10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to ____

Commission File Number: 001-40275

COURSERA, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	45-3560292
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
381 E. Evelyn Ave. Mountain View, California	94041
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (650) 963-9884

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.00001 par value	COUR	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 28, 2022, the registrant had 144,051,175 shares of common stock, $0.00001 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	2
	Condensed Consolidated Balance Sheets (Unaudited)	2
	Condensed Consolidated Statements of Operations (Unaudited)	3
	Condensed Consolidated Statements of Comprehensive Loss (Unaudited)	4
	Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows (Unaudited)	6
	Notes to Condensed Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30
PART II.	OTHER INFORMATION	32
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68
Item 6.	Exhibits	69
Signatures		70

PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

COURSERA, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

(Unaudited)

	March 31, 2022			December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	361,315		$	580,658
Marketable securities		419,104			241,117
Accounts receivable, net of allowance for doubtful accounts of $195 and $105 as of March 31, 2022 and December 31, 2021, respectively		54,185			34,396
Deferred costs, net		20,031			19,666
Prepaid expenses and other current assets		23,269			16,494
Total current assets		877,904			892,331
Property, equipment, and software, net		26,403			24,725
Operating lease right-of-use assets		15,050			16,321
Intangible assets, net		9,703			10,091
Restricted cash		2,061			2,061
Other assets		15,743			13,381
Total assets	$	946,864		$	958,910
Liabilities and Stockholders’ Equity
Current liabilities:
Educator partners payable	$	53,897		$	49,206
Other accounts payable and accrued expenses		11,263			23,257
Accrued compensation and benefits		16,036			18,353
Operating lease liabilities, current		8,060			8,031
Deferred revenue, current		106,836			94,637
Other current liabilities		7,745			7,639
Total current liabilities		203,837			201,123
Operating lease liabilities, non-current		10,278			11,864
Deferred revenue, non-current		3,109			3,851
Other liabilities		955			559
Total liabilities		218,179			217,397
Commitments and contingencies (Note 12)
Stockholders’ equity:
Preferred stock, $0.00001 par value—10,000,000 shares authorized as of March 31, 2022 and December 31, 2021; no shares issued and outstanding as of March 31, 2022 and December 31, 2021		—			—
Common stock, $0.00001 par value—300,000,000 shares authorized as of March 31, 2022 and December 31, 2021; 146,578,434 shares issued and 143,830,496 shares outstanding as of March 31, 2022, and 144,653,979 shares issued and 141,906,041 shares outstanding as of December 31, 2021		1			1
Additional paid-in capital		1,262,283			1,235,231
Treasury stock—at cost, 2,747,938 shares as of March 31, 2022 and December 31, 2021		(4,701	)		(4,701	)
Accumulated other comprehensive loss		(1,864	)		(252	)
Accumulated deficit		(527,034	)		(488,766	)
Total stockholders’ equity		728,685			741,513
Total liabilities and stockholders’ equity	$	946,864		$	958,910

See notes to unaudited condensed consolidated financial statements.

2

COURSERA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(In thousands, except share and per share data)

(Unaudited)

	Three Months Ended March 31,
	2022			2021
Revenue	$	120,433		$	88,362
Cost of revenue		42,803			38,826
Gross profit		77,630			49,536
Operating expenses:
Research and development		37,955			22,140
Sales and marketing		51,667			32,613
General and administrative		25,178			13,144
Total operating expenses		114,800			67,897
Loss from operations		(37,170	)		(18,361	)
Interest income		335			80
Other expense, net		(425	)		(7	)
Loss before income taxes		(37,260	)		(18,288	)
Income tax expense		1,008		375
Net loss	$	(38,268	)	$	(18,663	)
Net loss per share—basic and diluted	$	(0.27	)	$	(0.45	)
Weighted average shares used in computing net loss per share—basic and diluted		143,026,907			41,218,355

See notes to unaudited condensed consolidated financial statements.

3

COURSERA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Loss

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2022			2021
Net loss	$	(38,268	)	$	(18,663	)
Change in unrealized (loss) gain on marketable securities, net of tax		(1,612	)		3
Comprehensive loss	$	(39,880	)	$	(18,660	)

See notes to unaudited condensed consolidated financial statements.

4

COURSERA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(In thousands, except share data)

(Unaudited)

	Redeemable																		Accumulated
	Convertible									Additional									Other						Total
	Preferred Stock				Common Stock					Paid-In			Treasury Stock						Comprehensive			Accumulated			Stockholders’
	Shares		Amount		Shares			Amount		Capital			Shares			Amount			Income (Loss)			Deficit			Equity (Deficit)
Balance—December 31, 2021		—	$	—		144,653,979		$	1	$	1,235,231			(2,747,938	)	$	(4,701	)	$	(252	)	$	(488,766	)	$	741,513
Issuance of common stock upon exercise of options		—		—		1,728,006			—		6,450			—			—			—			—			6,450
Vesting of restricted stock units		—		—		322,335			—		—			—			—			—			—			—
Tax withholding on vesting of restricted stock units		—		—		(125,886	)		—		(2,625	)		—			—			—			—			(2,625	)
Stock compensation expense		—		—		—			—		23,227			—			—			—			—			23,227
Change in unrealized loss on marketable securities		—		—		—			—		—			—			—			(1,612	)		—			(1,612	)
Net loss		—		—		—			—		—			—			—			—			(38,268	)		(38,268	)
Balance—March 31, 2022		—	$	—		146,578,434		$	1	$	1,262,283			(2,747,938	)	$	(4,701	)	$	(1,864	)	$	(527,034	)	$	728,685
Balance—December 31, 2020		75,305,400	$	462,293		43,049,228		$	—	$	126,408			(2,747,938	)	$	(4,701	)	$	20		$	(343,551	)	$	(221,824	)
Issuance of common stock upon exercise of options		—		—		2,891,926			—		8,564			—			—			—			—			8,564
Vesting of early exercise stock options		—		—		—			—		21			—			—			—			—			21
Stock compensation expense		—		—		—			—		5,810			—			—			—			—			5,810
Change in unrealized gain on marketable securities		—		—		—			—		—			—			—			3			—			3
Net loss		—		—		—			—		—			—			—			—			(18,663	)		(18,663	)
Balance—March 31, 2021		75,305,400	$	462,293		45,941,154		$	—	$	140,803			(2,747,938	)	$	(4,701	)	$	23		$	(362,214	)	$	(226,089	)

See notes to unaudited condensed consolidated financial statements.

