Ladies and gentlemen, thank you for joining us, and welcome to Coursera's Third Quarter 2025 Earnings Call. This call is being recorded. I would now like to turn the call over to Cam Carey, Vice President of Investor Relations. Mr. Carey, you may begin.

Good afternoon. Thank you for joining us for Coursera's Q3 2025 Earnings Conference Call. Today, I'm joined by Greg Hart, our President and Chief Executive Officer; and Ken Hahn, our Chief Financial Officer. Following their prepared remarks, we will open the call for questions. Our earnings press release was issued after market close. It is available on our Investor Relations website at investor.coursera.com, where this call is being webcast live and where versions of today's materials, including our quarterly shareholder letter, have been published. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP measures to the most directly comparable GAAP measure can be found in today's earnings press release and supplemental materials. Please note that all growth percentages discussed refer to year-over-year change unless otherwise specified. All statements made during this call relating to future results and events are forward-looking statements based on current expectations and beliefs. Actual results and events could differ materially from those expressed or implied in these forward-looking statements due to a number of risks and uncertainties, including those discussed in our earnings press release, shareholder letter and SEC filings. Please refer to today's earnings press release for more details on our forward-looking statements. With that, I'll turn it over to Greg.

Thank you, Cam, and good afternoon, everyone. We appreciate you joining us. Today, Coursera is reporting a strong third quarter. Earlier this year, we set clear priorities to drive continuous improvements in our execution, build durable capabilities across our platform and invest in product-led innovation to create more valuable customer experiences that can fuel our long-term growth. Our third quarter results reflect the early evidence of our efforts. We delivered revenue of $194 million, up 10% year-over-year. We increased our Consumer revenue growth rate to 13% year-over-year, driven by 7.7 million new registered learners and continued strength in our Coursera Plus subscription offering. Coursera Plus is large and growing at scale and now encompasses more than half of our Consumer segment revenue. We also demonstrated our commitment to operational discipline, generating $27 million of free cash flow, which was up 59% from the prior year. As a result of our progress and momentum, we are once again raising our expectations for full year revenue. We now expect to deliver revenue in the range of $750 million to $754 million, representing 8% to 9% growth from the prior year. The midpoint of this range is a $10 million increase from the annual guidance provided last quarter and a $27 million increase from our expectations in April, effectively doubling our full year growth rate from 4% to 8%. Before discussing the updates across our ecosystem and product experience, I'd like to address two recent changes to the Coursera leadership team. First, I am pleased to announce the appointment of Anthony Salcito as the new General Manager of our Enterprise segment. Anthony is an established leader in global education transformation with over two decades at Microsoft, where he served as Vice President of Worldwide Education. His experience in leveraging technology to develop skilled talent in the evolving workforce will be critical in supporting our customers and accelerating our Enterprise initiatives over the coming year. I also want to take a moment to recognize and thank Ken for his excellent service as Coursera's CFO over the past 5.5 years. I am personally grateful for his partnership since I joined as CEO. This year, his expertise has provided stability and continuity to the entire organization, and his tenure has shaped the long-term trajectory of Coursera from guiding our IPO to strengthening the financial performance and position we operate from today. We appreciate the important role he has played at Coursera. As this is his final call, I will provide our updated financial outlook in my closing remarks. With that, let's turn to the ongoing expansion of our ecosystem. Upon joining Coursera, one of my earliest observations was recognizing the untapped potential of our extensive data across one of the largest and most globally distributed learning platforms. Leveraging these insights allows us to drive continuous improvements in all aspects of our business from accelerating product innovation to enhancing the speed and agility of our content engine. Most importantly, our data offers a deep understanding of our primary customers, the learners. In September, we published our 2025 Learner Outcomes Report conducted in partnership with The Harris Poll, reflecting feedback from over 52,000 learners across 179 countries. The report found that 86% of learners joined to build new skills and transform their careers. Career advancement is the top motivation for learning on Coursera, and we continue to drive meaningful and measurable career outcomes for learners. 91% reported achieving a positive career outcome after completing a course on Coursera, encompassing salary increases, skill development, higher job levels and personal benefits. As individuals increasingly seek the skills necessary to adapt and thrive in today's evolving job market, Coursera continues to strengthen its position as the world's trusted source for verified learning. The quality of our content and the scale of our ecosystem are foundational assets we intend to increasingly differentiate and enhance through rapid innovation in how content is created, delivered and adapted for the unique needs of every learner. Over the past year, our catalog has expanded by 44% and now includes more than 12,000 courses developed by world-class instructors trusted for their expertise and career relevance. As demand for career-aligned education grows, we continue to expand our collection of job-focused micro credentials. We now offer nearly 100 professional certificates and have recently added new titles for Microsoft, AAPC and EC-Council. Additionally, we welcomed 12 new content creators to the Coursera community, including world-class universities, industry experts and learning providers like Pearson and SkillShare. Many of our partners view Coursera as a strategic platform to extend their global reach, create more personalized and interactive learning experiences designed to keep pace with the fast-changing education landscape and expand access to the emerging skills that are rapidly reshaping the requirements for individual jobs, business models and global labor markets. In 2025, AI skills are becoming essential, and demand has accelerated. We are now seeing 14 enrollments per minute in our catalog of more than 1,000 generative AI courses, up from 8 enrollments per minute last year. Generative AI is the most in-demand skill in Coursera's history, which is why I was thrilled to recently announce our content partnership with Anthropic, welcoming one of the world's leading AI research companies to our platform. As the need to develop new skills progresses at an unprecedented rate, Anthropic, like many of our partners, shares our commitment to helping learners and institutions everywhere apply the latest advancements in AI safely and effectively, unlocking new ways to learn, teach and work. Let's turn to our recent product updates. AI is transforming the way learners discover Coursera, engage with our content and verify their skills for career advancement. This year, we have been focused on accelerating our ability to deliver more value to learners and enhance the value of our business by driving improvements in our conversion, engagement and retention metrics over time. Our team has made remarkable progress developing new