Coursera, Inc. (COUR) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to Coursera's Fourth Quarter and Full Year 2024 Earnings Call. [Operator Instructions] And please be advised that this call is being recorded. [Operator Instructions] I'd like to turn the call over to Cam Carey, Head of Investor Relations. Mr. Carey, you may begin.

Hi, everyone, and thank you for joining us for Coursera's Q4 and Full Year 2024 Earnings Conference Call. Today, I'm pleased to be joined by Andrew Ng, Coursera's Chairman and Co-Founder; Jeff Maggioncalda, our current Chief Executive Officer; Greg Hart, our incoming Chief Executive Officer; and Kenn Hahn, our Chief Financial Officer. Following their prepared remarks, we will open the call for questions. Our earnings press release, including financial tables was issued prior to the market open and is available on our Investor Relations website located at investor.coursera.com, where this call is being simultaneously webcast and where versions of our prepared remarks and supplemental slides have been posted. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP measures to the most directly comparable GAAP measure can be found in today's earnings press release and supplemental presentation on our Investor Relations website. Please note, all growth percentages refer to year-over-year change unless otherwise specified. Additionally, all statements made during this call relating to future results and events are forward-looking statements based on current expectations and beliefs. Actual results and events could differ materially from those expressed or implied in these forward-looking statements due to a number of risks and uncertainties, including those discussed in our earnings press release, supplemental presentation and SEC filings. And with that, I'd like to turn it over to Andrew.

Hi, everyone. We appreciate you joining us today. Before we discuss our results, I would like to take a moment to touch on yesterday's leadership announcement. First, on behalf of the Board, I want to thank Jeff for his significant contributions to Coursera over the past 7 years. Under his leadership, we achieved important milestones, including completing our IPO, growing our revenue from less than $100 million in 2017 to nearly $700 million by the end of 2024, while achieving profitability, rapidly expanding our platform, products and offerings in collaboration with the world's best educators, including partnering with more than 200 new universities and industry leaders, growing our number of registered learners by over 100 million. And importantly, he has helped us accomplish all this while remaining a faithful steward of Coursera's #1 goal to serve learners and to transform lives through learning. His leadership and dedication hope to build our strong foundation, and I believe that Coursera and the industry are at an important inflection point as we look to our next chapter of growth. Advancements in technology such as AI are transforming industry after industry and education, too, will change. Learners need to discover, develop and validate new skills that can start or advance their career. Academic institutions need to modernize their curricula and teach learners the skills they need not for the past but for the future. And enterprises need a more agile and adaptive solution to power upskilling initiatives for their most important asset, their people. After all, human capital is the most valuable form of capital, and we all have to invest in building that. Coursera's ecosystem, assets and global reach are unmatched, and I'm optimistic and excited about the role our platform will play in shaping the future of learning. Together with Jeff, the Board has been thoughtful, comprehensive and deliberate in selecting the right person to lead Coursera's next phase. Greg Hart is an exceptional and proven leader. With over 25 years of experience leading technology-driven businesses, he has a long track record and that's highlighted by that rare combination of innovation and operational excellence, including successfully navigating 2 decades of transformational technology shifts while at Amazon and scaling multiple businesses, domestically and internationally, with rigorous execution and leading customer-focused product development, including an early AI-based consumer product, Alexa. His wealth of operational excellence, deep understanding of technology and of product and his passion for our mission make us excited for the upcoming years. The Board is grateful to Greg for agreeing to take the helm as CEO, and we're confident in his ability to lead Coursera as we look to accelerate our journey of growth and innovation. I'm thrilled to now hand it over to Greg to share a few words.

