Ladies and gentlemen, thank you for standing by, and welcome to Coursera's Fourth Quarter and Full Year 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 Q4 and Full Year 2025 Earnings Conference Call. Today, I'm joined by Greg Hart, our President and Chief Executive Officer; and Mike Foley, our Chief Financial Officer. Following their prepared remarks, we will open the call for questions. Our earnings press release was issued after market close, and it is available on our Investor Relations website at investor.coursera.com where this call is being webcast live and reversions 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. Please refer today's earnings press release, shareholder letter and SEC filings 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. Coursera delivered a strong fourth quarter. Over the past year, we've been focused on a clear set of priorities to build a more durable foundation for long-term growth, sharpening our execution, refining how we operate, and embedding faster AI native product innovation and data-driven decision-making across the business. 2025 marked the early phase of this work. As the year progressed, we began to demonstrate tangible progress reflected in our results. For the full year, we grew revenue to $757 million, an increase of 9% year-over-year and more than double the 4% growth rate we shared in our initial April outlook. We generated record free cash flow of $78 million, up 32% from the prior year, and we extended our track record of delivering growth with increased financial leverage, expanding annual adjusted EBITDA margin by 240 basis points year-over-year to 8.4%, while continuing to invest in the next generation of product experiences. Our results reflect a more focused, disciplined company, one that's translating strategy into faster execution. I'm proud of the early progress our team has made, and I'm equally clear that we must and will continue to move faster. In December, we announced an agreement to combine with Udemy, a company and team we have long admired. This transaction is an important step in accelerating our strategy. By bringing together two highly complementary platforms, operating models, and cultures, we meaningfully increase our collective ability to invest, innovate, and execute at scale. Just as importantly, this combination reinforces the direction we have been taking all year, building a more agile, more focused, and more capable company and evolving beyond a content catalog into a leading technology platform for skills. More broadly, the environment around us continues to underscore why this moment matters. Skill requirements are changing quickly across nearly every industry. Organizations are under pressure to reskill and upskill their workforces at scale, and individuals around the world are increasingly seeking learning that is more personalized, job relevant, and clearly connected to advancing their career goals. Together, we believe we can execute at greater scale and speed, share product and data investments to accelerate our roadmap and be better positioned to address the global skilling and talent transformation opportunity. Our companies are progressing through the regulatory and shareholder approval processes, and we look forward to providing updates in the coming months as our integration planning advances. In the meantime, we are not slowing down. Coursera's ecosystem and the infrastructure that powers it continues to expand and evolve to better serve our learners, customers, and instructors. Throughout 2025, we strengthened Coursera's position as a trusted platform for career-relevant learning, supported by a growing and increasingly differentiated global ecosystem. At the center of that ecosystem are our learners. Over the year, we added more than 29 million new registered learners, growing our total cumulative learner base by 17% year-over-year. In Q4, we welcomed a record 6.8 million new learners, the highest fourth quarter additions in Coursera's history. Learners come to Coursera with a clear purpose: to build skills that help them advance their careers and adapt in a rapidly evolving labor market. Our platform combines data and product innovation with a broad selection of branded credentials and curated career pathways taught by more than 375 universities and industry leaders. These world-class instructors enable us to deliver a wide range of learning needs, from foundational technical and human skills to job relevant credentials that span every stage of career progression. By year-end, our platform offered more than 13,500 courses, expanding our catalog by over 45% year-over-year, the fastest pace in the past five years. As job requirements continue to evolve rapidly, demand for career-focused learning remains strong, including the accelerated demand for AI-related skills. In 2025, learners enrolled in our generative AI catalog at a rate of 15 enrollments per minute, up from 8 enrollments per minute in 2024. Many of our most popular courses and certificates are created by leading technology companies, including long-time partners such as Google, deep learning.AI, AWS, Microsoft, Meta, and IBM. In November, we launched our first courses with one of our new partners, Anthropic, designed to give learners hands-on experience with Claude while building the skills needed to collaborate effectively with AI. Coursera is now collaborating closely with many of the leading AI companies, serving not only as a platform of choice for distributing high-quality content, but also as a partner on product innovation, including new approaches to search discovery and learning in the flow of work. We also see that demand for these essential skills extends well beyond technical roles. Earlier this week, we announced new AI courses encompassing an increasingly