capabilities to enhance our customer experiences and strengthen our role in the future of learning. In September, our early efforts were on display during our annual conference, Coursera Connect. The event brings together our global ecosystem of learners, customers, universities and industry innovators to address evolving trends in education while introducing our latest features, tools and experiences. To start, I'll share three enhancements. First, Coursera Coach, our in-course GenAI tutor, is now integrated into 97% of our courses and available in 26 languages. We have added persistent memory and contextual understanding, delivering smarter, more relevant responses to drive better outcomes. Over 90% of learners reported an improved learning experience and more than 60% said Coach has benefited their career. We also continue to make Coach more personalized and interactive. Dialogue is now available in over 1,200 courses, enabling instructors to build and scale one-on-one immersive Socratic learning. We also introduced Role Play, which takes this level of interactive engagement even further through AI-driven simulations, allowing learners to apply their knowledge in real-life scenarios and receive real-time actionable feedback. Second, AI translations. Since 2023, advancements in machine learning have enabled us to rapidly expand access to text-based translations across our platform. We now offer more than 7,500 courses in up to 26 languages. In April, we introduced AI dubbing to bring native language learning to Coursera, starting with 100 courses. Today, AI dubbing is now available for more than 600 courses in 5 languages, and we expect to surpass 1,000 courses by the end of the year. As improvements in the speed and quality of this technology continue, we're excited to invest in bringing this experience to more learners in more languages with the goal of driving higher engagement and better outcomes. Third is Course Builder, our AI-powered authoring tool. In 2023, Course Builder was initially launched as a feature for our Enterprise customers interested in creating custom private courses. What makes it distinctive is its ability to blend the best of Coursera's catalog with internal context-relevant materials. At Connect, we announced that Course Builder will soon be piloted with our university and industry content partners, featuring new AI-powered content generation and catalog ingestion capabilities that are designed for speed, simplicity and flexibility. Most importantly, it is all backed by Coursera's learner data and designed with pedagogical best practices to deliver high-quality courses at scale. Next, our newest product offering, Skills Tracks. From our customer conversations, we know that most organizations struggle to measure training impact and identify skill gaps, particularly as job needs rapidly change. For individuals, the motivation to learn is focused on building skills that can make them more productive in their role or open new career opportunities. Skills Tracks are designed to address both requirements, keeping learners focused on essential skills through custom paths and content discovery while enabling admins to track progress and better align learning objectives with company business goals. Compared to existing courses and certificates, Skills Tracks offer a more structured and interactive approach to skill development built on our proprietary career graph and data-driven personalization. By focusing on role-specific competencies, practical hands-on applications and features to assess, track and verify proficiency, learners and businesses can better measure learning impact and ROI. We started with curated learning paths for data, IT, software and product and, of course, GenAI with more fields to come next year. For our final product update, I'd like to focus on our efforts to reimagine the learner journey on Coursera, encompassing improvements in search, discovery and onboarding. This quarter, we enhanced our site experience with a redesigned homepage to better guide learners through our funnel. We also made meaningful progress in our efforts to serve our growing population of international learners, launching new geo pricing and promotional capabilities to make our marketing activities more effective and ensure Coursera is accessible in emerging markets. From the early results, we're seeing positive signals in our new paid learner conversion. However, our efforts to attract, convert and retain learners more effectively through our funnel extend well beyond our platform. Search is fundamentally changing, and we intend to be at the forefront of understanding, experimenting and shaping how learners discover and start their journey, leveraging the strengths that have drawn 191 million learners to our platform over the last decade. On October 6, we were proud to announce Coursera as the first online learning platform to be embedded directly in ChatGPT. In a new partnership with OpenAI, we launched one of the first generation of apps in ChatGPT, putting our trusted world-class content directly where hundreds of millions of people are going to get answers related to education, skills and jobs. Learning is one of the most common use cases for ChatGPT and OpenAI shares our commitment to broadening access to high-quality education and essential skills. We're excited about the partnership and the innovation it will enable, positioning Coursera at the forefront of AI-native learning experiences and strengthening our ability to help learners master the right skills to grow and advance in their careers, regardless of where their learning journey begins. Our third quarter performance marked another step in laying the foundation for Coursera's next chapter of growth, and our progress is reflected in our financial outlook for the remainder of the year. For Q4, we anticipate revenue in the range of $189 million to $193 million, representing 5% to 8% year-over-year growth, primarily driven by our Consumer segment. Our assumptions on the more muted Enterprise environment have not changed. For adjusted EBITDA, we expect a range of $7 million to $10 million, leveraging the flexibility and capacity of our annual operating framework to fund our most productive growth initiatives. As I highlighted before, we are raising our full year 2025 revenue outlook to a range of $750 million to $754 million, representing 8% to 9% growth from the prior year. For adjusted EBITDA, we continue to target an annual adjusted EBITDA margin improvement of approximately 200 basis points to 8%. As a reminder, this reflects an additional 100 basis points of anticipated improvement from our initial full year target of 7%. This year has clearly demonstrated the value of our annual operating model as it relates to EBITDA. This long-standing framework has enabled us to assess our growth opportunities, allocate capital toward our most productive priorities, demonstrate our long-term commitment to operating with financial discipline and driving consistent scale in our model, and ensure we are making the right long-term decisions on behalf of our learners, customers and shareholders. As we approach the end of the year, I am pleased with the strong progress our team has made across our three key growth priorities: delivering rapid product innovation, building a faster, more agile content engine, and ensuring we are well-positioned to meet and serve customers globally no matter where their learning journey begins. Our early achievements in 2025 are just the beginning of what I believe Coursera is capable of solving in the massive skilling opportunity that lies ahead of us. By continuing to invest in AI-driven innovations and personalized learning experiences, we are uniquely positioned to meet the evolving needs of learners and organizations worldwide. I am confident in our clear direction and excited for what we will build next. Now I will hand it over to Ken to discuss our financial performance in more detail.