Thank you, Andrew, and good afternoon, everyone. I'm honored to take on the role of CEO and excited to build upon everything that Jeff and the collective team have accomplished. Coursera is a transformative company with a powerful mission. I have long admired the company's ability to bridge the gap between education access and economic opportunity, serving millions of learners and thousands of institutions with a platform model powered by partnerships with over 350 world-class universities and industry leaders. The industry is at a critical moment accelerated by the rapid adoption of AI. As with other transformative technologies that I have navigated throughout my career, AI is poised to dramatically reshape industries and tasks across all sectors and regional economies. And I believe this can create a future demand for learning that will be nearly limitless. Individuals and institutions will need to be more agile, learning at an accelerated pace to ensure they have the relevant skills and talent to remain competitive in a global labor market. Meeting this demand will require a market leader in education and technology with the capacity to transform access, deliver new experiences and enable the future of learning and work. I believe that Coursera has that capacity and is uniquely positioned to capture this opportunity. Thanks to Jeff and the management team's work, Coursera is on solid footing operating from a position of financial strength with a distinct set of assets. In the coming days and weeks, I'm looking forward to spending my time immersing myself in the business, getting to know the team, engaging with our partners and customers and gaining a deeper understanding of the company and how to accelerate our progress against the opportunities ahead. I'm committed to driving a new phase of innovation and excited to work alongside such a talented team to shape the next chapter of Coursera's growth and leadership. Thank you. I'll now pass it to Jeff.

Thanks, Greg. I could not be more thrilled to see you take on this role. Serving as CEO for the past 7.5 years has been a privilege and a thrill. When Andrew and the Board gave me the opportunity to lead Coursera in 2017, my wife and I both felt that there was nothing more fundamental or more important that I could dedicate my time and talent to than providing education to the world. During that time, technology and globalization were changing industry after industry, and the job most at risk of automation were typically held by lower skilled workers. Fast forward to today, and generative AI threatens the jobs of not only lower skilled workers, but of knowledge workers as well. The talk of Davos was AI and the phrase of the day was FOBO, fear of becoming obsolete, due to AI. Technology is dramatically shaping how we live, learn and work and requires every one of us, whether you're a CEO, a data scientist or an Uber driver to learn and adapt in order to keep up in this changing world. Earlier this month, the World Economic Forum published its Future of Jobs Report 2025. I encourage you all to read it. The findings, based on responses from over 1,000 companies, reinforce both the magnitude of change expected in our global labor markets and the opportunity ahead for Coursera and the industry. The report found that workers, on average, can expect that nearly 40% of theirs existing skill sets will be transformed or become outdated over the next 5 years. And these skill gaps are considered to be the biggest barriers to business transformation. In response, 85% of employers plan to prioritize upskilling their workforce. Unsurprisingly, AI and big data topped the list of the fastest-growing skills, but complementing these are human skills like creative thinking, resilience and agility, all things required to adapt to change that are expected to rise in importance by 2030. This moment calls for a new model of higher education and lifelong learning. Coursera's ecosystem of learners, educators and institutions is positioned at the intersection of these trends. And over the course of 2024, our team made substantial progress in scaling and deepening the 3 advantages that distinguish our platform. I'd like to take a moment to highlight the progress that we've made to drive future growth. First, our leading educator partners, who created a broad catalog of trusted content and credentials. In 2024, we welcomed more than 25 new educator partners ending the year with over 350. This included many of the world's most respected industry leaders, including Adobe, Johns Hopkins