broad range of careers from nursing and healthcare to business, legal and communications roles. Many of these new skills are being taught by leading universities, including Vanderbilt, the University of Colorado Boulder, and Macquarie University in Australia, as well as organizations with deep expertise in a specific industry or field, including healthcare. In January, we welcomed Cleveland Clinic, one of the world's largest health systems, to Coursera. Their initial launch includes courses focused on applying AI in clinical settings and using machine learning techniques to analyze medical images. It's one example of how our expanding ecosystem continues to strengthen Coursera's role as a critical platform for skills development as AI reshapes how we live, learn, and work across industries worldwide. Now let's turn to our product updates. First, we continue to refine the learner journey on Coursera, making focused improvements across search, discovery, and merchandising designed to better attract and convert learners. The scale and data of our platform create powerful opportunities for more personalized and contextual guidance, allowing us to tailor content, language, and recommended pathways to support the career needs of learners across regions, roles, and levels of mastery. Over the past several months, we've made continuous enhancements. We redesigned our homepage to make it easier for learners to get started and navigate Coursera. We also launched new geo-pricing, marketing, and promotional capabilities to better serve our growing international learner base, resulting in early gains in paid conversion and Coursera's adoption. In Q4, we continued experimenting with features like natural language search, AI-powered discovery, and learner motivation using rapid testing and iteration to improve relevance and drive stronger engagement over time. While much of our product innovation starts with the learner experience, it's equally important that we continue to strengthen the value and choice we provide to enterprise customers who manage workforce learning at scale. We are focused on delivering a more intuitive, data-driven enterprise experience that helps customers assess skills, drive engagement, and translate learning investments into more measurable workforce outcomes. A key area of progress this quarter has been the redesign of our enterprise admin home. Admins rely on this view as their primary interaction with Coursera, and customers want it to be more actionable, role-based, and clearly connected to outcomes. In pilot deployments, the redesigned home delivered improvements in admin-led engagement, reinforcing our belief that clearer insights, targeted nudges, and contextual assignments can influence learner behavior and skill development at scale. Based on these early results, we began rolling it out more broadly in January. Beyond the admin home, we continue to invest in enterprise integrations and workflow improvements designed to embed Coursera more deeply into customers' existing technology ecosystems, positioning learning closer to the flow of work where skills can be applied, measured, and reinforced. For example, our product priorities for 2026 include verified skill pathways, MCP-based discovery capabilities, and deeper integrations with HR and LMS platforms, as well as an expanding set of AI and collaboration tools. These initiatives reflect a broader shift towards making Coursera not just a catalog for learning but a central system of record for skills development, helping organizations engage learners more proactively, benchmark talent, and enable workforce transformation at scale in an increasingly dynamic labor market. Now turning to today's final product update. Over the past several years, we have been investing in building a faster, more agile content model, one that preserves the value of our trusted brands while evolving beyond the static catalog into a skilling platform designed to keep pace with real-time learner and business needs. To support this evolution, we have introduced a platform fee designed to establish a more sustainable model to fund ongoing investment in Coursera's AI native platform capabilities. As Mike will discuss, we expect the financial impact of this change to be gradual. Effective January 1, the platform fee will apply to eligible new sales across our consumer subscriptions and courses, as well as our enterprise offerings. The fee is not retroactive, and pricing for learners and customers remains unchanged. While we expect this to provide a structural benefit to gross margin over time, our primary objective is to support continued investment in our AI native capabilities and enhance the value of our platform for all users. For learners, this enables more personalized and adaptive experiences from AI-powered role play simulations to coaching and career guidance. For customers, it allows us to expand our skills infrastructure and tools to better measure talent and align learning to business outcomes. And for instructors, it provides access to AI-enhanced tools and new authoring capabilities that help them create, augment, and deliver more impactful learning experiences at a global scale. When I stepped into my role a year ago, I was clear that product-led growth would be central to our strategy and the foundation for Coursera's next chapter. As we look to 2026, we intend to push further. Our goals extend beyond simply keeping pace with technology. We are innovating on behalf of learners, customers, and instructors to build a more dynamic AI-enabled skilling platform that is designed to help them succeed in a rapidly evolving skills landscape. With that, I'll turn it over to Mike to walk through our financial performance and provide more detail on our initial outlook for 2026. Mike, please go ahead.

