Coursera CEO on Earnings, AI, Pending Udemy Merger

0:00Greg Hart:They told us to expect change. They warned us about the transition. But honestly, they forgot the best part. This is the chapter where we finally focus on us. LifeMD delivers expert menopause and midlife care right from your home. From hormone health to holistic wellness, LifeMD helps you feel your best for the best years of your life. LifeMD, it's just getting good. Visit LifeMD.com slash goodlife. So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need.

0:40Greg Hart:Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business.

0:57The Bloomberg Businessweek Hosts:Let's create smarter business.

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1:39Greg Hart:Bloomberg Audio Studios. Podcasts, radio, news. This is Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio.

1:51The Bloomberg Businessweek Hosts:The Department of Justice probing Netflix tactics amid the Warner Brothers Discovery Deal investigation. This according to the Wall Street Journal. The Justice Department investigating whether Netflix engaged in anti-competitive taxes. It's probing the streaming network's proposed acquisition of Warner Discovery Studios and HBO Max streaming service. The department looking at whether Netflix's planned Warner deal could enrich or entrench its market power or lead to monopoly in the future. It's also reviewing Paramount's proposed acquisition.

2:21Greg Hart:Yeah, stock off its earlier highs. It's just still up, though, about 0.5 % here in the Friday trade. Hey, we want to get to Coursera. The company did report earnings last night. Forecast revenue for 2026 with the guidance beating the average analyst estimate. Stock has swung quite a bit today, up about 7 % at its highs, off more than 4 % at its lows. KeyBank and RBC both lowering their price targets on the stock today. And we just mentioned about this Warner Brothers discovery, waiting to get this deal done. And there is also an M &A story to Coursera as well. It is about a$1 billion market cap company, online education company.

2:59Greg Hart:It is down about 19 % year to date. 12 % Tim of the float is short.

3:04The Bloomberg Businessweek Hosts:I want to bring in Greg Hart, president and CEO of Coursera. Greg joins us from San Francisco. Greg, I want to start with the merger. Carol mentioned it in December, an all-stock merger between Coursera and Udemy. What is the status of that right now? We understand it's going to close in the second part of the year. The integration, how does it go? What does it mean in terms of the customer and user experience? And who's the boss?

3:31The Bloomberg Businessweek Hosts:Thank you, Tim, for the question. So we are going through the regulatory approval process right now. Nothing to share on that front, but we're moving through the paces. And then we'll hope to move through that and then go through shareholder approval. In terms of who's the boss, first of all, the customer is always the boss. In terms of the actual governance of the company, I will be the CEO of the combined company. And we are excited about that combination because of the opportunity to bring together two businesses that are really quite complementary. Udemy, the companies are roughly the same size in revenue.

4:09The Bloomberg Businessweek Hosts:So the combined revenue of the companies would be about$1.5 billion for 2025 with about 10 % adjusted EBITDA margins pre-synergies. We also announced at signing that we would deliver$115 million of synergies post-close within the first two years. And so a nice improvement in the operating margin that we have as a combined company. We are focused as we go through the planning process on exactly what that integrated company and platform will look like. So how do we think about pricing and packaging and promotions? Of course, how do we think about the leadership team? And then how do we bring the companies together to really drive not only better margins through the synergies, but also really over time, drive much higher revenue growth and do a better job of addressing the massive market opportunity in front of the companies?

5:04The Bloomberg Businessweek Hosts:Greg, there have been many examples of mergers that have been announced that haven't actually gone through for a whole multitude of reasons. Some of them have been regulatory. Some of them have involved other factors. What happens if this doesn't go through? Well, I'm very confident that it will. I mean, we operate in the education space, which is a massive space, you know, two trillion plus dollars that encompasses physical education. So day through 12 universities, vocational schools, it encompasses the online sector that we happen to be a part of and Udemy also is a part of. And then, of course, it encompasses all the other ways that people learn today.

5:44The Bloomberg Businessweek Hosts:And increasingly, that is through things like LLMs or YouTube or TikTok. We believe we have a very differentiated offering, but we are a very, very small player within that massive space. And we believe that the combination actually delivers more value to every one of our constituents, to our learners. they'll get access to more content, not only the 375 different university and industry partners that Coursera has, but the 85 ,000 plus subject matter experts that Udemy's content creator community has. And so it'll bring more choice, more learning opportunity. It'll be better for our content creators because they'll have access to a worldwide learner audience that's approaching 300 million registered learners across the two companies.