5

COURSERA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2022			2021
Cash flows from operating activities:
Net loss	$	(38,268	)	$	(18,663	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		4,182			2,931
Stock-based compensation		21,978			5,284
Amortization or accretion of marketable securities		510			177
Other		2,119			98
Changes in operating assets and liabilities:
Accounts receivable, net		(19,997	)		5,041
Prepaid expenses and other assets		(11,467	)		260
Operating lease right-of-use assets		1,271			1,345
Accounts payable and accrued expenses		(6,670	)		(3,032	)
Accrued compensation and other liabilities		(1,815	)		(4,330	)
Operating lease liabilities		(1,557	)		(1,582	)
Deferred revenue		11,457			8,124
Net cash used in operating activities		(38,257	)		(4,347	)
Cash flows from investing activities:
Purchases of marketable securities		(180,552	)		—
Proceeds from maturities of marketable securities		—			82,500
Purchases of property, equipment, and software		(400	)		(307	)
Capitalized internal-use software costs		(3,544	)		(3,985	)
Purchases of content assets		(617	)		(170	)
Net cash (used in) provided by investing activities		(185,113	)		78,038
Cash flows from financing activities:
Proceeds from exercise of stock options		6,947			8,564
Payment of deferred offering costs		(295	)		(4,061	)
Payment of tax withholding on vesting of restricted stock units		(2,625	)		—
Net cash provided by financing activities		4,027			4,503
Net (decrease) increase in cash, cash equivalents, and restricted cash		(219,343	)		78,194
Cash, cash equivalents, and restricted cash—Beginning of period		582,719			82,426
Cash, cash equivalents, and restricted cash—End of period	$	363,376		$	160,620
Reconciliation of cash, cash equivalents, and restricted cash:
Cash and cash equivalents	$	361,315		$	158,072
Restricted cash		2,061			2,548
Total cash, cash equivalents, and restricted cash	$	363,376		$	160,620
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	808		$	530
Supplemental disclosure of noncash investing and financing activities:
Stock-based compensation capitalized as internal-use software costs	$	1,249		$	526
Unpaid deferred offering costs	$	—		$	2,182

See notes to unaudited condensed consolidated financial statements.

6

COURSERA, INC. AND SUBSIDIARIES

NOTES TO ConDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(In thousands, except share and per share data)

1.ORGANIZATION AND DESCRIPTION OF BUSINESS

Description of Business

Coursera, Inc., a Delaware public benefit corporation, together with its subsidiaries (“Coursera”, the “Company”, “we”, “us” or “our”), is an online learning platform that connects learners, educators, and institutions with the goal of providing world-class educational content that is affordable, accessible, and relevant. We combine content, data, and technology into a platform that is customizable and extensible to both individual learners and institutions. We partner with leading university and industry partners (“educator partners”) to bring quality higher education to a broad range of individuals, businesses, organizations, and governments. We also sell directly to institutions, including employers, colleges and universities, organizations, and governments, to enable their employees, students, and citizens to gain critical skills aligned to the job markets of today and tomorrow. Our corporate headquarters is located in Mountain View, California.

2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation—The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and following the requirements of the Securities and Exchange Commission (“SEC”), for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP can be condensed or omitted. These unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, that are necessary for a fair statement of the Company’s financial information. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any other interim period or for any other future year. The balance sheet as of December 31, 2021 has been derived from audited consolidated financial statements at that date but does not include all information required by GAAP for annual consolidated financial statements.

These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the SEC on March 3, 2022.

Principles of Consolidation—The unaudited condensed consolidated financial statements include the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Segment Information—The Company defines its segments as those operations the chief operating decision maker (“CODM”), determined to be the Chief Executive Officer of the Company, regularly reviews to allocate resources and assess performance. For the three months ended March 31, 2022 and 2021, the Company operated under three segments: Consumer, Enterprise, and Degrees. The Company continually monitors and reviews its segment reporting structure in accordance with Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting, to determine whether any changes have occurred that would impact its reportable segments. For further information on the Company’s segment reporting, see Note 15 “Segment and Geographic Information.”

Use of Estimates—The preparation of these unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and related disclosures at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, the Company evaluates its estimates, including those related to the fair value of common stock and stock-based awards; period of benefit for capitalized commissions; internal-use software costs; useful lives of long-lived assets; the carrying value of operating lease right-of-use assets; valuation of intangible assets and income tax expense, including the valuation of deferred tax assets and liabilities, among others.

Summary of Significant Accounting Policies

There have been no significant changes to the Company’s significant accounting policies as of and for the three months ended March 31, 2022 as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the SEC on March 3, 2022.

7

Concentration of Credit Risk—Financial instruments that potentially subject the Company to concentration of credit risk consist of cash, cash equivalents, and marketable securities. The Company invests only in high-credit-quality instruments and maintains its cash equivalents and marketable securities in fixed-income securities. The Company places its cash primarily with domestic financial institutions that are federally insured within statutory limits.

For purposes of assessing concentration of credit risk and significant customers, a group of customers under common control or customers that are affiliates of each other are regarded as a single customer. For the three months ended March 31, 2022 and 2021, the Company did not have any customers that accounted for more than 10% of the Company’s revenue. As of March 31, 2022, the Company had one customer that accounted for 22% of its net accounts receivable balance that has since been collected within typical business terms. As of December 31, 2021, no customer accounted for more than 10% of the Company’s net accounts receivable balance.

New Accounting Pronouncements Recently Adopted

Coursera is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, the unaudited condensed consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

The JOBS Act does not preclude an emerging growth company from early adopting new or revised accounting standards. We early adopted Accounting Standards Update (“ASU”) 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, effective July 1, 2021. The Company expects to use the extended transition period for any other new or revised accounting standards during the period for which the Company remains an emerging growth company.

In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This standard simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC Topic 740, Income Taxes, related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. The guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill and the allocation of consolidated income taxes to separate financial statements of entities not subject to income tax. Upon adoption, certain aspects of this standard are applied retrospectively for all periods presented while other aspects are applied on a modified retrospective basis through a cumulative-effect adjustment to accumulated deficit as of the beginning of the fiscal year of adoption. We adopted ASU 2019-12 effective January 1, 2022, and the adoption did not have a material impact on our unaudited condensed consolidated financial statements and related disclosures.

New Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses, which provides new authoritative guidance with respect to the measurement of credit losses on financial instruments. This update changes the impairment model for most financial assets and certain other instruments by introducing a current expected credit loss (“CECL”) model. The CECL model is a forward-looking approach based on expected losses rather than incurred losses, requiring entities to estimate and record losses expected over the remaining contractual life of an asset. The guidance will be effective for the Company in 2023 and early adoption beginning in 2019 is permitted. The Company is currently evaluating the impact of adopting this guidance on the consolidated financial statements and related disclosures.

8

3. REVENUE RECOGNITION

Contract Balances—The Company’s contract assets and liabilities as of March 31, 2022, December 31, 2021, and January 1, 2021 were as follows:

	March 31, 2022		December 31, 2021		January 1, 2021
Contract assets:
Billed accounts receivable, net of allowance for doubtful accounts	$	44,532	$	22,286	$	39,976
Unbilled accounts receivable		9,653		12,110		745
Total contract assets	$	54,185	$	34,396	$	40,721
Contract liabilities:
Deferred revenue	$	109,945	$	98,488	$	80,642
Total contract liabilities	$	109,945	$	98,488	$	80,642

Revenue recognized during the three months ended March 31, 2022 and 2021 that was included in the deferred revenue balances at the beginning of the year was $47,160 and $37,522, respectively.