Medicine, Samsung, Xbox and more as well as prominent universities like Saïd Business School in the University of Oxford and IIIT Hyderabad. We also deepened our relationship with existing partners. I'm pleased to share that we've extended a multiyear relationship with our largest industry partner, sending the foundation to jointly serve our learners and customers in years to come. In addition to growing our educator partnerships, we've also been able to accelerate our content engine, deploying new technology tools and production arrangements with our partners. We launched nearly 40 new entry-level professional certificates. Many of our certificates in this catalog have received credit recommendations from ACE, ECTS and NSQF so that industry micro-credentials can create pathways to both well-paying jobs as well as college degrees. We also rapidly expanded our catalog of generative AI courses and credentials. Our partners, many of which are the world's leading AI companies, added over 450 GenAI courses this year as they look to meet the growing demand for these skills. In 2024, we saw 6 enrollments per minute in GenAI content, up from 1 per minute in 2023. For the first time, a generative AI course, Google's AI essentials, was the most popular course of the year, with over 900,000 enrollments. Our second advantage is Coursera's global reach to individuals and institutions. In 2024, we welcomed 26 million new learners from across the world, most since 2020, growing our learner base to 168 million by the end of the year. We added nearly 250 new Paid Enterprise Customers, ending the year with more than 1,600 businesses, campuses and governments using our platform. To deliver more value for these learners and customers, we continue to invest in our platform's third advantage: product innovation. Our innovation efforts have been focused in areas where we can uniquely leverage AI to redefine the experience for our learners, educators and customers. The first example is Coursera Coach, which started as a learning assistant, but has rapidly grown to become a core presence across our platform, with expanding capabilities in career guidance and discovery, instructional design support and interactive learning. This year, more than 1.7 million learners exchanged over 21 million messages with Coach. In Q4, we launched Coach Dialogues, providing personalized interactive learning where Coach acts as an extension of the instructor. This is the future of learning and partners including Google, Stanford, Amazon, Johns Hopkins, Vanderbilt and Microsoft have already added Coach Dialogues to their courses. Second is our AI translation initiative, allowing us to better serve the growing volume of learners coming from outside the U.S. To date, our learners have driven more than 2.4 million enrollments in AI-translated content and we recently added support for Dari, Hungarian and Pashto, ending the year with up to 24 languages available in nearly 5,000 courses. In Q4, we started experimenting with AI audio and video dubbing, so that learners can both see and hear the top instructors in the world, speaking in their own language. Finally, we continue to make progress on Course Builder, our generative AI-powered authoring tool. In 2024, our Enterprise customers, particularly campuses and businesses started using Course Builder to create custom, private courses as they tailor our learning content to their specific organizational needs. In total, our advancements in 2024 provide only a glimpse of how Coursera will transform the teaching and learning experience. And I believe that Greg's deep innovation and technology expertise will serve to further accelerate our team's capabilities and these initiatives. In closing, I want to thank Andrew, the Board and our exceptionally talented team. At Coursera, our mission is to provide universal access to world-class learning so that anyone, anywhere has the power to transform their life through learning. For me, it's been an inspiration at the end of every day to know that we're not only building a great company, but we're also serving the world to one of the most effective forces for empowering individuals and institutions rise to their full potential. I'm deeply proud of what we've accomplished in the past 7 years, grateful to be a part of this incredible journey and looking forward to watching Coursera change, grow and redefine what is possible in the years to come with Greg at the helm. Now I'd like to hand it over to Ken to walk us through the financial results. Ken, please go ahead.