6:33The Bloomberg Businessweek Hosts:And it's better for our enterprise customers because we're able to deliver them the breadth of that content coming from that content creator network across Udemy and Coursera.

6:44Greg Hart:Hey, listen, one of the things, well, first of all, I have to just follow up on the deal, the combination with you and Udemy. Is it still, though, you said you're pretty confident about regulatory, Greg, so maybe still on track to close this deal in the second part of 2026?

6:59The Bloomberg Businessweek Hosts:Yes, we've heard nothing that would, you know, change our belief that it will close, you know, by the second half of 2026 and remain confident in getting all the regulatory approvals we need to do so.

7:09Greg Hart:One of the things I thought's interesting, I always think about your business. You mentioned university industry partners, you've got these subject experts. How are people most using it? Is it your corporate partnerships where people want retraining for their employees? Is it people on their own? Is it people who are just interested about different topics? Like tell us where the growth is. Is it all of it or certain parts of it?

7:33The Bloomberg Businessweek Hosts:Fantastic question, Carl. So our business as Coursera, an independent company, we are two-thirds consumer, one-third enterprise. From a revenue perspective, Udemy is the inverse. They are two-thirds enterprise, one-third consumer. For both companies, there is a huge focus on and growth in technology and specifically AI right now. And so So for Coursera, last year, we saw enrollments in Gen AI-related content at a rate of 15 enrollments per minute. In 2024, that was only eight enrollments per minute. And so a real burgeoning interest that I believe will continue in 2026 as well. And we are really focused on delivering not just learning, but delivering skills so that people can advance their careers.

8:21The Bloomberg Businessweek Hosts:86 % of the learners who come to Coursera come here to advance their careers. And so we are very focused on delivering them skills that they can use to advance their careers and that they can demonstrate, you know, real mastery of as they are in the workforce.

8:39Greg Hart:Hey, Greg, really quickly, 30 seconds. Are people in it, train, and then that's it, you don't see them again? Or how much of it is return business that the platform is sticking, and they're constantly coming back to learn more and forgive me, only about 25 seconds.

8:53The Bloomberg Businessweek Hosts:Well, more than 50 % of our consumer revenue is around Coursera Plus, which is our monthly or annual subscription. It's the best value for learners because they get access to all of that content. And those learners tend to stay obviously for longer than a single course learner might.

9:08Greg Hart:Cool stuff, as always. Stay in touch. Love talking with you. Greg Hart, president and CEO of Coursera joining us from the West Coast. They told us to expect change. They warned us about the transition. But honestly, they forgot the best part. This is the chapter where we finally focus on us. LifeMD delivers expert menopause and midlife care right from your home. From hormone health to holistic wellness, LifeMD helps you feel your best for the best years of your life. LifeMD, it's just getting good. Visit lifemd.com slash goodlife.

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10:32The Bloomberg Businessweek Hosts:Add paid for by Public Holdings. Brokered services by Public Investing, member FINRA SIPC. Advisory services by Public Advisors, SEC Registered Advisor. Crypto services by ZeroHash. All investing involves risk of loss. See complete disclosures at public.com slash disclosures. Hello, hello. I'm Malcolm Gladwell, host of the podcast Smart Talks with IBM. I recently sat down with IBM's chairman and CEO, Arvind Krishna. And I asked him, how can companies use AI to its fullest potential to create smarter business?

11:04Greg Hart:My one advice to them, pick areas you can scale. Don't pick the shiny little toys on the side.

11:11The Bloomberg Businessweek Hosts:For example?

11:13Greg Hart:If anybody has more than 10 % of what they had for customer service 10 years ago, they're already five years behind. If anybody is not using AI to make their developers who write software 30 % more productive today, with the goal of being 70 % more productive. Yeah. Wow. So we are not asking our clients to be the first experiment on it. We say, you can leverage what we did. We are happy to bring out all our learnings, including what needs to change in the process, because the biggest change is not technology. It's getting people to accept that there's a different way to do things.

11:55The Bloomberg Businessweek Hosts:To listen to the full conversation, visit ibm.com slash smarttalks.

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