Coursera (NYSE:COUR) Misses Q1 Revenue Estimates, Stock Drops 18%
Online learning platform Coursera (NYSE:COUR) fell short of analysts' expectations in Q1 CY2024, with revenue up 14.5% year on year to $169.1 million. Next quarter's revenue guidance of $164 million also underwhelmed, coming in 7.8% below analysts' estimates. It made a GAAP loss of $0.14 per share, improving from its loss of $0.22 per share in the same quarter last year.
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Coursera (COUR) Q1 CY2024 Highlights:
- Revenue: $169.1 million vs analyst estimates of $170.4 million (0.8% miss)
- EPS: -$0.14 vs analyst estimates of -$0.17 (18.1% beat)
- Revenue Guidance for Q2 CY2024 is $164 million at the midpoint, below analyst estimates of $177.8 million
- The company dropped its revenue guidance for the full year from $735 million to $700 million at the midpoint, a 4.8% decrease
- Gross Margin (GAAP): 52.9%, in line with the same quarter last year
- Free Cash Flow of $18.09 million, up from $5.69 million in the previous quarter
- Paying Users : 148 million, up 24 million year on year
- Market Capitalization: $1.88 billion
“We are in the very early stages of helping our learners, educators, and customers understand how emerging AI technologies will transform the way we teach, learn, and work,” said Coursera CEO Jeff Maggioncalda.
Founded by two Stanford University computer science professors, Coursera (NYSE:COUR) is an online learning platform that offers courses, specializations, and degrees from top universities and organizations around the world.
Consumer Subscription
Consumers today expect goods and services to be hyper-personalized and on demand. Whether it be what music they listen to, what movie they watch, or even finding a date, online consumer businesses are expected to delight their customers with simple user interfaces that magically fulfill demand. Subscription models have further increased usage and stickiness of many online consumer services.
Sales Growth
Coursera's revenue growth over the last three years has been strong, averaging 26.4% annually. This quarter, Coursera reported mediocre 14.5% year-on-year revenue growth, missing Wall Street's expectations.
Guidance for the next quarter indicates Coursera is expecting revenue to grow 6.7% year on year to $164 million, slowing from the 23.2% year-on-year increase it recorded in the comparable quarter last year. Ahead of the earnings results, analysts were projecting sales to grow 16.5% over the next 12 months.
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Usage Growth
As a subscription-based app, Coursera generates revenue growth by expanding both its subscriber base and the amount each subscriber spends over time.
Over the last two years, Coursera's users, a key performance metric for the company, grew 21.2% annually to 148 million. This is strong growth for a consumer internet company.
In Q1, Coursera added 24 million users, translating into 19.4% year-on-year growth.
Revenue Per User
Average revenue per user (ARPU) is a critical metric to track for consumer internet businesses like Coursera because it measures how much the average user spends. ARPU is also a key indicator of how valuable its users are (and can be over time).
Coursera's ARPU growth has been subpar over the last two years, averaging 0.1%. The company's ability to increase prices while steadily growing its users,however, shows that users still find value in its platform. This quarter, ARPU declined 4.1% year on year to $1.14 per user.
Key Takeaways from Coursera's Q1 Results
Although Coursera beat analysts' profitability estimates this quarter (EPS, EBITDA, free cash flow), its revenue slightly missed. Furthermore, its full-year revenue and EBITDA guidance were meaningfully below Wall Street's expectations, resulting in a negative market reaction. Overall, this was a mixed quarter for Coursera and the company is down 18% on the results. It currently trades at $9.75 per share.
Coursera may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