Thank you, Greg, and good afternoon, everyone. Coursera finished 2025 in a position of financial strength. We delivered double-digit year-over-year revenue growth for the last three consecutive quarters, expanded our gross and adjusted EBITDA margins, and generated strong cash flow while continuing to invest in strengthening the long-term fundamentals of the business. These investments are focused on building platform capabilities that learners and customers increasingly require as skills change more quickly. The results I'll discuss today reflect how we're managing and planning the business on a stand-alone basis. I'll begin with our fourth quarter results and then walk through our guidance and outlook assumptions for the first quarter and full year 2026. In the fourth quarter, we delivered total revenue of $197 million, up 10% from the prior year period, driven by growth across both our Consumer and Enterprise segments. Please note that for the remainder of this call, I will discuss our non-GAAP financial measures unless otherwise stated. Gross profit was $109 million, up 12% year-over-year, representing a 55% gross margin, an expansion of approximately 90 basis points from the prior year period. Margin expansion was driven primarily by continued improvement in our consumer segment, reflecting higher learner engagement with newer content created under more favorable production arrangements. These arrangements typically feature lower revenue share and content costs, reflecting the growing role our technology and authoring capabilities play in enabling high-quality learning experiences at scale. Additionally, as we deliver faster innovation cycles and our reach continues to grow, we will continue to explore structural opportunities to improve unit economics over time, including the platform fee Greg mentioned earlier, which took effect at the start of 2026. This structure better aligns economics with the value our technology delivers, while supporting continued investment in innovation. I'll share more detail on the expected margin impact with our outlook. Total operating expense was $103 million or 52% of revenue, consistent with the prior year period as we paced ongoing investments in R&D and go-to-market capabilities expected to drive sustainable growth and improve long-term operating leverage. Net income for the fourth quarter was $11 million or 5.6% of revenue, and adjusted EBITDA was $11 million or 5.7% of revenue. For the full year, net income was $67 million or 8.8% of revenue, and adjusted EBITDA was $64 million, representing an 8.4% margin. As a reminder, we began 2025 targeting 100 basis points of adjusted EBITDA margin expansion to 7%. We later raised that target to 8% as our execution and visibility improved and ultimately exceeded both delivering 240 basis points of year-over-year expansion. We achieved this while deploying targeted growth investments across product, content, and go-to-market initiatives, with quarter-to-quarter flexibility provided by our annual margin framework. In a year defined by rapid technological change and a refined operating model, that flexibility was critical enabling us to deliver meaningful margin expansion while continuing to make long-term decisions on behalf of our learners, customers, and broader stakeholders. This balance remains central to how we operate the business. Now turning to cash performance and the balance sheet. As Greg highlighted earlier, we generated a record $78 million of free cash flow in 2025, a clear signal of the earnings potential in our model. This included a use of $2 million in the fourth quarter, driven by seasonal working capital dynamics related to receivables timing of our revenue share catch-up payment as well as $3.8 million in cash payments for M&A transaction-related costs. For additional clarity, these costs have been footnoted in the financial tables of today's press release. Moving to the balance sheet. We ended the year with approximately $793 million of unrestricted cash and cash equivalents with no debt. This strong financial position gives us the capacity to invest in growth, move quickly in a fast-changing landscape, and create additional opportunities for shareholder returns. As we discussed on the December announcement call, this includes our anticipated execution of a sizable share repurchase program following the close of the proposed transaction with Udemy. Now let's discuss the fourth quarter performance of our operating segments, starting with Consumer. In Q4, we delivered consumer revenue of $132 million, up 12% year-over-year. Growth was driven by acceleration in our core consumer subscription and courses category powered by enhanced marketing, localized pricing, and subscription capabilities with Coursera Plus. These capabilities help learners discover, develop, and validate skills more effectively as labor market needs evolve. This strength was modestly offset by the anticipated fourth quarter decline in our degrees product category previously disclosed with our decision to integrate Degrees results into our consumer segment at the start of 2025. As Greg mentioned earlier, we added 6.8 million new registered learners in Q4, the highest number of fourth quarter additions in Coursera's history despite the seasonal softness we typically see in our fourth quarter top of funnel. Consistent with regional trends observed over the past several quarters, a growing proportion of new learner traffic continues to come from international markets. This global demand underscores the importance of product innovation that improves relevance, localization, and value across regional labor markets and in effect supports monetization of our funnel over time. Consumer segment gross profit was $81 million, up 15% year-over-year and 62% of consumer revenue, up from 60% in the prior year period. As I mentioned earlier, this margin expansion reflects increasing learner engagement with content produced with more favorable revenue share economics. Overall, our consumer