Good afternoon, everyone. Thank you, Greg, for the kind words. It has been a pleasure working with this team, particularly around growth enablement. Over the course of this year, we've made consistent progress through a focused effort to bolster Coursera's return to higher growth. In Q3, we generated total revenue of $194 million, an increase of 10% from the prior year period, leading us to raise our expectations for full year growth, as Greg just outlined. Please note that for the remainder of this call, I'll discuss our non-GAAP financial measures while reviewing our business performance unless otherwise stated. In Q3, gross profit was $108 million, up 10% year-over-year. This represented a 56% gross margin, which was consistent with the prior year period, reflecting improvements in our Consumer gross margin rate, offset by other cost of revenue and the greater mix of Consumer revenue driven by the segment's faster growth as compared to our yet higher-margin Enterprise segment. Total operating expense was $98 million or 51% of revenue, consistent with the prior year period. We deployed targeted investments in growth initiatives while demonstrating our long-standing commitment to operating with discipline and scaling annual profitability each year. Net income was $17 million or 8.6% of revenue, and adjusted EBITDA was $16 million or 8% of revenue. Since the start of this year, we have delivered over $52 million of adjusted EBITDA, putting us well on track to achieve our increased annual margin target of approximately 8%. Turning to cash performance and the balance sheet. Q3 marked another strong quarter of cash performance, generating $27 million of free cash flow, including approximately $2 million in purchases of content assets treated similarly to other categories of capital expenditures. Year-to-date, we've delivered more than $80 million of free cash flow, representing 55% year-over-year growth and reinforcing our strong financial position. As of September 30, 2025, we had approximately $798 million of unrestricted cash and cash equivalents on the balance sheet with no debt. Now let's discuss the results of our operating segments. As you know, we have evolved our operating model over the course of this year by implementing new capabilities under Greg's leadership, adding product and data expertise to our team and making investments across our platform from product to content and marketing to create and deliver more valuable experiences for our learners over time. Our strong Consumer performance shows promising signs of our renewed focus. In Q3, we delivered Consumer segment revenue of $130 million, up 13% from a year ago. Growth was driven by two primary factors. First, we welcomed 7.7 million new registered learners, expanding our total base to 191 million. We've maintained a strong top of funnel by broadening our global reach, diversifying our marketing channels and experimenting with new opportunities to reach and attract new learners, including directly embedding Coursera in ChatGPT as one of OpenAI's first generation of apps. Second, we've seen strong reception to Coursera Plus. As you know, our subscription efforts in the Consumer segment are not new. In 2021, we recognized that the rapid pace of skills transformation, combined with our growing catalog of career-focused education would naturally benefit from a bundled subscription offering that creates more value for our learners, content partners and ultimately, our business. Over time, we have continuously enhanced that value with the introduction of new content, product features and localized pricing, promotion and payment capabilities. As Greg highlighted, Coursera Plus has grown to become the majority of our Consumer segment revenue, providing important visibility with more predictable recurring revenue streams. Consumer segment gross profit was $80 million, up 16% from $69 million in the prior year period. Segment gross margin was 61%, an increase of 180 basis points from a year ago. The expansion in our gross margin rate has been driven by increased learner demand and engagement with content created under more recent production arrangements. As we have discussed, this new content typically includes a lower revenue share and associated content costs, reflecting the increasing value of Coursera's ecosystem and platform capabilities from AI native authoring, production and ingestion tools for our partners to Coursera Coach and other learner enhancements to our large growing distribution channel. Now moving to our Enterprise segment. Enterprise revenue was $64 million, up 6% from a year ago. Growth continues to be driven by our campus and business verticals, including a 10% increase in the total number of paid Enterprise customers to 1,724. As we've discussed in the past several quarters, customer demand and budget trends continue to vary by vertical, region and use case, which is reflected in our net retention rate of 89%. Our team will continue to monitor the dynamic corporate spend environment and remain focused on go-to-market positioning and Enterprise-focused product enhancements to reignite more significant long-term growth under Anthony's new leadership. Segment gross profit was $45 million, up 5% from $42 million in the prior year period. And segment gross margin was 70%. The margin rate was in line with the prior year period, which included a one-time revenue share benefit of approximately 150 basis points disclosed during our third quarter 2024 report. Without that historic one-time benefit, Enterprise segment gross margin would have expanded year-over-year, driven by the same content production and engagement trends contributing to the ongoing improvement in our Consumer segment margin. Before we open the call for questions, I want to reiterate what a rewarding experience it has been to serve as CFO during such a transformative chapter for Coursera, the industry and the broader technology landscape. I'm deeply proud of our achievements over the past 5.5 years, and I'm grateful for the continued support of our shareholders and analysts. Having partnered closely with Greg this year, I have full confidence in the leadership team's clarity of direction. It is a privilege to leave Coursera in such a strong financial position to serve as a bedrock for Greg's vision, the catalyst to accelerate the next phase of innovation, growth and impact for the millions of learners our platform serves. Now let's open the call for questions.

