Coursera reports revenue declines in degree business

Dive Brief: 

• Although Coursera reported overall revenue growth in 2022’s second quarter, revenue from the company’s degree segment declined 4% to $11.4 million, according to its latest earnings report. 
• Coursera, which is one of the world’s most prominent MOOC platforms, has worked with colleges to launch dozens of their online bachelor’s and master’s degrees. In return, those institutions give Coursera a share of their programs’ tuition revenue. The segment only accounts for about 9.1% of the company’s overall revenue, but it had been quickly growing until recently. 
• Jeff Maggioncalda, Coursera’s CEO, said the degree segment’s revenue decline was due to lower-than-expected student enrollment, particularly in programs offered by U.S. and European institutions. The company’s net loss widened to $49.3 million in the second quarter, up 6.4% from a year ago. 

Dive Insight: 

Coursera launched a decade ago as one of the first MOOC providers, with the aim to bring college-level courses to the masses. The platform has expanded its offerings over the years, hosting its first master’s degree in 2015 and its first bachelor’s degree in 2018.

The company saw major revenue growth in the degrees segment in fiscal 2021, and Maggioncalda told analysts in February that Coursera is still in the beginning stages of building this part of its business. He doubled down on that strategy Wednesday, saying the company plans to expand the types of degrees offered from new and existing partner colleges. That includes by launching degrees in a greater variety of languages. 

Kenneth Hahn, Coursera’s chief financial officer, echoed those comments on a call with analysts. But Hahn said it will take time to see new programs pay off for the company, partly because international programs tend to have lower tuition rates. 

Almost 17,500 students were enrolled in a degree program on Coursera’s platform in the second quarter, up 19% from a year ago. Still, degree revenue fell slightly year over year. 

That’s because Coursera enrollment levels didn’t reach expected levels in some of the platform’s oldest U.S. and European degree programs, where the company’s revenue is concentrated, according to Maggioncalda. 

It’s also because of lower student activity. 

“The tuition paid depends on how many credit hours students are learning,” Maggioncalda said. “Partly probably because of working, maybe because of vacation — whatever it is — students have pulled back in activity level.” 

Maggioncalda also cited the strong labor market in the U.S., which historically has led to lower enrollments as people choose the workforce over college. 

Despite declines in the degree segment, Coursera reported that overall revenue increased to $124.8 million, up 22.2% from a year ago. Cost of revenue and operating expenses grew at a similar clip, rising 16.7% year over year to $172.6 million. 

Coursera has also been expanding its enterprise segment, which is focused on providing its content libraries to colleges and employers. This segment includes Coursera for Campus, which allows colleges to use the platform’s content in their classes. 

Enterprise revenue increased to $43.7 million in the second quarter, up 55% from a year ago. The company ended the quarter with 958 enterprise customers, increasing 64% year over year.

Coursera plans to expand the enterprise segment by focusing on acquiring new customers and expanding existing relationships, Maggioncalda said. He called attention to a new offering called Coursera’s Career Academy, a platform colleges can offer to students who want to learn skills directly connected to jobs.