Remaining Performance Obligations—Remaining performance obligations represent future promises to transfer goods or services under noncancelable contracts for which revenue has not yet been recognized and we do not yet have the right to bill. As of March 31, 2022, the Company had remaining performance obligations of $273,107 and expects to recognize approximately 64% as revenue over the next 12 months and the remainder thereafter.

Costs to Obtain and Fulfill a Contract—During the three months ended March 31, 2022 and 2021, the Company capitalized $2,493 and $2,289, respectively, of commissions and related payroll tax expenditures and amortized $2,744 and $1,666, respectively, to sales and marketing expense. As of March 31, 2022 and December 31, 2021, the amount of deferred commissions and related payroll tax expenditures included in deferred costs and in other assets was $10,087 and $8,240, and $9,761 and $8,817, respectively.

During the three months ended March 31, 2022, the Company recognized an impairment loss of $1,886 relating to deferred partner fees associated with content from Russian educator partners that the Company does not expect to recover. This was recorded within general and administrative expenses in the unaudited condensed consolidated statements of operations.

4. FAIR VALUE MEASUREMENTS

The Company’s assets and liabilities that were measured at fair value by level within the fair value hierarchy as of March 31, 2022 and December 31, 2021 were as follows:

	March 31, 2022
	Fair Value		Level 1
Financial assets:
Cash equivalents—money market funds	$	315,453	$	315,453
Marketable securities:
U.S. government Treasury bills		419,104		419,104
Total financial assets	$	734,557	$	734,557

	December 31, 2021
	Fair Value		Level 1
Financial assets:
Cash equivalents—money market funds	$	539,091	$	539,091
Marketable securities:
U.S. government Treasury bills		241,117		241,117
Total financial assets	$	780,208	$	780,208

The Company remeasures certain assets, including intangible assets and its equity-method investment in a private company, at fair value on a nonrecurring basis when there are identifiable events or changes in circumstances that may have a significant adverse impact on the fair value of these assets. No such events or changes occurred during the three months ended March 31, 2022 and 2021.

9

5. MARKETABLE SECURITIES

The following table presents the Company’s available-for-sale marketable securities as of March 31, 2022 and December 31, 2021:

	March 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. government Treasury bills	$	420,968	$	—	$	(1,864	)	$	419,104
Total marketable securities	$	420,968	$	—	$	(1,864	)	$	419,104

	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. government Treasury bills	$	241,369	$	—	$	(252	)	$	241,117
Total marketable securities	$	241,369	$	—	$	(252	)	$	241,117

The gross realized gains and losses related to the Company’s marketable securities were not material for the three months ended March 31, 2022 and 2021.

The following table presents the amortized cost and fair value of available-for-sale marketable securities by contractual maturity date as of March 31, 2022 and December 31, 2021:

	March 31, 2022				December 31, 2021
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	420,968	$	419,104	$	241,369	$	241,117

Investments in an unrealized loss position consisted of the following as of March 31, 2022 and December 31, 2021:

	March 31, 2022					December 31, 2021
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. government Treasury bills	$	419,104	$	(1,864	)	$	241,117	$	(252	)
Total investments in an unrealized loss position	$	419,104	$	(1,864	)	$	241,117	$	(252	)

As of March 31, 2022 and December 31, 2021, no investments were in a continuous unrealized loss position for more than 12 months. The Company does not intend to sell any of these investments, and it is not more likely than not that the Company would be required to sell these investments before recovery of their amortized cost basis, which may be at maturity.

6. CONSOLIDATED BALANCE SHEET COMPONENTS

Property, Equipment, and Software—Property, equipment, and software, net as of March 31, 2022 and December 31, 2021 consisted of the following:

	Estimated Useful Life	March 31, 2022			December 31, 2021
Internal-use software	2 to 5 years	$	40,301		$	35,508
Computer equipment and software	2 years		4,566			4,163
Leasehold improvements	Shorter of useful life and remaining lease term		7,140			7,119
Furniture and fixtures	5 years		3,051			3,051
Total property, equipment, and software			55,058			49,841
Less accumulated depreciation and amortization			(28,655	)		(25,116	)
Property, equipment, and software—net		$	26,403		$	24,725

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Depreciation and amortization expense related to property, equipment, and software for the three months ended March 31, 2022 and 2021 was $3,539 and $2,504, respectively, which included amortization expense for internal-use software of $2,811 and $1,830, respectively, that is recorded within cost of revenue in the unaudited condensed consolidated statements of operations.

Intangible Assets—Intangible assets, net as of March 31, 2022 and December 31, 2021 consisted of the following:

		March 31, 2022							December 31, 2021
	Estimated Useful Life	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Gross Carrying Value		Accumulated Amortization			Net Carrying Value
Assembled workforce	3 years	$	181	$	(158	)	$	23	$	181	$	(143	)	$	38
Developed technology	6 years		8,446		(3,683	)		4,763		8,446		(3,337	)		5,109
Content assets	5 years		5,976		(1,059	)		4,917		5,721		(777	)		4,944
Intangible assets		$	14,603	$	(4,900	)	$	9,703	$	14,348	$	(4,257	)	$	10,091

During the three months ended March 31, 2022 and 2021, the Company capitalized $255 and $170 of content assets, respectively. Intangible assets amortization expense was $643 and $427 for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, the weighted-average remaining amortization period was 0.4 years for assembled workforce, 3.4 years for developed technology, and 4.1 years for content assets. Amortization of assembled workforce is included in research and development expenses, and amortization of developed technology and content assets is included in cost of revenue in the unaudited condensed consolidated statements of operations.

As of March 31, 2022, future expected amortization expense for intangible assets was as follows:

Years Ending December 31
Remainder of 2022	$	1,980
2023		2,602
2024		2,609
2025		2,081
2026		415
2027		16
Total	$	9,703

7. INCOME TAXES

The provision or benefit from income taxes for interim periods is determined using an estimate of the Company’s annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the Company updates the estimate of the annual effective tax rate, and if the estimated tax rate changes, the Company records a cumulative adjustment.

Income tax expense for the three months ended March 31, 2022 and 2021 resulted in an effective tax rate of (2.7)% and (2.1)%, respectively. The difference between the effective tax rate and the U.S. federal statutory rate is primarily due to a valuation allowance established on the Company’s federal and state net deferred tax assets, foreign operations and excess tax benefits (deficiencies) related to stock-based compensation. Due to tax losses and the offsetting valuation allowance, the Company did not record a provision for U.S. income taxes in either period.

As of March 31, 2022, the Company has provided a valuation allowance against certain federal and state deferred tax assets. Management continues to evaluate the realizability of deferred tax assets and the related valuation allowance. If management’s assessment of the deferred tax assets or the corresponding valuation allowance were to change, the Company would record the related adjustment to income during the period in which management makes the determination.

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8. REDEEMABLE CONVERTIBLE PREFERRED STOCK

Redeemable Convertible Preferred Stock—Upon the closing of the Company’s initial public offering on April 4, 2021 (the "IPO"), all outstanding shares of its redeemable convertible preferred stock automatically converted into 75,305,400 shares of common stock on a one-for-one basis. As of March 31, 2022, there were no shares of redeemable convertible preferred stock issued and outstanding.

