Coursera reports revenue decline in degree business

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Brief description of the dive:

  • Although Coursera reported overall revenue growth in the second quarter of 2022, revenue from the company’s degree segment fell 4% to $11.4 million, according to last income statement.
  • Coursera, which is one of the most prominent MOOC platforms in the world, works with colleges to launch dozens of their online bachelor’s and master’s degrees. In return, these institutions give Coursera a share of the tuition revenue of their programs. The segment only accounts for about 9.1% of the company’s total revenue, but was growing rapidly until recently.
  • Jeff Magioncalda, CEO of Coursera, said the decline in degree segment revenue was due to lower-than-expected student enrollment, particularly in programs offered by US and European institutions. The company’s net loss widened to $49.3 million in the second quarter, up 6.4 percent from a year ago.

Dive Insight:

Coursera started a decade ago as one of the first MOOC providers, aiming 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 strong growth in diploma segment revenue in fiscal 2021 and Maggioncalda analysts said in February that Coursera is still in the early stages of building this part of its business. He doubled down on that strategy on Wednesday, says the company plans to expand the types of degrees offered by new and existing partner colleges. This includes launching degrees in a wider 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 the new programs pay off for the company, in part because international programs tend to have lower tuition rates.

Almost 17,500 students were enrolled in a program of study on the Coursera platform in the second quarter, up 19% from a year ago. However, diploma income fell slightly during the year.

That’s because Coursera’s enrollment levels have not reached expected levels in some of the platform’s oldest programs in the U.S. and Europe, where the company’s revenue is concentrated, according to Maggioncalda.

This is also due to the lower activity of students.

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

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

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

Coursera is also expanding its enterprise segment, which is focused on making its content libraries available 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, up 64% year over year.

Coursera plans to expand the enterprise segment by focusing on acquiring new customers and expanding existing relationships, Maggioncalda said. He drew attention to a new proposal called Coursera Career Academya platform that colleges can offer students who want to learn skills directly related to work.

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