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Coursera Inc(COUR-N)

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Coursera (NYSE:COUR) Beats Q3 Sales Targets, Stock Jumps 15.6%

StockStory - Thu Oct 26, 2023

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Online learning platform Coursera (NYSE:COUR) reported Q3 FY2023 results exceeding Wall Street analysts' expectations, with revenue up 21.4% year on year to $165.5 million. Guidance for next quarter's revenue was also better than expected at $163 million at the midpoint, 1.12% above analysts' estimates. Turning to EPS, Coursera made a GAAP loss of $0.21 per share, improving from its loss of $0.25 per share in the same quarter last year.

Is now the time to buy Coursera? Find out by accessing our full research report, it's free.

Coursera (COUR) Q3 FY2023 Highlights:

  • Revenue: $165.5 million vs analyst estimates of $158.9 million (4.21% beat)
  • EPS: -$0.21 vs analyst estimates of -$0.26 (19.6% beat)
  • Revenue Guidance for Q4 2023 is $163 million at the midpoint, above analyst estimates of $161.2 million
  • Free Cash Flow of $15.6 million is up from -$11.5 million in the previous quarter
  • Gross Margin (GAAP): 50.3%, down from 64.2% in the same quarter last year
  • Paying Users : 136 million, up 23 million year on year

“We accelerated our AI-powered translation initiative to deliver over 4,000 courses in seven languages, broadening access to the world's best educators and trusted brands for the millions of new learners coming to our platform,” 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 very strong, averaging 31.5% annually. This quarter, Coursera beat analysts' estimates and reported decent 21.4% year-on-year revenue growth.

Coursera Total Revenue

Guidance for the next quarter indicates Coursera is expecting revenue to grow 14.6% year on year to $163 million, slowing down from the 23.7% year-on-year increase it recorded in the same quarter last year. Ahead of the earnings results, analysts covering the company were projecting sales to grow 13.5% over the next 12 months.

The pandemic fundamentally changed several consumer habits. There is a founder-led company that is massively benefiting from this shift. The business has grown astonishingly fast, with 40%+ free cash flow margins. Its fundamentals are undoubtedly best-in-class. Still, the total addressable market is so big that the company has room to grow many times in size. You can find it on our platform for free.

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 22% annually to 136 million. This is strong growth for a consumer internet company.

Coursera Paying Users

In Q3, Coursera added 23 million users, translating into 20.4% year-on-year growth.

Key Takeaways from Coursera's Q3 Results

With a market capitalization of $2.59 billion, Coursera is among smaller companies, but its more than $507.2 million in cash on hand and near break-even free cash flow margins puts it in a stable financial position.

It was great to see Coursera significantly beat analysts' revenue, EPS, adjusted EBITDA, and free cash flow estimates this quarter. Its outperformance was driven by healthy user growth in its consumer division; the company benefitted from increased demand for newly launched entry-level Professional Certificates created by Google, IBM, and Microsoft. On top of that, Coursera recently launched the first entry-level Professional Certificate from Amazon Web Services. Things certainly seem to be pointing up for the company. Overall, this quarter's results were great and shareholders should feel optimistic. The stock is up 15.6% after reporting and currently trades at $19.85 per share.

So should you invest in Coursera 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.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 50% year on year and best-in-class SaaS metrics it should definitely be on your radar.

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The author has no position in any of the stocks mentioned in this report.