Thank you, Jeff, and good afternoon, everyone. Over the course of 2024, while growth fell short of our goals, we nonetheless continue to demonstrate strong financial and operating leverage in our model. In particular, we delivered more than 750 basis points of annual adjusted EBITDA margin expansion and generate over $59 million of free cash flow. Please note that for the remainder of the call, as we review our business performance and outlook, I'll discuss our non-GAAP financial measures unless otherwise noted. In the fourth quarter, we generated total revenue of $179 million, which was up 6% from a year ago on growth across all operating segments. Gross profit was $97.5 million, a 54% gross margin in line with our gross margin in the prior year period. Total operating expense was $93.1 million or 52% of revenue, an improvement of 1 percentage point from the prior year period. Net income was $13.3 million or 7.4% of revenue, and adjusted EBITDA was $9.5 million or 5.3% of revenue. For the full year, we delivered total revenue of $695 million, up 9% from a year ago. Gross profit was $379.6 million, a 55% gross margin, up from 53% in the prior year. Total operating expense was $357.7 million or 52% of revenue, an improvement of 6 percentage points from the prior year on continued operating discipline across all functions. Net income was $55.6 million or 8% of revenue, and adjusted EBITDA was $41.5 million or 6% of revenue which was up from negative 1.6% in 2023 as we extended our long track record of consistently delivering improving scale and leverage each year. Moving to cash performance in the balance sheet. In Q4, we generated free cash flow of $7.4 million. And as I highlighted before, delivered more than $59 million for the full year. This included over $17 million in purchases of content assets, which at the beginning of 2024, we began treating like other categories of capital expenditures, effectively lowering our free cash flow computation. In the coming year, we've earmarked approximately $20 million to continue driving this content engine initiative, which importantly provides us with multiple long-term benefits, including pipeline visibility, platform exclusivity and more attractive revenue share economics over time. Our free cash flow performance bolstered our already healthy balance sheet. We ended the year with approximately $726 million of unrestricted cash, cash equivalents and marketable securities with no debt. This was approximately the same balance as the beginning of 2024 as the completion of our share repurchase program designed to target dilution was offset by strong operating cash generation. As we've discussed in the past, our capital allocation framework emphasizes the strategic optionality provided by our strong financial position, which we believe is particularly valuable given the industry's current pace of change as well as our desire to grow and enhance our leadership position. Now I'd like to discuss the fourth quarter performance of our segments, starting with Consumer. Consumer revenue was $101.7 million, up 5% from the prior year on solid demand for our Coursera Plus subscription offering. Following our October discussion of consumer retention trends, we made some progress stabilizing the month-to-month softness with our Coursera Plus subscriptions with initiatives planned across content, product and marketing in the coming year as we seek a return to more significant growth. Segment gross profit was $54.9 million or 54% of consumer revenue, up from 53% in the prior year period. And we added more than 6 million new registered learners despite Q4 being our historically lightest quarter in terms of top-of-funnel seasonality. Consistent with the regional trends we discussed in the past several quarters, softer growth in North America translates into a higher proportion of learner traffic coming from international regions, which, on average, have lower lifetime values given the price point. Moving to our Enterprise segment. Enterprise revenue was $62.3 million, up 7% from a year ago and driven by the momentum in our business and campus verticals. Segment gross margin was $42.6 million and remained at 68% of enterprise revenue. The total number of Paid Enterprise Customers increased to 1,612, up 18% from a year ago. And our net retention rate for Paid Enterprise Customers was 87%, reflecting the transitory budget dynamics we discussed in prior quarters. And finally, our Degrees segment. Degrees revenue was $15.2 million, up 14% from a year ago on growth in new students and scaling of recent programs. The total number of Degrees students grew 22% from a year ago to 26,700, primarily due to some sizable new student cohorts from more recently added programs in India. As a reminder, there's no content costs attributable to Degrees, so segment margin was 100% of revenue. As we discussed in October, we expect the Degrees market and broader opportunities to serve universities will continue to evolve, and we want to be clear about our focus in the near term. In 2024, we were selective in our pursuit of partnerships and programs that align with our platform's strengths. This approach, coupled with our recent expense initiatives to prioritize resources and investments, leads us to anticipate a revenue decline in our Degrees segment for Q1 and full year 2025. We continue to believe this is an attractive long-term market that we can uniquely serve but our pace of investment will shift to more productive near-term opportunities, such as Coursera for Campus, that can position us for a more immediate return to growth company revenue trajectory. Finally, turning to our financial outlook. As you know, our historical practice entering new year has been to provide some incremental color on the composition and pace of our business, particularly given the diverse global markets and broad ecosystem our platform serves. Over the next several months, Greg will work closely with the rest of the management team to assess areas and opportunities for growth, in support of Coursera's long-term strategy and the creation of shareholder value. Once he's had the opportunity to do so, our intention is to provide more detailed full year 2025 expectation in the coming months. For the full year 2025, we expect to continue to generate positive overall top line growth. We anticipate top line growth in both our Consumer and Enterprise segments and as previously mentioned, we expect our Degrees segment revenue to decline in the year. And we'll provide refined guidance on the magnitude of the overall growth and that of the segments in the coming months. For full year adjusted EBITDA, we remain committed to extending our strong track record of delivering annual EBITDA margin improvement. We have done so each year as a public company and even in the immediate years preceding our IPO. Our initial expectations are to once again expand annual EBITDA margin, though at a less aggressive pace in order to provide the company with the flexibility and capacity to invest in growth initiatives. At the end of the day, our long-term prospects and value will depend most heavily on us growing and succeeding in our large and attractive market. As we work to reignite the higher growth rates we enjoyed until just recently, we'll continue to operate in a disciplined financial fashion. Over the past 2 years, we delivered over 1,300 basis points of EBITDA margin expansion, including more than 750 basis points in 2024. We've made strong progress on our business model and ability to generate cash, particularly as the team demonstrated its ability to operate with financial discipline and delivered consistent productivity improvements in scaling our core capabilities. This scaling and a moderation of the aggressive pace of improvement is designed to provide us the room this year to further differentiate enhanced Coursera's leadership position. With regards to the quarterly guidance for Q1, we expect revenue to be in the range of $173 million to $177 million, representing growth of 2% to 5% year-over-year driven by our Enterprise and Consumer segment. For adjusted EBITDA, we're expecting a range of $8 million to $12 million. We entered 2025 in a position of operational and financial strength with the flexibility and stability needed to effectively execute on our long-term strategy and bolster our return to higher growth. We are confident now is the right time to be joined by Greg, who has decades of experience successfully navigating technology trends, steering product development and scaling new and international markets. I'm excited to work alongside him and to deliver Coursera's next phase of innovation, growth and industry leadership and in the process, create value for shareholders while transforming the global higher education market for the millions of learners, customers and educators we serve. With that, I'll open the call for questions.