We'll take our first question from Josh Baer with Morgan Stanley.

And Ken, it's been great working together over the years. I know it's early, but I did want to ask about any takeaways you have from the start of the OpenAI embedded app and the integration there. Just anything around usage and engagement or expectations? And then the follow-up is on the financial side. What is the economic arrangement there? And how are you thinking about potential financial impact?

Thank you, Josh. Good questions. This is Greg. First of all, we're incredibly excited about the partnership. Obviously, OpenAI is a place that people go to ask about basically everything, 800 million weekly active users, so an incredibly popular destination and learning is one of the most common use cases. And so the fact that OpenAI reached out to us to invite us to be one of the first seven launch apps is incredibly exciting. Very, very early days on that partnership, obviously. So don't have anything to share yet on what we think that might look like and what that might do for the business over time. But I would say that given the traffic that ChatGPT sees and the fact that search is fundamentally changing, we're very glad that we're at the forefront of some of that change and being in the place that is driving a lot of that change because I think that gives us a real opportunity to understand and shape how learners can discover and start their journey with Coursera. On the financials, there is no economic arrangement between OpenAI and Coursera. This is really a top-of-funnel opportunity to get in front of people as they start their learning journey by asking questions in ChatGPT. And then the appropriate course will get surfaced so they can preview that content and then come through to Coursera to enroll and benefit from the full rich learning experience that we offer across the world-class content along with our AI-driven features on Coursera. So Coursera Coach and Role Play dialogue, some of the things that I mentioned in my scripted remarks, and we're excited to see how it develops.

And on sales and marketing, the percentage of revenue increased year-over-year. Just hoping you could walk through some of the top priorities on sales and marketing investments and how you're assessing the returns on that spend?

Thank you, Josh. Sales and marketing have been very efficient and effective for us over several quarters. We continue to see excellent results as we scale our marketing in terms of return on ad spend. Our approach is to invest wherever we identify efficiency at the appropriate levels. One benefit of this is that it often leads to subscriptions rather than just single course purchases. As we mentioned, Coursera Plus has now surpassed 50% of our Consumer segment revenue, providing significant visibility into future trends. We will keep investing in marketing channels that effectively drive this growth. This is evident in the 7.7 million new registered learners and the 13% year-over-year revenue growth in the Consumer segment this quarter.