9. STOCKHOLDERS’ EQUITY (DEFICIT)

Preferred Stock—In connection with the IPO, the Company authorized the issuance of 10,000,000 shares of undesignated preferred stock with a par value of $0.00001 per share, with rights and preferences, including voting rights, to be designated from time to time by the board of directors. As of March 31, 2022, there were no shares of preferred stock issued or outstanding.

Stock Incentive Plans—In 2013, the Company adopted the Coursera, Inc. Stock Incentive Plan (“Stock Incentive Plan”) and in 2014, adopted the Coursera, Inc. 2014 Executive Stock Incentive Plan (together, the “Predecessor Plans”), pursuant to which the Company granted a combination of incentive and nonstatutory stock options and restricted stock units (“RSUs”).

The Predecessor Plans were terminated in March 2021 in connection with the IPO but continue to govern the terms and conditions of the outstanding awards granted pursuant to the Predecessor Plans. No further equity awards will be granted under the Predecessor Plans.

The Company adopted the 2021 Stock Incentive Plan (the “2021 Plan”) and 2021 Employee Stock Purchase Plan (the “ESPP”) in February 2021, which became effective on March 30, 2021 when the registration statement for the IPO was declared effective (collectively, the 2021 Plan, the ESPP, and the Predecessor Plans are referred to as the “Plans”). The 2021 Plan provides for the granting of incentive and nonstatutory stock options, RSUs, and other equity awards. Pursuant to the ESPP, participants may contribute up to 15 percent of their eligible compensation to purchase shares of common stock at 85 percent of the lower of the market price of the Company’s common stock on the date of commencement of the applicable offering period or on the last day of each six-month purchase period. The offering periods start on the first trading day on or after May 11 and November 11 of each year, except for the first offering period, which commenced on the Company’s IPO effective date, or March 30, 2021, and ends on May 10, 2023.

As of March 31, 2022, 21,039,110 shares of the Company’s common stock, plus certain automatic annual increases in the number of shares of the Company’s common stock reserved for future issuance under the 2021 Plan, and any shares subject to outstanding awards under the Predecessor Plans after the effective date of the 2021 Plan that are subsequently (i) forfeited or terminated, (ii) not issued because such award is settled in cash, or (iii) withheld or reacquired to satisfy the applicable exercise, strike, or purchase price, or a tax withholding obligation, were reserved for future issuance under the 2021 Plan. As of March 31, 2022, 3,991,012 shares of the Company’s common stock, plus certain automatic annual increases in the number of shares of the Company’s common stock, were reserved for issuance under the ESPP.

Stock Options—The Company may grant options at prices not less than the grant date fair value. These options generally expire 10 years from the grant date. Incentive stock options and nonstatutory options generally vest ratably over a four-year service period.

Stock option activity under the Plans for the three months ended March 31, 2022 was as follows:

	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in Years)		Aggregate Intrinsic Value
Balance—December 31, 2021		23,000,872		$	5.62		6.81	$	436,630
Granted		—			—
Exercised		(1,728,006	)		3.73
Canceled		(360,985	)		6.73
Balance—March 31, 2022		20,911,881		$	5.75		6.62	$	366,105
Options vested		13,445,692		$	3.60		5.82	$	261,336

Aggregate intrinsic value represents the difference between the exercise price of the options and the estimated fair value of the Company’s common stock as determined by the board of directors. The aggregate intrinsic value of options exercised was $29,924 for the three months ended March 31, 2022.

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RSUs—During the year ended December 31, 2020, the Company began granting RSUs to its employees and directors. RSUs granted prior to the IPO had service-based and performance-based vesting conditions, both of which must be satisfied in order for RSUs to vest. The service-based vesting condition for these awards is typically satisfied over four years with a cliff vesting period of one year and continued vesting quarterly thereafter. The performance-based vesting condition is satisfied on the earlier of (i) a change in control event or (ii) the first sale of the Company’s common stock pursuant to an initial public offering. Both events were not deemed probable until consummated. Upon the first sale of the Company’s common stock pursuant to the IPO on April 5, 2021, the performance-based vesting condition was satisfied, and therefore, the Company recognized cumulative stock-based compensation expense of $16,803 using the accelerated attribution method for the portion of the awards for which the service-based vesting condition had been satisfied. RSUs granted after the IPO do not contain the performance-based vesting condition described above, and the related stock-based compensation expense is recognized on a straight-line basis over the requisite service period.

RSU activity during the three months ended March 31, 2022 was as follows:

	Number of Shares			Weighted-Average Grant Fair Value		Aggregate Intrinsic Value
Unvested balance—December 31, 2021		7,387,288		$	29.68	$	180,545
Granted		1,075,008			21.01
Released		(322,335	)		30.81
Forfeited		(198,372	)		31.31
Unvested balance—March 31, 2022		7,941,589		$	28.42	$	182,974

Stock-Based Compensation Expense—The Company records stock-based compensation expense based on the fair value as determined on the grant date. The Company estimates the fair value of stock options and shares of common stock to be issued under the ESPP utilizing the Black-Scholes valuation model. Key assumptions of the Black-Scholes valuation model are the risk-free interest rate, expected volatility, expected term, and expected dividends. The Company recognizes such compensation expense on a straight-line basis over the vesting period for each award. The fair value of restricted stock awards equals the market value of the underlying stock on the grant date. These amounts are estimates and, thus, may not be reflective of actual future results, nor amounts ultimately realized by recipients of these grants.

Stock-based compensation expense for the three months ended March 31, 2022 and 2021 is classified in the unaudited condensed consolidated statements of operations as follows:

	Three Months Ended March 31,
	2022		2021
Cost of revenue	$	577	$	107
Research and development		9,743		2,028
Sales and marketing		6,274		1,347
General and administrative		5,384		1,802
Total	$	21,978	$	5,284

The Company capitalized $1,249 and $526 of stock-based compensation related to its internal-use software during the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, there was a total of $44,960 unrecognized employee compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of approximately 2.1 years. In addition, as of March 31, 2022, total unrecognized compensation cost related to unvested RSUs was $158,969, which is expected to be recognized over a weighted-average period of approximately 2.5 years. Total unrecognized compensation cost related to the ESPP as of March 31, 2022 was $12,611, which is expected to be recognized over a weighted-average period of approximately 0.8 years.