momentum reflects renewed execution and the early investments we've made across product, content, and marketing over the past year. In 2026, we plan to build on this momentum, delivering faster innovation cycles, more engaging experiences, and greater value through our large and growing subscription offerings. Turning to our Enterprise segment. Enterprise revenue was $65.4 million up 5% from a year ago. Growth was driven by our campus and business verticals, with demand trends and spending priorities varying by customer, region, and use case. The total number of paid enterprise customers increased to 1,730, up 7% from a year ago, and our net retention rate for paid enterprise customers was 93%. The improvement in net retention was driven by Coursera for campus, as well as a large government expansion. However, we remain focused on driving sustained improvements in retention and expansion across a broader set of enterprise customers over time, particularly within Coursera for business. Segment gross profit was $46 million, up 7% year-over-year and a 70% gross profit margin. This was an improvement of 130 basis points from the prior year period, driven by content engagement trends similar to those benefiting our consumer segment. Overall, our expectations for the enterprise segment remain largely unchanged as we remain focused on the long-term growth opportunity. As organizations increasingly prioritize skills transformation, they're looking for platforms that combine relevance, agility, and measurable outcomes. We plan to continue investing in product features and tools to better meet those needs, recognizing that progress in this segment is typically more measured given the nature of the revenue cycle. Finally, turning to our financial outlook. As we enter a new year, we're providing additional detail on the composition and pace of the business underlying our guidance. This includes onetime segment-level growth estimates as well as other modeling considerations. Importantly, today's guidance reflects Coursera's expectations on a stand-alone basis and does not take into account the proposed transaction with Udemy. We expect the transaction to generate meaningful operating efficiencies, including anticipated annual run rate cost synergies of $115 million within 24 months of closing, primarily through optimized go-to-market motions and streamlined G&A expense. We are confident that a majority of these run rate synergies can be achieved within the first year post-close. And we look forward to providing updates as we progress through the regulatory and integration planning processes in the months ahead. With that context, for the first quarter of 2026, we expect revenue to be in the range of $193 million to $197 million, representing growth of 8% to 10% year-over-year. For adjusted EBITDA, we're expecting a range of $11 million to $15 million, which reflects our typical seasonality and our focus on deploying growth investments early in the year. For full year 2026, we anticipate revenue to be in the range of $805 million to $815 million, representing growth of approximately 6% to 8% from the prior year. From a segment perspective, this anticipates consumer segment growth of more than 10% over the prior year, reflecting the performance improvement we continue to drive in our subscription and course offerings, slightly offset by an anticipated 100 basis point headwind from our degrees product category. For our enterprise segment, we expect 2026 growth in the low single digits year-over-year and have not assumed any material change in the current macroeconomic environment. For adjusted EBITDA, we expect to deliver in the range of $70 million to $76 million or an adjusted EBITDA margin of approximately 9% at the midpoint of the revenue and adjusted EBITDA ranges. This initial target is designed to extend Coursera's strong track record of delivering operating leverage through annual EBITDA margin expansion while continuing to make targeted investments in growth initiatives that enhance learner and customer value over time. While we did not manage the business to optimize adjusted EBITDA for any single quarter, we expect our 2026 bottom line performance to be weighted to the second half of the year for two reasons. First, our focus on deploying investments early in the year to support our most productive growth opportunities. Second, we expect to begin seeing the early financial benefit of the platform fee on gross margin later in the year. As Greg outlined, the 15% platform fee only applies to new sales across eligible consumer subscription and courses and enterprise offerings. There is limited or no impact on certain product categories with structurally higher margins today, such as Coursera produced content and degrees. The financial effect is expected to be gradual as we begin to recognize revenue from new sales over time. We anticipate seeing some initial expansion in Consumer segment margins in the second half of 2026, followed by enterprise segment margin improvement in 2027, given the multiyear contract structure and revenue recognition dynamics in enterprise sales. Finally, in a standard year, we would continue to expect free cash flow performance to largely track at or above adjusted EBITDA, excluding the impact of cash payments related to the proposed transaction. For additional visibility today, we wanted to provide our first quarter forecast of approximately $14 million of cash payments related to the transaction fees and planning expenses. This does not factor in additional costs contingent upon close or any post-close integration expenses. We look forward to providing more detailed expectations in future updates. To close, 2025 marked meaningful progress across several fronts. We delivered solid growth, expanded margins, generated strong cash flow, and strengthened the foundation of the business. We entered 2026 with a disciplined operating plan, a strong financial position, and a clear set of priorities focused on long-term value creation.

