
Coursera (COUR)
We’re skeptical of Coursera. Its sales and EPS are expected to be weak over the next year, which doesn’t bode well for its share price.― StockStory Analyst Team
1. News
2. Summary
Why Coursera Is Not Exciting
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.
- Preference for prioritizing user growth over monetization has led to 5.2% annual drops in its average revenue per customer
- High marketing expenses suggest it needs to spend heavily on new customer acquisition to sustain momentum
- A bright spot is that its paying Users have grown by 19.6% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features
Coursera’s quality doesn’t meet our bar. We believe there are better opportunities elsewhere.
Why There Are Better Opportunities Than Coursera
High Quality
Investable
Underperform
Why There Are Better Opportunities Than Coursera
At $8.40 per share, Coursera trades at 23.7x forward EV/EBITDA. This multiple is high given its weaker fundamentals.
Paying a premium for high-quality companies with strong long-term earnings potential is preferable to owning challenged businesses with questionable prospects. That helps the prudent investor sleep well at night.
3. Coursera (COUR) Research Report: Q1 CY2025 Update
Online learning platform Coursera (NYSE:COUR) announced better-than-expected revenue in Q1 CY2025, with sales up 6.1% year on year to $179.3 million. Guidance for next quarter’s revenue was optimistic at $181 million at the midpoint, 2.4% above analysts’ estimates. Its non-GAAP profit of $0.12 per share was 52.6% above analysts’ consensus estimates.
Coursera (COUR) Q1 CY2025 Highlights:
- Revenue: $179.3 million vs analyst estimates of $175.3 million (6.1% year-on-year growth, 2.3% beat)
- Adjusted EPS: $0.12 vs analyst estimates of $0.08 (52.6% beat)
- Adjusted EBITDA: $18.7 million vs analyst estimates of $10.36 million (10.4% margin, 80.5% beat)
- Revenue Guidance for the full year is $725 million at the midpoint, roughly in line with what analysts were expecting
- EBITDA guidance for the full year is $50.75 million at the midpoint, below analyst estimates of $51.02 million
- Operating Margin: -8%, up from -17.6% in the same quarter last year
- Free Cash Flow Margin: 0%, down from 4.1% in the previous quarter
- Market Capitalization: $1.23 billion
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.
The company’s founders wanted to make education accessible to everyone, regardless of location or finances. Coursera addresses two consumer pain points of learning: access and convenience. First, taking courses and especially earning degrees can be financially out of reach for many. Second, learning traditionally involved a teacher and his/her students meeting in the same physical space at the same time.
Coursera digitizes learning and enables affordable, flexible, and self-paced learning. There is a free tier that gives access to select courses, but there are no assignments and certificates upon completion. There are multiple paid tiers that unlock additional courses, assignments, and access to degrees and certifications upon successful completion.
The largest source of revenue for the company is subscriptions for courses. However, Coursera’s revenue isn’t just from the busy working mom completing a statistics degree. Coursera may provide Nike with a social media advertising course to its incoming marketing employees. Nike pays for the courses, and the employees earn credentials. Another example is the Master's in Computer Science program offered by the University of Illinois on Coursera. It allows students to earn a Master's in computer science entirely online at a fraction of the cost of a traditional program.
4. Consumer Subscription
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).
5. Sales Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Thankfully, Coursera’s 16.4% annualized revenue growth over the last three years was solid. 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 6.1%, and its $179.3 million of revenue exceeded Wall Street’s estimates by 2.3%. Company management is currently guiding for a 6.3% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 3.4% 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.
6. Paying Users
User 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 19.6% annually to 175.3 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 Q1, Coursera added 26.8 million paying users , leading to 18% year-on-year growth. The quarterly print was lower than its two-year result, suggesting its new initiatives aren’t accelerating user growth just yet.
Revenue Per User
Average revenue per user (ARPU) is a critical metric to track because it measures how much the average user spends. ARPU is also a key indicator of how valuable its users are (and can be over time).
Coursera’s ARPU fell over the last two years, averaging 5.2% 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 ARPU by taking a more aggressive approach to monetization, it’s unclear whether users can continue growing at the current pace.
This quarter, Coursera’s ARPU clocked in at $1.02. It declined 10.2% year on year, worse than the change in its paying users .
7. Gross Margin & Pricing Power
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 53% gross margin over the last two years. Said differently, Coursera had to pay a chunky $47.01 to its service providers for every $100 in revenue.
Coursera’s gross profit margin came in at 54.6% this quarter, marking a 1.6 percentage point increase from 53% in the same quarter last year. Coursera’s full-year margin has also been trending up over the past 12 months, increasing by 1.9 percentage points. If this move continues, it could suggest better unit economics due to more leverage from its growing sales on the fixed portion of its cost of goods sold (such as servers).
8. User Acquisition Efficiency
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 61.1% 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.
9. EBITDA
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 4.2%. 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 15.4 percentage points over the last few years, as its sales growth gave it immense operating leverage.

In Q1, Coursera generated an EBITDA profit margin of 10.4%, up 5.5 percentage points year on year. The increase was solid, and because its EBITDA margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.
10. Earnings Per Share
We track the change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Coursera’s full-year EPS flipped from negative to positive over the last three years. This is encouraging and shows it’s at a critical moment in its life.

In Q1, Coursera reported EPS at $0.12, up from $0.07 in 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 to perform poorly. Analysts forecast its full-year EPS of $0.39 will hit $0.39.
11. Cash Is King
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 mediocre cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 4.9%, subpar for a consumer internet business.
Taking a step back, an encouraging sign is that Coursera’s margin expanded by 16.4 percentage points over the last few years. We have no doubt shareholders would like to continue seeing its cash conversion rise as it gives the company more optionality.

Coursera broke even from a free cash flow perspective in Q1. The company’s cash profitability regressed as it was 10.7 percentage points lower than in the same quarter last year, prompting us to pay closer attention. Short-term fluctuations typically aren’t a big deal because investment needs can be seasonal, but we’ll be watching to see if the trend extrapolates into future quarters.
12. Balance Sheet Assessment
Businesses that maintain a cash surplus face reduced bankruptcy risk.

Coursera is a well-capitalized company with $748 million of cash and no debt. This position is 61% 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.
13. Key Takeaways from Coursera’s Q1 Results
We were impressed by Coursera’s optimistic EBITDA guidance for next quarter, which blew past analysts’ expectations. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. On the other hand, its full-year EBITDA guidance slightly missed. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 3.6% to $7.96 immediately following the results.
14. Is Now The Time To Buy Coursera?
Updated: July 10, 2025 at 10:31 PM EDT
Before investing in or passing on Coursera, we urge you to understand the company’s business quality (or lack thereof), valuation, and the latest quarterly results - in that order.
Coursera isn’t a terrible business, but it isn’t one of our picks. 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 23.7x. This valuation tells us it’s a bit of a market darling with a lot of good news priced in - we think there are better stocks to buy right now.
Wall Street analysts have a consensus one-year price target of $9.77 on the company (compared to the current share price of $8.40).
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.