Common Stock Reserved for Issuance—The Company’s common stock reserved for future issuance as of March 31, 2022 and December 31, 2021 was as follows:

	March 31, 2022		December 31, 2021
Stock options outstanding		20,911,881		23,000,872
RSUs outstanding		7,941,589		7,387,288
Shares available for future grants		25,030,122		16,905,525
Total shares of common stock reserved		53,883,592		47,293,685

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10. NET LOSS PER SHARE

The following table presents the calculation of basic and diluted net loss per share for the three months ended March 31, 2022 and 2021:

	Three Months Ended March 31,
	2022			2021
Numerator:
Net loss	$	(38,268	)	$	(18,663	)
Denominator:
Weighted-average shares used in computing net loss per share—basic and diluted		143,026,907			41,218,355
Net loss per share—basic and diluted	$	(0.27	)	$	(0.45	)

The following potentially dilutive securities were excluded from the computation of diluted net loss per share calculations for the periods presented because the impact of including them would have been anti-dilutive:

	Three Months Ended March 31,
	2022		2021
Redeemable convertible preferred stock		—		75,305,400
Common stock options		20,911,881		29,308,725
RSUs		7,941,589		6,151,271
Shares subject to repurchase		2,607		39,584
ESPP		175,078		—
Total		29,031,155		110,804,980

11. LEASES

The Company has entered into various non-cancelable office space operating leases with lease periods expiring through November 2024. These leases do not contain residual value guarantees, covenants, or other restrictions.

12. COMMITMENTS AND CONTINGENCIES

Purchase Obligations—Purchase obligations relate mainly to a third-party cloud infrastructure agreement and subscription arrangements as well as service agreements used to facilitate the Company’s operations. As of March 31, 2022, the Company had approximately $49,143 of future minimum payments under the Company’s non-cancelable purchase obligations, which are expected to be paid through 2026.

Litigation—The Company continually evaluates uncertainties associated with litigation and records a charge equal to at least the minimum estimated liability for a loss contingency when both of the following conditions are met: (i) information available prior to issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and (ii) the loss or range of loss can be reasonably estimated. If the Company determines that a loss is possible and a range of the loss can be reasonably estimated, the Company discloses the range of the possible loss in the notes to the unaudited condensed consolidated financial statements. The Company evaluates, on a quarterly basis, developments in its legal matters that could affect the amount of liability that has been previously accrued, if any, and the matters and related ranges of possible losses disclosed, and makes adjustments and changes to our disclosures as appropriate. Significant judgment is required to determine both likelihood of there being, and the estimated amount of, a loss related to such matters. Until the final resolution of such matters, there may be an exposure to loss, and such amounts could be material. For legal proceedings for which there is a reasonable possibility of loss (meaning those losses for which the likelihood is more than remote but less than probable), the Company has determined it does not have material exposure on an aggregate basis at this time.

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Indemnifications—In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provides for the potential of general indemnification obligations. The Company’s exposure under these agreements is unknown because it involves future claims that may be made against the Company but have not yet been made. To date, the Company has not paid any material claims or has been required to defend any actions related to its indemnification obligations; however, the Company may record charges in the future as a result of these indemnification obligations. In addition, the Company has indemnification agreements with certain of its directors, executive officers, and other employees that require it, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service with the Company. The terms of such obligations may vary.

13. 401(k) PLAN

The Company has a 401(k) savings plan (the “401(k) Plan”) that qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Under the 401(k) Plan, participating employees may elect to contribute up to 100% of their eligible compensation, subject to certain limitations. The 401(k) Plan provides for a discretionary employer-matching contribution. The Company has made $667 and $0 matching contributions to the 401(k) Plan for the three months ended March 31, 2022 and 2021, respectively.

14. RELATED-PARTY TRANSACTION

During the year ended December 31, 2017, the Company entered into a content sourcing agreement with a related party in the normal course of business. Content fees earned by the related party during the three months ended March 31, 2022 and 2021 were $1,630 and $1,679, respectively. As of March 31, 2022 and December 31, 2021, outstanding educator partner payables related to this content sourcing agreement were $1,630 and $1,502, respectively.

15. SEGMENT AND GEOGRAPHIC INFORMATION

The Company’s Chief Executive Officer is its CODM. For the purposes of allocating resources and assessing performance, the CODM examines three segments, which are the Company’s three revenue sources: Consumer, Enterprise, and Degrees. This is also consistent with how the Company disaggregates revenue.

Financial information for each reportable segment was as follows:

	Three Months Ended March 31,
Revenue	2022		2021
Consumer	$	68,096	$	51,908
Enterprise		39,046		24,493
Degrees		13,291		11,961
Total revenue	$	120,433	$	88,362
Segment gross profit
Consumer	$	48,296	$	29,655
Enterprise		27,952		16,581
Degrees		13,291		11,961
Total segment gross profit	$	89,539	$	58,197
Reconciliation of segment gross profit to gross profit
Platform and support costs	$	7,893	$	6,312
Stock-based compensation		577		107
Amortization of internal-use software		2,811		1,830
Amortization of intangible assets		628		412
Total reconciling items		11,909		8,661
Gross profit	$	77,630	$	49,536

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Geographic Information:

Revenue: The following table summarizes the revenue by region based on the billing address of the Company’s customers:

	Three Months Ended March 31,
	2022		2021
United States	$	62,775	$	45,446
Europe, Middle East, and Africa		30,616		24,580
Asia Pacific		16,017		10,889
Other		11,025		7,447
Total	$	120,433	$	88,362

No single country other than the United States represented 10% or more of the Company’s total revenue during the three months ended March 31, 2022 and 2021.

Long-lived assets: The following table presents the Company’s long-lived assets, consisting of property, equipment, and software, net of depreciation and amortization, and operating lease right-of-use assets, by geographic region:

	As of March 31, 2022		As of December 31, 2021
United States	$	40,654	$	40,245
Rest of World		799		801
Total	$	41,453	$	41,046

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of Coursera, Inc’s and its subsidiaries’ (“Coursera”, the “Company”, “we”, “us”, or “our”) financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes included in Item 1 of Part I of this report, and together with our audited consolidated financial statements and the related notes and the discussions under the heading “Management’s Discussions and Analysis of Financial Condition and Results of Operations” for the year ended December 31, 2021 included in the Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 3, 2022.

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements in this report other than statements of historical fact, including statements identified by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect” and similar expressions, are forward-looking statements. Forward-looking statements include, but are not limited to, statements about:

•trends in the higher education market and the market for online education, and expectations for growth in those markets;

•the acceptance, adoption, and growth of online learning and credentialing by businesses, organizations, governments, educational institutions, faculty, learners, employers, accreditors, and state and federal licensing bodies;

•the demand for, and market acceptance of, our platform;

•the potential benefits of our solutions to partners and learners;

•anticipated launch dates of new partner programs;

•our business model;

•our future financial performance, including our expectations regarding our revenue and expenses, and our ability to achieve and maintain future profitability;

•our ability to expand the content and credentialing programs available on our platform and our ability to develop new platform features;

•our ability to manage or sustain our growth and to effectively expand our customer base and operations, including internationally;

•our ability to acquire new partners and expand program offerings with existing partners;

•our ability to acquire prospective learners and to affect or increase learner enrollment and retention;

•our growth strategies, plans, objectives, and goals;

•our ability to compete and the future competitive landscape;

•our ability to attract and retain key employees;

•the scalability of our platform and operations;

•our ability to develop and protect our brand;

•the increased expenses, including regulatory compliance costs, associated with being a public company;

•the size of our addressable markets, market share, and market trends;

•the affordability and convenience of our platform;

•the effect of COVID-19 on our business and operations, including the demand for online learning following the COVID-19 pandemic;

•our ability to obtain, maintain, protect, and enforce our intellectual property and proprietary rights and successfully defend against claims of infringement, misappropriation, or other violations of third-party intellectual property;

•the availability of capital to grow our business;

•our ability to successfully defend any future litigation brought against us;

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•our ability to implement, maintain, and improve effective internal controls;

•potential changes in laws and regulations applicable to us or our partners and our partners’ ability to comply therewith; and

•the amount of time for which we expect our cash balances and other available financial resources to be sufficient to fund our operations.