We'll take our next question from Bryan Smilek from JPMorgan.

Thank you, Ken, for the great partnership throughout the years. Just curious more so on the 4Q revenue outlook. Totally appreciate Consumer continues to grow well and really unchanged macro outlook for Enterprise. Just curious, looking ahead, what drives the durability of the Consumer growth here, perhaps around the double-digit percent? And I guess, like can you just give a bit more color on what drives the declines more near term in terms of growth deceleration into 4Q?

I want to highlight a few points. First, we've updated our full year revenue guidance from $738 million to $746 million, and now we're looking at $750 million to $754 million. This represents an 8% to 9% year-over-year growth, up from our previous projection of 4% growth back in April, reflecting an additional $27 million at the midpoint. This optimism stems from our strong performance, with 7.7 million new registered learners, and better revenue visibility through Coursera Plus. We're also seeing a more flexible revenue model, thanks to our marketing initiatives and early improvements in our product strategy, such as the learner journey and geo pricing. Specifically for Q4, I want to note that, as you've observed in past years, there is typically a seasonal effect, with Q4 generally being smaller than Q3, which also influences our forward-looking guidance.

And then I just had a quick question just around CapEx overall. I believe a few quarters ago, really entering 2025, we had discussed about up to $20 million in purchases of content assets. And the free cash flow clearly has come in nicely. And I imagine some of that is also driven by just AI content gains in terms of production. But just curious, how will you balance free cash flow growth going forward with incremental content investments? And is there anything just to keep in mind from a free cash flow perspective?

At a high level, we've been very pleased with the impact of the content investments that we've made. You see that reflected in two stats. One is the growth of the catalog. So we now have more than 12,000 courses. That's up 44% year-over-year. The second is the gross margin expansion. And that is driven by both Coursera produced content and also a bit of a mix change to newer content that is at lower revenue share rates. We anticipate that both of those things, we will continue to invest in. We really like the appeal of the Coursera produced content. One of the reasons that we like it is that as AI gives us better and better tools, we're able to bring down the cost of creating each piece of that content so we can expand the catalog at potentially a faster clip while doing so with a lower per course spend.

Our next question comes from Stephen Sheldon with William Blair.

Congrats on a great run, Ken. So maybe for either Greg or Ken, just can you just talk more about the factors driving the continued Consumer acceleration this quarter? And on the international side, it sounds like you're starting to find the right localized pricing versus volume mix. Is that fair? And if so, could that be a factor kind of supporting continued strong growth in Consumer over the coming years as you optimize that balance and monetization?

Great question. I'll start, and Ken, feel free to obviously add. On the Consumer side, I mentioned marketing being one of the things that we've continued to improve. So that's certainly a factor. I would say also, it's just responsiveness in the course offering that we have and our efforts to improve the product experience as well. And so the expansion of the catalog, a lot of that is coming in areas and it's certainly being targeted at areas where we see a lot of demand. And so in GenAI, as I mentioned in the scripted remarks, we've doubled the size of our GenAI catalog year-over-year from 500 courses to more than 1,000 courses. Again, these come from leading industry partners, Anthropic being one that I mentioned in the scripted remarks as well and our academic partners in higher education, some of the leading universities around the world. That's driving incredible interest on the Consumer side as well as the Enterprise side. So that's certainly a factor. On geo pricing, you mentioned, we lowered the price across a range of countries earlier this year in the quarter. And the rationale for doing that was really that when I arrived, one of the things I observed within my first few weeks was our pricing internationally just simply didn't make sense for consumers in those markets. It was priced out of reach of most of those markets. And so we lowered our pricing substantially in those markets, up to 60% in different geographies. And the goal of that was to both ensure that we were able to reach the broad market of consumers that we aspire to serve with a more attractive price and also, of course, to drive higher overall revenue growth. And we've been pleased with the results so far of that, and we continue to believe that we will look at pricing as a tool within our toolkit to continue to fuel better growth and also make sure that we're serving our mission overall of enabling learning to be accessible to as many people around the planet as possible.

And then just following up in Enterprise. NRR moved back just to touch this quarter after a few quarters of stabilization. So just curious how did trends look across the different end markets there between business, government campus? And how has overall corporate spending towards learning played into that? Has there been any additional softening there in recent months where it's getting harder to retain existing and sell new? I guess, what are you seeing on the kind of the budgetary side?