Thank you for today's Q&A session, Andrew, Jeff and Ken will be available to answer questions. [Operator Instructions] We will now take our first question from the line of Stephen Sheldon with William Blair.

You have Pat McIlwee on for Stephen today. My first question, can you just talk more about the trends you're seeing in Enterprise and more specifically where you're seeing notable weakness or strength across campus B2B and government?

Yes. Pat, this is Jeff. So Enterprise, we obviously look across the 3 verticals: the business, government and campus. I'd say where we're seeing weakness has been in, not only expansion bookings, but also new bookings in Coursera for Government workforce development types of programs. I mean, to a large degree, in the years following COVID, a lot of money went into programs to kind of upscale and generally support individual citizens. Many of those budgets have turned out to be transitory. That's where we're seeing some weakness. And that's been weighing on the NRRs when you look at the NRRs in Q4 and the trend of NRRs that we've been seeing, and we talked about that in previous quarters. The other part of weakness that we're seeing notably is Coursera for Campus when it's not used for credit. So clearly, universities, colleges, vocational programs, they are really struggling to come up with curriculum that make the training that they do for students relevant to the workforce. And the faster things changed, the harder it is to keep pace. When universities and colleges and other educational institutions use Coursera, but kind of avoid the process of integrating into the curriculum and avoid all the faculty approval process, what we find is that the students are less likely to take the courses because they're not getting credit for it. And they're also more of a cost center than a profit center for the educational institution because they're not receiving tuition for the courses being offered. When you offer Coursera for Campus for credit, the opposite is true. Suddenly, students take it at higher rates. The completion rates among students who are taking Coursera partner courses for credit are the highest across our entire platform. And because it's for credit, the institution is receiving tuition, but the relative cost of delivering those credit hours is lower. So it's early days. We're seeing great progress in India and in certain regions where this embrace of online learning and integrating it into college degree programs has been faster. In Europe, we've seen it a little bit slower, but it clearly seems that this is the beginning. We are seeing the beginning of educational institutions around the world, realizing they cannot keep up without partnering with someone like a Coursera to provide this kind of content.

Briefly, as we look forward to '25 and discussing the overall enterprise growth, which we expect for 2025, in rank ordering since you asked the question before, C for C, we expect to deliver the most growth next year, followed by C for B and then C for G, of course, with the...

