overall performance and look forward to the subsequent growth derived from this partnership.

Thank you. We'll go next now to Jason Celino at KeyBanc.

Hey, thanks for taking my questions. Just two for me. Staying on EBITDA, Ken, you're showing breakeven potential in the second half. I think you mentioned a previous philosophy around setting margin targets and reinvesting upside. Should we believe that this approach remains?

Yes, 100%, Jason. Both upside and downside matter. As growth rates slowed in the second half of last year, we pulled back our expenses. We achieved our targets and will do the same going forward; we aim for continued scaling on the path to EBITDA breakeven and profitability over time, no matter how revenue growth shapes up.

Perfect. And one more question on the Georgetown Bachelor's completion degree. I imagine there are a lot of folks out there who have credits but may not have finished. Is this an area where we could expect more announcements?

Yes, this is very important. When you see why Georgetown is doing this, they extend that elite education to a broader population. Affordable and flexible completion is vital, just as we're seeing globally. Societies recognize the need for continuous learning and credentialing through life-long education. We are delighted to partner with a prestigious institution like Georgetown in doing this and drive such a meaningful initiative.

Thank you. We'll go next to Ryan MacDonald of Needham.

Hi, thanks for taking my questions. Jeff, as layoffs increase, what are you seeing regarding pipeline or top-of-the-funnel activity in the consumer segment for the professional certifications and the degrees segment? How does this impact your guidance for 2023?

The world is dynamic coming off COVID; we're seeing effects of recession, inflation, and a tight labor market. We felt Q4 ended decently for new degree learners. Affordability, flexibility, and relevance are key. If history serves, a softening labor market should improve demand. The right degree designs, especially performance-based admissions, will also help attract these adult working learners.

As we did last year, we provided segment guidance to help with forecasting. While we see some modest declines in the first half, our guidance assumes solid growth in Degrees, reflecting strong visibility and proactive measures to fulfill programs.

Regarding Coursera for government opportunities, we see an increasing recognition of the importance of reskilling that will remain important over time. The online model suits governments well, serving working adults who have families and need affordable options. We see growing interest, although competition is increasing. Coursera’s distinctive qualities are clear to governments—our credentials, the brands, and our broad user base. Collaborations with higher education institutions allow us to create unique workforce development programs with competitive advantages.

Thank you. We’ll take our last question today from Rishi Jaluria of RBC.

Wonderful. Thanks for taking my questions. Two I'd like to ask. First, regarding ChatGPT, how does it disrupt the learning process? Are there potential threats, or do you believe the benefits to your business model far outweigh the risks?

In terms of how the learning experience changes, I've noted that from passive online learning, we’ve transitioned to active learning, where students engage with the content. The next level is interactive learning, where personalized feedback and simulated scenarios can significantly enhance learning. Overall, I see this as a great opportunity for improving how people learn. However, there is a risk of individuals outsourcing their thinking too much to AI, which could be problematic. But as long as they're prudent, this interactive technology served well with quality content will enhance learning dramatically.

Got it. That is really helpful. Just a quick one for you, Ken. I'm glad to see we have an inflection in the back half of the year regarding Degrees. What gives you confidence in that?

We have significant visibility into Degrees revenue due to our model, allowing us to forecast accurately. We see real improvements in fulfilling student cohorts while new programs roll out. Overall, we have equipped the elements that will drive performance positively in this segment.

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

Thank you Ms. Carey. Ladies and gentlemen, again that does conclude Coursera's fourth quarter and full-year 2022 earnings conference call. I'd like to thank you so much for joining us and wish you all a great remainder of today. Goodbye.