In addition, any statements contained herein that are not statements of historical facts are deemed to be forward-looking statements. These forward-looking statements reflect our management’s beliefs and views with respect to future events and are based on estimates and assumptions as of the date of this report and are subject to a number of risks and uncertainties that could cause our actual results to differ materially from those expressed or implied by our forward-looking statements. These risks and uncertainties include, but are not limited to, those risks discussed in Part II, Item 1A “Risk Factors” of this report. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Given these uncertainties, you should not place undue reliance on these forward-looking statements. We qualify all of the forward-looking statements in this report by these cautionary statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this report to conform these statements to actual results or to changes in our expectations, except as required by law.

Overview

Coursera is one of the largest online learning destinations in the world, connecting an ecosystem of learners, educators, organizations, and institutions with a platform of high-quality content and credentials, data, and technology.

As shifts in the digital economy are increasing the need for new skills, Coursera’s online learning offerings can meet this global demand and provide access to world-class education to learners, organizations, and institutions worldwide. We partner with over 250 leading global university and industry partners to create and distribute content that is modular, stackable, flexible, and affordable. As of March 31, 2022, approximately 102 million learners are registered on our platform to engage with a wide range of offerings from Guided Projects to bachelor’s and master’s degree programs.

Coursera serves learners in their homes, through their employers, through their colleges and universities, and through government-sponsored programs. We provide a broad range of learning offerings: Guided Projects, Specializations, courses, certificates, degrees, and postgraduate diplomas. Our go-to-market strategy centers on efficiently attracting learners to our platform and connecting them to content and degree programs tailored to them, after which our data-driven learner experience identifies potential Enterprise prospects, complemented by our direct sales team, which finds and engages with potential business, academic, government, and other institutional customers.

For the three months ended March 31, 2022 and 2021, we generated a net loss of $38.3 million and $18.7 million, respectively, which included stock-based compensation expense of $22.0 million and $5.3 million, respectively, and a net loss margin as a percentage of revenue of 32% and 21%, respectively.

Factors Affecting Our Performance

We believe that the growth of our business and our future success are dependent upon many factors. While each of these factors present significant opportunities for us, these factors also pose challenges that we must successfully address in order to sustain the growth of our business and enhance our results of operations.

Ability to attract and engage new learners, Enterprise customers, and Degrees students—In order to grow our business, we must attract new learners, Enterprise customers, and Degrees students efficiently and increase engagement on our platform over time. Our Consumer learners are the most important source of our overall learner base, as they contribute to our Enterprise and Degrees revenue.

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Ability to source in-demand content from our educator partners—We believe that learners and enterprises are attracted to Coursera largely because of the high quality and wide selection of content provided by our educator partners, and that continuing to source in-demand content and credentials from our educator partners—from courses to degrees—will be an important factor in attracting free and paid customers and increasing our revenue over time.

We believe that our reach, scale, and reputation provide an attractive value proposition for leading organizations and institutions to partner with Coursera to develop and distribute content and credentials. To be the platform of choice for educator partners, we continue to invest in increasing the size and engagement of our learner base, improving recommendation and personalization features, developing marketing capabilities that drive higher conversion into paid offerings, and improving the analytics tools available for learners, educators, organizations, and institutions.

Impact of mix shift over time—Our mix of business amongst our Consumer, Enterprise, and Degrees channels is shifting, and this shift will affect our financial performance. We incur content costs in the form of a fee paid to our university and industry partners, determined as a percentage of total revenue generated from their content. We incur no content costs for our Degrees offerings since our university partners pay us a percentage of learner tuition. If either our Enterprise or Degrees revenue grow faster than our Consumer revenue, which we presently expect, our overall margins will benefit from this shift in revenue mix.

Ability to convert free learners to paid learners—New learners to our platform typically begin to engage with our free courses, which serve as a funnel to grow our total learner base and drive referrals to our other offerings, including our paid offerings. Through both our on-platform and off-platform marketing efforts, we engage our free learners by highlighting key features that encourage conversion to our paid offerings. These efforts include campaigns targeting existing learners, personalized recommendations, and performance marketing across leading social media platforms.

Ability to expand our international footprint—We see a significant opportunity to expand our offerings into other regions, particularly in regions with large, underserved adult learning populations. We have invested, and plan to continue to invest, in personnel and marketing efforts to support our international growth and expand our international operations as part of our strategy to grow our customer and learner base, particularly among our Enterprise customers.

Ability to retain and expand our Enterprise customer relationships—Our efforts to grow our Enterprise segment are focused primarily on business, academic, government, and other institutional customers. We believe a significant opportunity exists for us to expand our existing customers’ use of our platform by identifying new use cases in additional departments and divisions and increasing the size of deployments. Our business and results of operations will depend in part on our ability to retain and expand usage of our platform within our existing customer base.

Our investment in growth—We are actively investing in our business to support our future growth and expanding set of offerings. We anticipate that our operating expenses will increase as we continue to build our sales and marketing efforts, expand our employee base, and invest in our technology. The investments we make in our platform are designed to grow our revenue opportunity and to improve our operating results in the long term.

Components of Results of Operations

Revenue

We derive revenue from contracts with customers for access to the learning content hosted on our platform and related services. We derive our revenue from three sources: Consumer, Enterprise, and Degrees.

Consumer and Enterprise revenue both consist primarily of subscriptions with terms varying from 30 days for certain Consumer subscriptions to one to three years for Enterprise license subscription contracts. Consumer subscriptions are paid in advance, generally after a 7-day free trial period. Enterprise subscriptions are generally invoiced in advance in quarterly or annual installments. Access to our platform represents a series of distinct services, as we continually provide access to, and fulfill our obligation to, our customer over the contract term. As a result, revenue is recognized ratably over the contract term.

We are the principal with respect to revenue generated from sales to Consumer and Enterprise customers as we control the performance obligation and are the primary obligor with respect to delivering access to content.

Degrees revenue is generated from contracts with university partners for the delivery of online bachelor’s and master’s degrees or postgraduate diplomas awarded by the university. We earn a Degrees service fee that is determined as a percentage of the total tuition collected from Degrees students, net of refunds. University partners generally collect the tuition from Degrees students; however, in the

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case of some MasterTrack Certificate offerings, this obligation can be our responsibility. We have a stand ready obligation to perform degree services continually throughout the period that the degree content is hosted on our platform. Service fees are paid by the university partner for each university term. As a result, revenue generated from each term is recognized ratably from the start of a term through the start of the following term.