Yes. And one thing. I mean you asked about the weak spots. One other bright spot that we saw has been building, but we certainly saw it in Q4 is Coursera for Business in North America is looking pretty strong, driven mostly by AI upskilling efforts. I mean it seems like businesses in North America are embracing -- sort of seeing and embracing the need to upscale their employees the fastest. They're also the ones who seem to be differentiating and caring, discriminating between the generative AI content on Coursera versus other places. And frankly, the generative AI teaching and learning experiences that are built in the platform. So we're seeing signals that the demand is growing from businesses on generative AI and that the Coursera content and platform are pretty well differentiated against the competition for those kinds of buyers looking for this kind of a GenAI solution. And we think that North America is leading the world in the adoption of this in the business sector.

One more question, if I may. At your 2023 Investor Day, you had expected Degrees to be a core growth engine for this business and we're now looking at declining revenue in 2025. So I understand there's some shift in strategic priorities there. But can you just talk us through a bit what has changed in that business versus your prior expectations?

Sure, sure. I'd say a lot of it is 5 years ago, 7 years ago, online degrees were pretty novel. And during COVID, when campus is closed, online degrees became largely a necessity in some sort of form. Clearly, the OPM market, the online program managers, the more traditional bundled outsourced sort of online degree programs have struggled quite a bit. And what we saw and what we kind of outlined on Investor Day was a new type of an online degree that really couples together, the open learning that you can do on the courses from our partners that can count as credit towards a college degree. So the model that we see as being attractive and can emphasize this a bit is are those that are sort of based on open content being used for credit with what we call a degree pathway where you can start learning an open content in Coursera, and you can have that credit count as guaranteed credit on admission to a degree program. Now the degree programs, what we had been thinking before that there would be only the elite universities and they would be -- the degrees would be fully on Coursera. What we're seeing is a lot of Coursera for Campus customers, once they put Coursera and make it available and they integrate it into their curriculum, suddenly, they're like, look, students are already taking open content in my college courses and they're getting credit towards degrees, we would love to bridge that gap between what's happening on Coursera broadly and attracting students into our degree programs. So we see a tighter synergy between Coursera for Campus and degree recruitment, and that's where we're putting more of our focus.

The next question comes from Rishi Jaluria of RBC Capital Markets.

Jeff, it's been a pleasure working with you since IPO, wishing you all the best in the next chapter, and Greg looking forward to working with you. Maybe I wanted to start for you, Jeff. As we kind of reflect over your 7-year tenure as CEO, you've been through some major, major shifts, right, with kind of the initial onset of the company as you took over as CEO, COVID and the rise of virtual learning and now AI. And from the outside perspective, it seems like virtual learning while still transformational has not been quite as widely adopted or transformational or at the very least, we've snapped back to more traditional ways of learning than we would have expected if we rewound the tape back to late -- or early 2021, late 2020. And on the AI front, you've given some really encouraging stats in terms of course adoption and users and courses. But maybe the monetization or at least the disruption from AI that necessitates that hasn't been quite as profound as maybe we would have expected when ChatGPT first came out. Maybe can you walk us through your reflections over the past 7 years and through the [indiscernible] waves and just kind of how to think about the time line of things going forward?