Our first question comes from Stephen Sheldon with William Blair.

First, I wanted to ask about the platform fee that sounds like you introduced in January. I guess can you just give a little bit more color on the structure of that? How much of a lift do you think that could be to gross margins over time? And I guess, as you've kind of pushed that out there and communicated it, has there been any pushback in the system that you've seen regarding the fee?

Maybe I'll start and then Mike can add on. Thanks for the question, Stephen. So a couple of us. First of all, the intent of the platform fee, as was indicated in the scripted remarks, is to enable us to invest in an ongoing way in continuing to improve the platform. And by doing so to deliver better outcomes for our learners and for our content partners as well. They've obviously been pleased with the growth that we've shown, particularly over Q2 through Q4 with 10% growth in each of those quarters. And the intent of the platform fee is to enable ongoing investment and product initiatives that will help further that growth. They're obviously curious to get better visibility into what some of those investments might be and what our 2026 roadmap looks like. As Mike mentioned in his scripted remarks, the impact of the fee on gross margin because of the nature of the fee and the nature of our revenue recognition with an increasing percentage of our consumer business being related to our subscription Coursera Plus. And so the revenue gets recognized over a longer time period. The same is obviously true in our enterprise business as well. And so that's a little bit of color behind what Mike referenced in more impact will be reflected in our financials in the back half of the year. Mike, over to you.

Yes. I would just add in terms of gross margin overall, we do expect to continue to make improvements in progress on gross margin in the aggregate. The platform fee is a significant component of that in 2026, along with continued investment in Coursera produced content. Of course, we also have offsetting that the mix of revenue, our fastest-growing business in our consumer subscription is our lower margin business, and enterprise growing slower as our higher-margin business. So there's a mix shift to offset that from an overall gross margin percentage basis. But it is a meaningful uplift in the platform fee for the second half of the year and definitely into 2027.

Got it. Yes, that makes sense. Following up, can you elaborate on where you're making additional investments in the business with regard to the 2026 budget? Are there specific areas where you're reinvesting more than you have in the past? Given some of the comments in the prepared remarks, it seems like you have many product ambitions. Any insights on where you are focusing more resources compared to previous efforts?

Yes, I can take that. So we'll continue to invest in our sales and marketing to drive new learner acquisition. We've seen significant improvements in efficiency over 2025. In that spend, we expect to see more efficiency in 2026. The other area, as Greg alluded to, is in R&D, and we are expecting to invest more in R&D this year. Part of that is hiring that we've already done, and part of that is continued investment in software tools and more engineering and product into 2026. So those will be the two areas I'd highlight. G&A would just grow modestly this year.

Our next question comes from Josh Baer with Morgan Stanley.