There is no direct contractual revenue arrangement between Coursera and Degrees students, who contract directly with our university partners. University partners typically have additional performance obligations to the Degrees students in the form of designing the curriculum, setting admission criteria, real-time teaching, making admissions and financial aid decisions, independently awarding credits, certificates, or degrees, and academic or career counseling. Although some MasterTrack Certificate learners are required to accept our terms and conditions prior to tuition payment, our core performance obligations remain similar to the services provided to university partners for their online bachelor’s and master’s degrees or postgraduate diplomas. For these reasons, the university partners control the delivery of degrees, postgraduate diplomas, and MasterTrack Certificates hosted on our platform. As a result, we recognize Degrees revenue as the service fee we earn from our contracts with university partners.

Cost of Revenue

Cost of revenue consists of content costs in the form of fees paid to educator partners and expenses associated with the operation and maintenance of our platform. These expenses include the cost of servicing both paid learner and educator partner support requests, hosting and bandwidth costs, amortization of acquired technology, internal-use software and content assets, customer payment processing fees, allocated depreciation, and facilities costs.

Content costs only apply to Consumer and Enterprise offerings; there is no content cost attributable to our Degrees offering. Content costs as a percentage of revenue are lower for our Enterprise offerings due to a lower effective percentage payable to educator partners compared with sales to Consumer customers. We expect Enterprise and Degrees to become a larger portion of the overall business, and to the extent our mix changes as we expect, content costs will decrease as a percentage of total revenue.

Operating Expenses

Operating expenses consist of research and development, sales and marketing, and general and administrative expenses. Personnel costs are the most significant component of our operating expenses and consist of salaries, stock-based compensation, bonus, payroll taxes, benefits, and commissions. Our operating expenses also include marketing and advertising expenses, consulting and services expenses, office expenses, depreciation and amortization, and allocated costs of facilities. Although our operating expenses may fluctuate from period to period, we currently expect our operating expenses to increase in absolute dollars over time as we continue to grow the business.

Research and development. Our research and development expenses consist primarily of personnel and personnel-related costs, including stock-based compensation and costs related to the ongoing management, maintenance, and expansion of content, features, and services offered on our platform. We believe that continued investment in our platform is important to our future growth and to maintain and attract partners and learners to our platform. As a result, we expect research and development expenses to increase in absolute dollars. In addition, we expect research and development expenses as a percentage of revenue to vary from period to period but generally decrease over the long term.

Sales and marketing. Our sales and marketing expenses consist primarily of personnel and personnel-related costs, including stock-based compensation and costs related to learner and partner acquisition, support efforts, and brand marketing. Sales and marketing expenses also consist of hosting and bandwidth costs and support costs related to the provisioning of services to free learners. We expect sales and marketing expenses to increase in absolute dollars as our business grows. In addition, we expect sales and marketing expenses as a percentage of revenue to vary from period to period but generally decrease over the long term.

General and administrative. Our general and administrative expenses consist primarily of personnel and personnel-related costs, including stock-based compensation and costs related to our legal, finance, and human resources departments, as well as indirect taxes, professional fees, and other corporate expenses.

We have incurred and expect to continue to incur additional expenses as a result of operating as a public company, including costs to comply with the rules and regulations applicable to companies listed on a national securities exchange, costs related to compliance and reporting obligations, and increased expenses for insurance and professional services. We expect general and administrative expenses to increase in absolute dollars as our business grows. In addition, we expect general and administrative expenses as a percentage of revenue to vary from period to period but generally decrease over the long term.

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Interest Income

Interest income consists primarily of interest income earned on our cash, cash equivalents, and marketable securities. It also includes amortization of premiums and accretion of discounts related to our marketable securities. Interest income varies each reporting period based on our average balance of cash, cash equivalents, and marketable securities during the period and market interest rates.

Other Expense, Net

Other expense, net consists primarily of foreign exchange gains (losses).

Income Tax Expense

Our income tax provision consists primarily of income taxes in certain foreign jurisdictions in which we conduct business. We have a full valuation allowance against our U.S. federal and state deferred tax assets as the realization of the full amount of these deferred tax assets is uncertain, including net operating loss carryforwards and tax credits related primarily to research and development. We expect to maintain this full valuation allowance until it becomes more likely than not that the deferred tax assets will be realized.

Results of Operations

The following table summarizes our results of operations for the periods presented. The results below are not necessarily indicative of results to be expected for future periods.

	Three Months Ended March 31,
	2022			2021
	(in thousands)
Revenue	$	120,433		$	88,362
Cost of revenue(1)		42,803			38,826
Gross profit		77,630			49,536
Operating expenses:
Research and development(1)		37,955			22,140
Sales and marketing(1)		51,667			32,613
General and administrative(1)		25,178			13,144
Total operating expenses		114,800			67,897
Loss from operations		(37,170	)		(18,361	)
Other income (expense):
Interest income		335			80
Other expense, net		(425	)		(7	)
Loss before income taxes		(37,260	)		(18,288	)
Income tax expense		1,008			375
Net loss	$	(38,268	)	$	(18,663	)

(1) Includes stock-based compensation expense as follows:

	Three Months Ended March 31,
	2022		2021
	(in thousands)
Cost of revenue	$	577	$	107
Research and development		9,743		2,028
Sales and marketing		6,274		1,347
General and administrative		5,384		1,802
Total stock-based compensation expense	$	21,978	$	5,284

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The following table summarizes our results of operations as a percentage of revenue for each of the periods indicated:

	Three Months Ended March 31,
	2022			2021
Revenue		100	%		100	%
Cost of revenue		36			44
Gross profit		64			56
Operating expenses:
Research and development		31			25
Sales and marketing		43			37
General and administrative		21			15
Total operating expenses		95			77
Loss from operations		(31	)		(21	)
Other income (expense):
Interest income		—			—
Other expense, net		—			—
Loss before income taxes		(31	)		(21	)
Income tax expense		1			—
Net loss		(32	)%		(21	)%

Comparison of the Three Months Ended March 31, 2022 and 2021

Revenue

	Three Months Ended March 31,				Change
	2022		2021		$		%
	(dollars in thousands)
Revenue:
Consumer	$	68,096	$	51,908	$	16,188		31	%
Enterprise		39,046		24,493		14,553		59	%
Degrees		13,291		11,961		1,330		11	%
Total revenue	$	120,433	$	88,362	$	32,071		36	%

Revenue for the three months ended March 31, 2022 was $120.4 million compared to $88.4 million for the three months ended March 31, 2021. Revenue increased by $32.1 million, or 36%, compared to the three months ended March 31, 2021. The increase in revenue was primarily driven by a 25% increase in registered learners, which resulted in an increase in paying Consumer customers, the addition of 438 Paid Enterprise Customers, and an increase in the number of Degrees Students.

For the three months ended March 31, 2022, total Consumer revenue increased by $16.2 million, or 31%, compared to the three months ended March 31, 2021. The new learners that registered after March 31, 2021 added $31.6 million in revenue to the total revenue of $68.1 million for the three months ended March 31, 2022. The remaining Consumer revenue in the three months ended March 31, 2022 of $36.5 million is attributable to learners that were registered in our platform as of March 31, 2021, thus retaining 70% of the revenue from those registered learners.

