Coursera (COUR)

Online learning platform Coursera (NYSE:COUR) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 10.3% year on year to $194.2 million. Guidance for next quarter’s revenue was better than expected at $191 million at the midpoint, 1.8% above analysts’ estimates. Its non-GAAP profit of $0.10 per share was 19.6% above analysts’ consensus estimates.

Company Overview

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.

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.

Competitors offering online legal or document services include Udemy (NASDAQ:UDMY), Microsoft’s LinkedIn Learning (NYSE:MSFT), and Skillsoft (NYSE:SKIL).

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Luckily, Coursera’s sales grew at a solid 14.2% compounded annual growth rate over the last three years. Its growth beat the average consumer internet company and shows its offerings resonate with customers.

This quarter, Coursera reported year-on-year revenue growth of 10.3%, and its $194.2 million of revenue exceeded Wall Street’s estimates by 2.1%. Company management is currently guiding for a 6.6% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 4.5% over the next 12 months, a deceleration versus the last three years. This projection doesn't excite us and implies its products and services will see some demand headwinds.

Customer 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 paying users , a key performance metric for the company, increased by 19% annually to 191 million in the latest quarter. This growth rate is among the fastest of any consumer internet business and indicates its offerings have significant traction.

In Q3, Coursera added 28.9 million paying users , leading to 17.8% year-on-year growth. The quarterly print was lower than its two-year result, suggesting its new initiatives aren’t accelerating customer growth just yet.

Revenue Per Customer

Average revenue per customer (ARPC) is a critical metric to track because it measures how much the average customer spends. ARPC is also a key indicator of how valuable its customers are (and can be over time).

Coursera’s ARPC fell over the last two years, averaging 7.3% annual declines. This isn’t great, but the increase in paying users is more relevant for assessing long-term business potential. We’ll monitor the situation closely; if Coursera tries boosting ARPC by taking a more aggressive approach to monetization, it’s unclear whether customers can continue growing at the current pace.

This quarter, Coursera’s ARPC clocked in at $1.02. It declined 6.4% year on year, worse than the change in its paying users .

For internet subscription businesses like Coursera, gross profit tells us how much money the company gets to keep after covering the base cost of its products and services, which typically include customer service, data center and infrastructure expenses, royalties, and other content-related costs if the company’s offerings include features such as video or music.

Coursera’s gross margin is slightly below the average consumer internet company, giving it less room to invest in areas such as product and marketing to grow its presence. As you can see below, it averaged a 54% gross margin over the last two years. That means Coursera paid its providers a lot of money ($46.02 for every $100 in revenue) to run its business.

This quarter, Coursera’s gross profit margin was 54.6%, in line with the same quarter last year. Zooming out, the company’s full-year margin has remained steady over the past 12 months, suggesting its input costs have been stable and it isn’t under pressure to lower prices.

Unlike enterprise software that’s typically sold by dedicated sales teams, consumer internet businesses like Coursera grow from a combination of product virality, paid advertisement, and incentives.

It’s very expensive for Coursera to acquire new users as the company has spent 61% of its gross profit on sales and marketing expenses over the last year. This inefficiency indicates a highly competitive environment with little differentiation between Coursera and its peers.

Coursera has managed its cost base well over the last two years. It demonstrated solid profitability for a consumer internet business, producing an average EBITDA margin of 7%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

Analyzing the trend in its profitability, Coursera’s EBITDA margin rose by 18.6 percentage points over the last few years, as its sales growth gave it immense operating leverage.

In Q3, Coursera generated an EBITDA margin profit margin of 8%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Revenue trends explain a company’s historical growth, but the change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

In Q3, Coursera reported adjusted EPS of $0.10, in line with the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Coursera’s full-year EPS of $0.42 to shrink by 3.1%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Coursera has shown impressive cash profitability, giving it the option to reinvest or return capital to investors. The company’s free cash flow margin averaged 10.2% over the last two years, better than the broader consumer internet sector.

Taking a step back, we can see that Coursera’s margin expanded by 21.5 percentage points over the last few years. This is encouraging, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability.

Coursera’s free cash flow clocked in at $26.6 million in Q3, equivalent to a 13.7% margin. This result was good as its margin was 4.2 percentage points higher than in the same quarter last year, building on its favorable historical trend.

Companies with more cash than debt have lower bankruptcy risk.

Coursera is a well-capitalized company with $797.7 million of cash and no debt. This position is 46.6% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

We were impressed by how significantly Coursera blew past analysts’ EBITDA expectations this quarter. We were also glad it expanded its number of customers. On the other hand, its EBITDA guidance for next quarter missed. Overall, this print was mixed. The market seemed to be hoping for more convincing guidance, and the stock traded down 3.7% to $10.14 immediately after reporting.

Updated: December 4, 2025 at 9:28 PM EST

Are you wondering whether to buy Coursera or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.

Coursera’s business quality ultimately falls short of our standards. Although its revenue growth was solid over the last three years, it’s expected to deteriorate over the next 12 months and its ARPU has declined over the last two years. And while the company’s rising cash profitability gives it more optionality, the downside is its projected EPS for the next year is lacking.

Coursera’s EV/EBITDA ratio based on the next 12 months is 20.3x. This valuation tells us a lot of optimism is priced in - we think other companies feature superior fundamentals at the moment.

Wall Street analysts have a consensus one-year price target of $12.38 on the company (compared to the current share price of $8.33).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.