I was hoping you could talk a little bit about some of the proprietary data sets that you have that would make it hard for an LLM or a new entrant to create learning content and more broadly, like the platform that you have that can enable skilling and reskilling and facilitate workforce transformation. So some of the data or competitive moat there.

Yes, I'll start on that one, Josh. Thank you for the question. So a couple of thoughts on that. First of all, we ingest a lot of data from external third-party sources. That data is presumably also some of it available to some of our other participants in the space, whether there's LOMs or others. It's what we do with that, that I think is a bit unique. And so what we are trying to do, 86% of the learners who come to Coursera come to grow their careers. And what we're really focused on doing is delivering a mapping of the skills that they need to do so in whatever particular career they might be pursuing to the courses on Coursera that deliver those skills. And then specifically, the modules within those courses that deliver those skills and then how we verify those skills at scale. We just actually rolled out the launch of our verified skills path across a number of different career groupings for our enterprise partners, which has been something that we've been working on since September. The goal is to continue to innovate on that. And obviously, we use all of the data that we have on our platform from within the learning experience from within courses, within given modules, of course, is about what is driving engagement, what is driving true mastery of those skills and how do we double down on that. It's one of the ways that we actually use Coursera produced content as a test bed to figure out which optimizations drive the highest learner engagement, the highest course completion rates, and the most correlation with skill mastery and development. So we do think that we have a differentiated set of data across both how we use external data, how we map that to the skills that we build on our platform for our learners, and then how we use the learning experience itself, which is very different on Coursera than it might be in a chat environment. In an LLM to deliver a far better outcome for those learners. And we just released our learner outcomes report about two or three weeks ago. One of the things we see is that 46% of learners on Coursera report a salary increase since enrolling in their course or program on Coursera. So we believe there's a strong correlation between the input of learning on Coursera and the output that learners are coming to Coursera to achieve, which is to grow their career.

Great. And just wondering, just a little confused on the platform fee. Like is there a difference between the platform fee and a pricing increase for new customers?

Pricing for customers is not impacted. There is no change to consumer pricing or enterprise pricing for that matter.

Our next question comes from Ryan MacDonald with Needham.

Congrats on a nice quarter here, guys. This is Matt Shea on for Ryan. Wanted to touch on international. It seems like it's been a real bright spot the last couple of quarters. 2-parter here. Maybe first, on the translation side, you achieved your goal of 100 courses with AI doing across five languages. It seems like this has been particularly helpful in unlocking international learners. I guess given that success, how much more translation could be in store for 2026? And how immediate is that benefit? And then maybe second, geo-based pricing was a big topic last quarter that seems to be bearing fruit. How has that evolved? And any plans to roll out incremental geo-based pricing to new countries in 2026?

Great question, Matt. I have a few thoughts on that. First, yes, we will definitely keep expanding the number of courses we have translated through both AIW and machine translation. We know that learners are much more likely to engage with courses in their native language, especially when that includes verbal audio rather than just text. Therefore, we will continue to invest in this area. Our enterprise customers often request this for specific regions to ensure they have the right content for their teams in native languages. Additionally, considering our combination with Udemy is particularly interesting to us because they have over 85,000 instructors from around the globe creating content in a wide variety of languages. We believe this will significantly enhance our ability to serve learners worldwide. Regarding geo pricing, we are pleased with the results we've seen so far, and we believe there is more potential to make our pricing model more responsive to the purchasing power in different countries. I anticipate that in 2026, we will keep assessing this and refining our approach accordingly.

Got it. I appreciate that color. Maybe one on the combination with Udemy. At the time of the announcement, it was a bit early to gauge feedback from the instructor base, but now assuming you've had a chance to connect with partners, how do your university and enterprise partners feel about this combination and conversely, to the extent you can share, I guess, any additional feedback from Udemy's structure about how they feel about the combination?