Well, first of all, we're not pleased with 89% NRR. We also weren't pleased with 93% NRR last quarter. We won't be happy with NRR until we get that north of 100%. I would say we've seen mixed trends between our different verticals. So Coursera for Campus is a brighter spot. Coursera for Government is more challenged. We're not factoring in any material improvement right now just given what we're seeing across the market. So the diversification is certainly helpful across the different segments, but the Coursera for business remains the majority of our Enterprise segment. It remains a muted environment as we've communicated on past calls. And so we're not forecasting any change in that as we look ahead. One of the things we are trying to do through the conversations that we're having with our Enterprise partners is really make sure that we're very responsive to their needs. And so one of the things that we heard consistently from Enterprise partners was the need to have an offering that is more tightly attuned to the challenges they are seeing in their workforce. And so they all face a need to upskill and reskill their workforce given how much AI is changing the roles across their companies. And so we launched Skills Tracks at Coursera Connect. I mentioned that in the scripted remarks as well. That's a curated set of offerings. We launched with four different areas: data, IT, GenAI and software and product development. Those each encompass a whole host of job families and roles within those job families. And the goal is to give Enterprise the ability to create tailored learning paths for specific roles they have at specific levels that give their employees in those roles and at those levels the right skills to adapt to how technology is changing their work that they do every day. And it measures impact and the ROI. And so we're rolling out verified credentials for those skills paths, and we'll continue to expand both the number of Skills Tracks that we offer as well as the verified credentials that go with them. And that's something that it's still early days, obviously, because we just launched this at Connect in September, but we've seen a very positive response in our conversations with our Enterprise partners. And I'm also very excited just to add on to have Anthony on board, Anthony Salcito, our new Enterprise GM, his experience at Microsoft, leading their worldwide education business in two decades doing that brings a wealth of expertise and highly relevant skills. He also has an energy and a strategic vision for where we can go that is incredibly exciting. So I'm really looking forward to seeing what he delivers in the business. Obviously, it will take time for that to take effect just because of the nature of an Enterprise business model, but very excited to have him on board as well.

Our next question comes from Ryan MacDonald Ryan with Needham.

Ken, best of luck. It was great working with you. Greg, could you start by discussing the fourth quarter implied EBITDA guidance for margin? Can you share the key areas where you're investing? Additionally, how should investors consider the balance between growth and margin expansion as we approach 2026 without providing specific guidance? Is there still an intention to expand EBITDA margins while pursuing growth? Or is the fourth quarter of 2025 a better indicator of the margin profile as we move into 2026?

So first of all, we've had for a number of years, a framework of providing an annual EBITDA margin guide. And the rationale behind that is we want to make sure that we're demonstrating both revenue growth and operating leverage every year year-over-year. So improvement on both of those things. The annual framework gives us flexibility to invest as the year progresses in the things that we think are going to be most effective at delivering against those two things. And so that's no different for our full year guide for this year as well. The key things that we are going to focus on within Q4 that will help drive growth, not just in Q4, but also next year and beyond are, first of all, continued investment in marketing efficiency and ad spend where we see an opportunity to do that, also experimenting with new channels. And so one of the reasons that we fund sales and marketing in Q4 is because that will then translate into revenue that persists into the following year. Second, continued investment in product. And so Patrick Supanc, our Chief Product Officer, who joined in the summer, is certainly still coming up to speed. Q3 was one of the largest quarters for launches of new features that Coursera has had in its history. We're really excited. Still early days on many of those features, but we're really excited directionally by the metrics that we're seeing those features deliver for us. And so we're going to continue to invest in that area as well. And so those are a few of the things that we're doing. But over the long term, just to circle back on that piece of your question, our goal is to continue to provide annual revenue growth and annual EBITDA margin leverage.

I appreciate the clarification there, Greg. Maybe on just sort of the broader sort of AI upskilling, reskilling initiatives. Just curious to get your comment on the news from a couple of months ago about Google and Microsoft committing, I think, a combined $5 billion plus on sort of AI skills gap closures and sort of skilling initiatives with AI. Given both companies are Coursera partners, is there a role for Coursera to play in these initiatives? Can either company sort of route learners to the platform or sponsor learners to be trained sort of on their content through the Coursera platform? Or is this sort of completely separate from the existing relationships you have there?

So Google obviously does route learners to Coursera for learning on a very regular basis. Our partnership with Google goes back many years. They're a very important partner for us. Microsoft also is an important content partner for us. I think it's still early days for both of those specific initiatives that you mentioned that they announced a little bit ago. We obviously are in ongoing dialogue with both of them on continuing to strengthen the partnership and look at ways that we can add value to the things that they're trying to accomplish and vice versa. I think that one of the benefits that Coursera offers is in addition to just content on GenAI, there's obviously a huge range of content beyond just general AI learning. Certainly, there's things that are specific about how GenAI can be applied to a given type of role, GenAI for finance, as an example, et cetera, but also a much broader catalog of learning in a whole host of other areas. And so we believe that's a benefit that we can bring to any one of those partnerships or future efforts that develop.