Hey, Rishi, thank you. I'll make the narrative arc as short, but I'll jump a little bit into this question of generative AI and how that might play out, at least from my perspective. When I first got here back in 2017, a lot of what was driving Coursera's growth, and it really started literally with Andrew and Daphne and literally with the Stanford Machine Learning course that Andrew had done. It was heavily driven in the early days by data scientists wanting to know machine learning is not being taught in any educational institution. There were no incumbent credentials. And if you want to learn the skills of machine learning and prove that you knew them, you kind of come to Coursera, like that was kind of what you did. That expanded rapidly when Google launched the first IT support certificate. Suddenly, whereas when Andrew launched DeepLearning in November of 2017, 90% of the learners that came to take DeepLearning had already taken the machine learning class. It was like a sequel to Andrew and attracted a lot of the same kinds of people. These sort of, I call them like the data scientists, heat seekers, the ones who wanted to build the AI models. But when Google launched IT support, 90% of the people that came for those certificates had never been a Coursera learner before. It attracted a totally different audience. So part of in the early stages of what was driving our growth was a broadening of appeal largely because of the content from experts in AI to broader people looking for career advancement. And those professional certificates during that time period where some without a college degree could get trained in the skills and get a certificate credential from a recognized brand to do either a new career by switching or a new career at the student graduating and the entry-level professional certificates really fueled that next level of growth and a broadening of the platform. Now as it relates to COVID and generative AI, COVID, clearly, I mean, it closed almost every campus in every office in the world within the course of 30 to 60 days. Things just went through the roof because the urgency of action and the clarity of action was super clear, like people had no other choice, and it happened immediately. With generative AI -- so we saw the subsequent growth because of that. With generative AI, it's been a little different. I mean the recognition that something big is happening was fairly immediate. Understanding for companies or campuses, what to do about it, less immediate, regulatory uncertainty certainly slowed some things down. And there's also a question like, is this really valuable? Or is this sort of a gimmick? Or like what do I do with this stuff? But I would say that the urgency to act was slower, the clarity of strategy and action was fuzzier. Now what we're starting to see now, and we're seeing it largely because the models keep getting better and there's more evidence that the value is there, we're seeing a lot more interest, not in understanding the general nature of generative AI, but productivity gains, productivity gains. To me, what will lever the urgency of action and the clarity of action will be when companies realize that for certain types of tasks, in certain types of jobs and certain types of functions that they could be done much faster and much -- with much higher quality and much lower cost and to do that, you're going to need to train certain people. I think productivity unlock will be something that improves the urgency and clarity and will provide a similar kind of tailwinds to what we saw before. But it has been a little bit slower to get that kind of clarity and urgency and ability to see how much value there is that you can unlock through reskilling. And Andrew, I'd love to get some of your thoughts on this, too. I mean, from your vantage point, what you're seeing.

As one of our leading learner providers on our platform.

Right.

Thanks, Jeff, Ken. And thank you, Rishi, for the question. So Rishi, I want to -- actually, your comment that disruption from AI is not yet as profound as I think the hype had made it out to be. I know a few years ago, there was a lot of hype saying AI will be smarter than people and it will change everything. And maybe predictably, it takes some time for the amazing technology, which I think it is, to be mapped to concrete applications that then start to deliver value, not just in education, but I was actually at Davos at the World Economic Forum last week, and there's also a sentiment that, boy, they show us a lot of hype, and finally, across multiple businesses, the actually valuable applications are being built. So in terms of Coursera, I think we have a very strong base on top of which to innovate, to capture or to invest or to partner or whatever, whatever comes next. I do think that there is going to be a transformation of learning. A lot of learners are already asking Coursera Coach or sometimes asking ChatGPT or other large language models for information. I think there is a transformation that maybe is coming. And as Jeff made earlier, Coursera Coach and Course Builder, which we announced, I think, over a year ago, are getting real traction. Course Dialogue, which was announced more recently, we're seeing, frankly, much earlier signs of hopeful traction there, but it does take some time for these things to gain adoption. And I tell you, I've been meeting our CTO, Mustafa, fairly regularly, and our product team is working very hard to innovate. You heard about some of the things already announced. The team is working very hard on the long list of additional things that I find exciting. And in terms of Coursera's based from what you're building on, I think we're starting from a very strong position because I think many learners know us as a quality shop, some high-quality content. We have a very large user base. And our company culture from day 1 has always put learners first. So our team collectively up and down the organization, there's very deep learning empathy and people really wake up the morning and figure out, all right, how do I serve learners today? And I think that combination of team assets and culture, together with a healthy balance sheet, which also gives us more options, I think puts us in excellent position to invent or spot what comes next and then quickly use our platform to scale it to a lot of learners. So our team knows that there's work to be done and are busy not just rolling out some of the inventions you've already heard us talk about, but hopefully, new things to come as well.

The next question comes from Josh Baer with Morgan Stanley.