I believe the combination will lead to significantly better outcomes for everyone involved in our value chain. From the perspective of content creators, Coursera has 197 million registered learners, and Udemy has over 82 million, nearing a total of 300 million learners combined. This large audience is something any content creator, whether a university partner, an industry partner, or a subject matter expert within Udemy's network, can reach. We think this will greatly enhance their ability to engage with new audiences and provide effective learning experiences. For learners, the advantages include access to more content, not only from Coursera's 375 university and industry partners but also from over 85,000 subject matter experts on the Udemy side. Regarding enterprises, we have approximately 1,700 enterprise customers while Udemy has around 17,000, creating a substantial audience for content creators to develop and serve. We've received feedback focused on how this will work, which is a valid question. We need to address that thoughtfully. Our goal is not to create a chaotic mix of content from various instructors and institutions, but rather to ensure we create a seamless experience. We plan to gather input from those audiences as we develop the integration into a single platform, which will be a crucial part of our strategy post-closure.

Our next question comes from Nafeesa Gupta with Bank of America.

Am I audible?

Any so we can hear you.

My question is regarding the Udemy merger. Could you provide any updates on potential timelines? I recall it was mentioned for the second half of the year, but are there any regulatory challenges anticipated in that process?

Yes. This is Mike. I can take that. Yes. So no real updates to that yet. We're moving forward with the regulatory filings and shareholder and SEC filings with good pace. Our guidance continues to be the second half. But frankly, there's a wide range of potential outcomes there. There's a theoretical path to being signed in the second half of the year, or it could be later than that. So no real update at this point in terms of timing.

My second question is about the traffic generated from AI platforms. You've partnered with OpenAI and Gemini, and you've mentioned your MCP-based discovery capabilities for 2026. What kind of traffic are you currently experiencing from these AI platforms, and what are your expectations for the future?

At a high level, it's still very early days in terms of the integration with OpenAI and chat GPT. We continue to collaborate with them on building out and improving that experience, but still really early days, so nothing substantive to share at this stage. I think what you're seeing more broadly is that we get a different type of traffic than you would have historically seen from search. And so you see higher intent on traffic coming through from the AI. And so we're pleased by that. But it's still very early days in terms of the actual integration that we have with ChatGPT.

Got it. And if I may, one last one. On the platform fee, is that like a one-time fee for any new subscription on consumer or enterprise? Or is that like an ongoing monthly fee? Or like how does that work? And could you also remind us what percentage of your consumer is in subscriptions?

Yes. The platform fee applies to new revenue in 2026 on related to eligible content. So not all of our content categories as noted earlier, and it effectively is 15% that comes off the top before we calculate the revenue share payments to our content partners. So that's how it works, and it's an ongoing fee.

And again, there's no change to consumer pricing or enterprise pricing connected with the platform fee.

Our next question comes from Brian Peterson with Raymond James.

This is Jessica on for Brian. In your commentary on your guidance, I see consumers expected to grow over 10%. Even considering the potential headwinds you're anticipating from the degrees segment, what are the main drivers of strength expected in consumer? Are we looking at a subscription that continues to represent a higher mix of the revenue? Or are you bringing in more learners, converting learners, or attracting them at higher price points? How should we be considering all the factors involved here?

Well, at a high level, I'll start and then Mike can certainly join in our subscriptions and courses piece of our consumer business continues to be the fastest-growing piece of our consumer business. And we expect that to continue to be true in 2026. We are pouring more energy into that, both on the external marketing side, from a paid marketing perspective, but also within the platform. It is, by far, the best value from a learner perspective. And so it makes the most sense for people to subscribe to Coursera Plus either monthly or annually depending on their learning goals. So you should expect that to increase. The other investments that we are making, Mike referenced the fact that we'll continue to invest in sales and marketing and driving that efficiently, which we've done over the course of 2025, and we also anticipate that continuing.

No, I think that's right. The only thing I would add is one of the things that gives us confidence here around that growth is the momentum that we had in Q4 around subscription and courses and not just the monthly subscription, but real strength and momentum in our annual subscription. So that gives the continued fast growth of our annual subscription gives us increasing confidence against the delivery of the number for 2026. So the combination of product-like growth improvements. We've seen an uptick in retention in Q4. So we'll get various signals that give us confidence in the outlook for '26.

It's really great to hear. And a follow-up then also in your enterprise segment, NRR is like inflected back to 93% this quarter. As we're thinking about the rest of this year, while it's growth, but also potentially following the Udemy merger, what are the main priorities you're still considering within the segment? And how like are you thinking about leading with pad development? Or what other aspects are you considering to be improving the segment and continuing driving its performance?

