Online learning will be a 'permanent feature of higher education': Coursera CEO

Online learning company Coursera posted earnings that beat expectations. Coursera CEO Jeff Maggioncalda joins Yahoo Finance Live to discuss.

Video transcript

- Well, shares of Coursera are trading lower in the session after popping nearly 20% yesterday on the back of its quarterly results. Right now, it's down about 4%. The online learning platform in the most recent quarter saw revenue soar 38% to $102 million with significant growth in their enterprise and degree businesses.

For much more on that, let's bring in the CEO of Coursera, we've got Jeff Maggioncalda joining us today. it's always good to talk to you. You know, we always talk to you about the partnerships you have with higher Ed. And certainly, that really accelerated the growth for Coursera during the pandemic.

But I am curious to hear more about what you're seeing on the enterprise side right now. We've heard so much about Americans quitting their jobs at a record pace, looking at new careers. As people try to up-skill, how has that provided a big boost to Coursera?

JEFF MAGGIONCALDA: That really has provided a big boost. I think that what a lot of folks didn't anticipate after this pandemic starts clearing up is that so many people would look at their careers and say, I want to try something different. You know, I think there's a lot of people realizing that there are new jobs emerging, digital jobs that pay well. Increasingly entry level digital jobs that don't require a college degree or any prior experience. And you can learn the skills to do these online.

So in Q2, we saw good growth, 38% revenue growth year on year, all organic and lapping COVID. Which was-- yeah, this was the first quarter, really, of COVID last year that produced a big pop in our revenues. So compared to last year, we thought that was good growth.

We saw a lot of improvement on the consumer side as individuals really subscribed to many of our entry level professional certificates. These are offered by IBM, and Facebook, and Google. And they really help people train for new careers in digital jobs with no prior experience or college degree.

- And when we look at, you know, the net loss there, $46.4 million for the quarter as well, it was up from what? $13.9 million a year ago. So I mean, when you talk about profitability in the pursuits there, what's the timeline? Because we always hear about companies wanting to invest when the opportunity is so large there to kind of spread out. I assume it's the same thing in the Ed tech space. But what's the timeline there in trying to reverse that, I guess?

JEFF MAGGIONCALDA: Yeah, I think, the one thing to consider there is that the GAAP earnings reflect the numbers that you just mentioned. That includes a lot of stock based compensation that's non-cash related. If you look at our adjusted EBITDA, which takes out those non-cash factors, we actually saw some nice improvements in terms of the margins.

In Q2, 2020, we had about minus 10% adjusted with that margin. In Q2 of 2021, it was about minus 3%. So we think that we can be in the, you know, minus 10% range. We want it of adjusted EBITDA margin. And we want to step that closer to profitability over time. But like you said, Zach, this is a global opportunity. Higher education is a $1.9 trillion global industry.

And we're at the very early stages of the digital transformation of higher education. So we will be continuing to invest in growth. But we expect our adjusted EBITDA margins to trend toward 0 over time.

- So let's talk specifically about higher Ed, Jeff. Because we've got a lot of universities starting up their new year soon. This would be the first full year, I would imagine, of more in-person classes, because so much of last year was taught online. What do you think that mix is going to look like?

You've got some good visibility in your partnerships with universities. Is there still going to be a hybrid approach or is this kind of going to be the first full year, where things are as normal as they can be compared to 2019?

JEFF MAGGIONCALDA: I think for business, the business audience out there, an easy way to think about this is think about your office. Will we be opening offices? Yes. We'll start to open offices. Coursera has opened our Mountainview office for folks who want to go in under certain, obviously, safety restrictions.

But it's definitely not going back to normal right now. And in fact for Coursera, it will never go back to normal. We have implemented a work from anywhere policy so that employees who don't want to go back to the office-- and in fact, over half the employees that we've hired in the last 12 months don't live next to any office. We're now hiring the best and brightest people everywhere in the country, everywhere in the world.

I think in terms of the campuses, it's going to be pretty similar. In the same way that workers got a taste of the flexibility of work from home, students got a taste of the flexibility of online learning. I think also the universities have realized, there's a huge audience of students out there, potential students that can't make it to campus, largely working professionals with families.

So I think that online learning is now a permanent feature of higher education, even as campuses open up. Almost every University will realize that online learning is good for the students and attracts a whole new audience of working professionals.

- For universities and colleges, certainly, there is a scramble to try and make up for lost revenue from last year. And on that front, we've seen them increasingly pursue these partnerships with companies like a Starbucks or an Uber, who are looking to try and sort of dangle the free education in front of prospective employees to get them on board. I wonder if you've seen an acceleration of that. And how does that benefit Coursera? What opportunities do you see there?

JEFF MAGGIONCALDA: Yeah, you could think of that as sort of learning as a benefit. And many, many people, especially millennials and Gen-Z, they really think about employment does more than just getting a paycheck. They think about the mission of the company. They think about who they're working with. They also think about the degree to which the employer helps invest in themselves, and invest in their skills, and their career development.

So I do think learning has a benefit that helps people with career development is big. And when we think about what kind of learning our company's offering, it kind of depends on the kind of employee. For people who don't have a college degree, having college degrees available is a big thing. We do that at Coursera. We'll pay for anyone's college degree, Master's or bachelor's degree at Coursera if you want one.

But also for more advanced people, when I say advanced, advanced skills being able to access learning on Coursera to learn about databases, or learn about computer science, or data science. Advancing your skills to advance your career is also big. So we do see companies broadly across all employees and across all learning, basically investing more in education. It's good for the company. And it's a great benefit for employees as well.

- Coursera CEO, Jeff Maggioncalda, always good to talk to you. Appreciate the time.