Our next question comes from Rishi Jaluria from RBC.

Nice to see continued momentum in the business. And Ken, let me echo my colleagues. It's been an absolute pleasure working with you since IPO over the years through all these earnings calls, Analyst Days, you name it. So wishing you the best for the next chapter. And again, really appreciate the partnership. Maybe I wanted to ask two AI questions. First, I want to go back to the OpenAI and Anthropic partnerships. I understand it's early new. You talked about kind of some of them as being pipeline generation. And you have these 1,000 AI courses on Coursera today, which is great to see that sort of growth. Over time, can these partnerships and other future contemplated ones, right, whether it's Google AI or other AI native companies, where there's not only those courses and for those tools in there, but also the opportunity for there to be actual certifications, right, whether it's an Anthropic certification or an OpenAI certification. And maybe the newly announced Anthropic course is exactly that. It was unclear to me just going through the website. But maybe just walk us through what does that opportunity look like to create these AI certifications attached to courses similar to what you had with Google and Facebook and IBM and Salesforce over the years? And then I've got a follow-up.

I do think that's absolutely an opportunity for us and that's something that I think is going to be increasingly important on both the Consumer and Enterprise side of our business. We see on the Enterprise side of the business, a need for Enterprises really to ensure that they have verified skills. And so the certificates are a way of ensuring that it's not just taking a course and gaining knowledge but actually gaining mastery of that material in a way that you can demonstrate within a role in the workforce. And so that's one of the reasons that we launched Skills Tracks with the verified credentials that I mentioned a bit ago. We certainly see the world moving in that direction. The importance of being a lifelong learner and continuing to develop new skills as the world around all of those changes at an increasingly rapid pace is unbelievably important. And that's where those certificates are really critical about demonstrating that it's not just that you've taken a course, but that, again, you have demonstrated mastery that you can apply in the real world. We certainly see that happening in the future with a number of our partners. We're in active conversations to do exactly that. And I would not be surprised at all to see that happen within the AI space as well.

You mentioned the shift towards AI search in your prepared remarks, and it's a significant discussion in the software and internet sectors regarding the transition from traditional SEO to AI search, which has sparked much debate. Could you elaborate on some early indicators of success you've observed in this transition? Additionally, how do you plan to invest in and evaluate success in this area? Even if overall traffic to the Coursera website has decreased, when someone uses ChatGPT to find courses for career advancement, Coursera ranks as the top option, as opposed to searching on Google where users must sift through various similar options before realizing Coursera is the best choice. This reasoning seems sound to me, so could you outline what you've noticed thus far and how you plan to leverage this opportunity and measure success?

Yes, great question. Obviously, search is fundamentally changing, as you just referenced. It used to be that people would do a web search and then they get a list of links, and they would click on one, see if it was a fit, go back to the search, click on the next, et cetera. And so you sort of pogo it in and out potentially. Now with LLMs, both ChatGPT and others, you can get much richer information right up front. And so we're incredibly excited about the integration into OpenAI because we get a chance to learn along the way as user behavior continues to evolve. I would imagine that over time, that integration, both for Coursera and for the other partners that ChatGPT has in their launch set of seven will continue to improve. It will become more contextually aware. It will become better for the user, and it will become better also for the partner because they'll do a better job of identifying through the context of what the user has prompted ChatGPT on when to route them through to Coursera. You'll get more highly qualified traffic as a result of doing that. I also think that people will get more familiar with, for example, the Coursera integration, the video will come up, you can start playing the video, but then you can really assess by asking ChatGPT questions that will then basically query our - the information we provide on that course to get more information upfront. Is it the right fit? Is it not the right fit? You can come through Coursera; you can enroll in that, or you can obviously look at other courses that might be a better fit. And so one of the things that we are investing a lot in is continuing to evolve our course detail pages to make sure that they do as good a job as possible at arming the user with education, the learner, the prospective learner with information they can use to decide if it's the right course for their goals. It's also why we're investing in onboarding and making sure that we do a good job at the start of that learner journey on Coursera and gathering information from the learner that we can use to help guide them to the best content for them, which is generally what is the career goal you're trying to accomplish. We just did our learner outcomes report, 86% of learners come to Coursera to advance their career. And so the more that we can know about what that career is, what job they're in and what their goals are, the better we can map them to the right content and start them on what is hopefully a very successful learning path for them.

Our next question comes from Taylor McGinnis with UBS.

This is Claire Gerdes on for Taylor. I just wanted to ask on the 4Q revenue guide. You mentioned a couple of things before that might affect that with seasonality, but it does imply a sequential decline and a further decel year-over-year. So can you just unpack the moving pieces there? As we think about heading into fiscal '26, just any thoughts you can provide on trends that you're seeing that we should keep in mind as we look into next year?