I'll start with the NRR comment and then hand it to Greg for the priorities. We're pleased to see the increase from 89% last quarter to 93%, but we're not satisfied with that figure. We'll only be content when it's above 100%, and we recognize there is significant progress needed. Several operational changes we've implemented in our enterprise business have shown positive results. We have a relatively new general manager in the enterprise for about four months who has made several significant adjustments to our market approach that I believe will yield positive results. However, due to the nature of that business, we might not see the impacts until the second half of this year, or even into 2027. Nevertheless, I am confident that we will see operational improvements. This quarter's increase was primarily driven by one substantial expansion, specifically in our government business in Asia, which significantly contributed to the uptick. While this was a positive development, we do not yet observe a consistent trend of improvement for this year until we start seeing the benefits of both product-led growth and the operational enhancements I've mentioned earlier.

To address your question about the combination with Udemy and their enterprise business, their enterprise segment is significantly larger than ours, consisting of about two-thirds enterprise and one-third consumer, while we are the opposite with two-thirds consumer and one-third enterprise. This merger will create a company with an estimated pro forma revenue of roughly $1.5 billion, balancing out to approximately 50% consumer and 50% enterprise. They have made considerable advancements in their enterprise offerings, not only in revenue but also in product development, which is particularly appealing. Conversely, we lead in several areas related to consumer products, which adds value to the partnership. The prospect of merging these strengths allows us to serve both consumer and enterprise clients effectively. We aim to enhance our consumer services by helping learners identify the right skills to advance their careers, making it easier for them to learn, master, and demonstrate those skills through verified assessments to potential employers. On the enterprise side, we intend to apply similar upskilling and reskilling strategies, integrated seamlessly into workflow through sophisticated integrations with enterprise systems. We are genuinely excited about the potential this collaboration presents.

We will take our final question from Devin Au with KeyBanc.

And congrats on a strong quarter. When I look at the first quarter guidance at the midpoint of the revenue guide, I think it's contemplating sort of a greater decline quarter-over-quarter in growth than prior years. I know you've kind of called out around 100 bps of headwind from degrees, but is there any other kind of factors that's worth highlighting and driving the larger sequential decline?

On the enterprise side, we continue to experience strong momentum with Coursera for campus. The largest segment of that business is, of course, Coursera. We are adopting a cautious outlook for the remainder of the year, as the macroeconomic environment remains uncertain, similar to 2025. Therefore, we are taking a careful approach to how the year unfolds for the Coursera business, largely due to the lack of visibility we have regarding its performance over the next four quarters. This is the primary point I wanted to emphasize.

The one other thing I might just build off Mike's response is, as we see more of our consumer revenue come from Coursera Plus subscriptions, and as we see increasing success in Coursera Plus annual subscriptions, the revenue recognition of that plays out, obviously, over a far longer time horizon than a normal a la carte course purchase or monthly. And so that's also a factor as you think about what happens in Q1 specifically.

Got it. I appreciate the context. And just a quick follow-up question. Looking at the kind of net new enterprise accounts that you've added in the quarter, kind of a step down in terms of net adds. If you look at the past couple of quarters or a few years, can you maybe unpack that a little bit? Have you seen any kind of deals kind of pushed out in 2016 that would explain that? Just any color would be helpful.

Well, every quarter, you also have deals that push out that you don't want to. I wouldn't say it was necessarily any worse in this quarter on that particular dimension than it is on others. I think I would just echo sort of what Mike said a little bit earlier about some of the macro trends that we're seeing play out in the C4B segment. C4C, we've had some good strength in that. We continue to be uniquely positioned to serve that particular segment really well, but it's a smaller piece of our enterprise business. And then C4G has natural sort of lumpiness in that particular part of the business just because you have typically annual government contracts versus multiyear deals. And so you see that kind of move up and down, and we've seen that historically as well.

That wraps today's Q&A session. A replay of this webcast will be available shortly on our Investor Relations website. We appreciate you joining us.

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