Well, we'll provide our formal 2026 guide on the Q4 call in February after we've gone through the remainder of the year and completed our full planning process. In terms of Q4 itself, one of the things that you saw in Q3 was Consumer growth of 13% year-over-year and Enterprise growth of 6% year-over-year. So the businesses in Q3 performed a little different than they had in Q2 when both of them grew at 10% year-over-year. Our expectation on Enterprise remains muted. It has not changed from what we've communicated over the past few quarters, given the uncertain spending environment within business. We are seeing some bright spots in parts of the Enterprise business. But overall, our expectations are unchanged. And then on the Consumer side, we have a lot of visibility into that, given the fact that we now have more than 50% of our Consumer segment revenue that's coming through Coursera Plus, so that gives us a lot of visibility into what that will be in Q4. And then we continue to invest in marketing where we see opportunity to do so efficiently to drive a really good return on that investment and to drive revenue growth. And so those are some of the things that are behind the Q4 guide overall, raising the guidance to $750 million to $754 million for full year, growth of 8% to 9% year-over-year. And again, I'd reiterate, when we gave that guidance for the full year for the first time on our April call, we expected $720 million to $730 million of revenue, 4% year-over-year. So we're taking that up from 4% year-over-year growth to 8% to 9% year-over-year growth.

We'll take our next question from Nafeesa Gupta with Bank of America.

My question is on the Coursera Plus doing really well. It's been growing consistently, and you've been talking about it for the past couple of quarters. What do you think has led to this uptick in Consumer subscription increase in paid subscription conversion? I know you're doing a couple of things on pricing, product updates, but what do you think is driving this mostly?

I think it's a combination of factors. One, I think on the Consumer side, there's obviously clear demand for educating and learning how to adapt in the world of AI, and we see that reflected in the incredible pace of enrollments for GenAI-related content, 14 per minute, as I mentioned earlier, which is up from 8 per minute last year. Our GenAI catalog has doubled in size from 500 to 1,000 courses. We now have more than 10 million enrollments in GenAI content on Coursera. Second, I would say, is the overall improvement in both our marketing and our focus on our Consumer business. And so one of the things that I observed when I joined Coursera was a real opportunity to get sharper on our funnel and do that in every stage of that funnel and through how we adapt our product experience to do a better job of taking learners through that funnel from prospect to paid learner. And so you're seeing some of that play out in some of the things that we launched during Q3. You mentioned some of the pricing changes that we made. That's one reflection of that. We also have updated and really evolved our approach to our homepage, and we're starting to do that across other parts of the site as well. You should expect to see an ongoing cadence of things like that play out on the site as Patrick and the team continue to move at a faster and faster pace. Product innovation was one of the main priorities that I had when I joined moving at a faster pace to innovate the product. I think you're starting to see some of the early green shoots of that, but that's something we're going to keep focused on. And I also think, frankly, one of the things that you see reflected in the Coursera Plus now representing more than 50% of our Consumer segment revenue is that we have an unbelievably rich catalog of content that represents an incredibly compelling value for somebody. We now have more than 12,000 courses and across all kinds of different domains, not just GenAI certainly, but of course, a broad range of tech, we've got health care-related material, finance, business, marketing, et cetera. And so it's a phenomenal deal. And so I think that's one of the other things that consumers are increasingly recognizing. And I think in international markets, we made that deal much more accessible through the pricing change that we made. And so I think those are a few of the things that are driving the momentum we're seeing in the Consumer business.

We'll take our final question from Ryan Griffin with BMO Capital Markets.

This is Ryan on for Jeff Silber. Just wondering if any changes to the sales motion that you can speak to on the Enterprise segment. I know that the last few years have been plagued by a challenging macro, but wondering if you're thinking about anything differently, whether that's the pricing or your go-to-market strategy?

Well, I'm sure that as Anthony -- he's in only his third week here. As Anthony gets up to speed, I'm sure he will have a number of recommendations on how to evolve our overall go-to-market, pricing, packaging, et cetera. One thing that I would mention is that Skills Tracks is not just a curated catalog offering, it is for new SKUs for our Enterprise partners with their own pricing, of course. And so we built Skills Tracks based on direct feedback that we had received from our Enterprise partners on the need to have more curated offerings, not just an entire catalog license. And so they are curated, tailored to very specific areas and to job families within those areas. I would imagine that as Anthony comes up to speed, he will continue to present new ideas for ways that we can help drive stronger growth within the Enterprise business by making it more responsive to the needs of workforces and institutions. And so I would expect continued innovation on product, on packaging, on our go-to-market on all of those things.

Thank you, Ryan, and thank you, everyone. That wraps today's Q&A session. A replay of the webcast will be available shortly on our Investor Relations website. We appreciate you joining us today.

This concludes today's conference call. You may now disconnect.