For the three months ended March 31, 2022, total Enterprise revenue increased by $14.6 million, or 59%, compared to the three months ended March 31, 2021. Approximately $12.5 million of the increase in revenue was attributable to new customers, and the remaining increase of $2.1 million was attributable to growth from existing customers.

For the three months ended March 31, 2022, total Degrees revenue increased by $1.3 million, or 11%, compared to the three months ended March 31, 2021. The increase in the number of Degrees students added $2.6 million in revenue, which was partially offset by a decrease of $1.3 million attributable to a decrease in revenue per student per quarter.

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Cost of Revenue, Gross Profit and Gross Margin

	Three Months Ended March 31,						Change
	2022			2021			$		%
	(dollars in thousands)
Cost of revenue	$	42,803		$	38,826		$	3,977		10	%
Gross profit	$	77,630		$	49,536		$	28,094		57	%
Gross margin		64	%		56	%

Cost of revenue for the three months ended March 31, 2022 was $42.8 million compared to $38.8 million for the three months ended March 31, 2021. We experienced an increase in usage by paid learners on our platform which resulted in a $2.1 million cost increase from support services, hosting costs, and credit card processing. There was an increase of $1.2 million in amortization expense mainly related to internal-use software. The increase in revenue combined with improved content costs as a percentage of revenue resulted in a net increase of $0.7 million in costs related to partner fees.

Content costs for the Consumer and Enterprise segments were $19.8 million and $11.1 million, respectively, for the three months ended March 31, 2022 compared to $22.3 million and $7.9 million, respectively, for the three months ended March 31, 2021. Content costs as a percentage of revenue for the Consumer and Enterprise segments were 29% and 28% for the three months ended March 31, 2022, respectively, compared to 43% and 32% for the three months ended March 31, 2021, respectively.

Gross margin was 64% for the three months ended March 31, 2022, compared to 56% for the three months ended March 31, 2021. The increase in gross margin was due to a shift in revenue mix toward Enterprise and Degrees and a lower revenue content cost rate for our Consumer segment revenue.

Operating Expenses

	Three Months Ended March 31,				Change
	2022		2021		$		%
	(dollars in thousands)
Operating expenses:
Research and development	$	37,955	$	22,140	$	15,815		71	%
Sales and marketing		51,667		32,613		19,054		58	%
General and administrative		25,178		13,144		12,034		92	%
Total operating expenses	$	114,800	$	67,897	$	46,903		69	%

Total operating expenses for the three months ended March 31, 2022 and 2021 were $114.8 million and $67.9 million, respectively.

Research and development expenses for the three months ended March 31, 2022 were $38.0 million compared to $22.1 million for the three months ended March 31, 2021. The increase was primarily due to higher personnel-related expenses of $13.0 million driven by additional headcount and stock-based compensation expense of $7.7 million. There was also an increase of $1.3 million in consulting fees. Other research and development expenses including recruiting fees, and facilities costs increased by $1.5 million.

Sales and marketing expenses for the three months ended March 31, 2022 were $51.7 million compared to $32.6 million for the three months ended March 31, 2021. The increase in sales and marketing expenses was primarily due to higher personnel-related expenses of $11.7 million driven by additional headcount and stock-based compensation expense of $4.9 million. Marketing and advertising expenses increased by $6.0 million. Other increases in sales and marketing expenses including general overhead expenses, office expenses, and an increase in recruiting fees of $1.3 million.

General and administrative expenses for the three months ended March 31, 2022 were $25.2 million compared to $13.1 million for the three months ended March 31, 2021. The increase in general and administrative expenses was primarily due to higher personnel-related expenses of $7.4 million driven by additional headcount and stock-based compensation expense of $3.6 million. We recognized an impairment loss of $1.9 million relating to deferred partner fees associated with content from Russian educator partners that we do not expect to recover. Insurance expense increased by $1.3 million. Other general and administrative expenses including consulting and services expenses, office expenses, recruiting fees, and facilities costs increased by $1.4 million.

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Other Income (Expense)

	Three Months Ended March 31,						Change
	2022			2021			$			%
	(dollars in thousands)
Interest income	$	335		$	80		$	255			319	%
Other expense, net		(425	)		(7	)		(418	)		5971	%
Total other income (expense)	$	(90	)	$	73		$	(163	)		(223	)%

Total other income (expense) for the three months ended March 31, 2022 and 2021 primarily reflected interest income earned on invested cash balances offset by net foreign exchange losses. Interest income was higher during the three months ended March 31, 2022 compared to the three months ended March 31, 2021 due to an increase in investments in marketable securities. Other expense, net was higher during the three months ended March 31, 2022 compared to the three months ended March 31, 2021 due to unfavorable foreign exchange rates.

Income Tax Expense

	Three Months Ended March 31,				Change
	2022		2021		$		%
	(dollars in thousands)
Income tax expense	$	1,008	$	375	$	633		169	%

Income tax expense for three months ended March 31, 2022 and 2021 was $1.0 million and $0.4 million, respectively, primarily related to foreign taxes.

Liquidity and Capital Resources

Overview

Since our inception, we have financed our operations primarily through proceeds from our redeemable convertible preferred stock issuances, as well as from cash generated from our business operations. In April 2021, we received cash proceeds of $525.3 million from our initial public offering (“IPO”), net of underwriting discounts and commissions, but before deducting other offering expenses. As of March 31, 2022, our principal sources of liquidity were cash, cash equivalents, and marketable securities totaling $780.4 million. Our investments consist of U.S. government Treasury bills.

Our principal uses of cash in recent periods include the funding of our business operations and investments in our internal-use software. We believe that our existing cash, cash equivalents, and marketable securities and our expected cash flows from operations will be sufficient to meet our cash needs for at least the next 12 months. Over the longer term, our future capital requirements will depend on many factors, including our growth rate, the timing and extent of our sales and marketing and research and development expenditures, the continuing market acceptance of our offerings, and any investments or acquisitions we may choose to pursue in the future. In the event that we need to borrow funds or issue additional equity, we cannot assure you that any such additional financing will be available on terms acceptable to us, if at all. In addition, any future borrowings may result in additional restrictions on our business and any issuance of additional equity would result in dilution to investors. If we are unable to raise additional capital when desired and on terms acceptable to us, our business, results of operations, and financial condition could be materially and adversely affected.

Contractual Obligations and Commitments

Except as discussed in Note 11, Leases, and Note 12, Commitments and Contingencies, in the notes to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, there were no material changes outside of the ordinary course of business in our commitments and contractual obligations for the three months ended March 31, 2022 from the commitments and contractual obligations in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, set forth in our Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the SEC on March 3, 2022.

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Cash Flows

The following table summarizes our cash flows for the periods indicated:

	Three Months Ended March 31,
	2022			2021
	(in thousands)
Net cash used in operating activities	$	(38,257	)	$	(4,347	)
Net cash (used in) provided by investing activities		(185,113	)		78,038
Net cash provided by financing activities		4,027			4,503
Net (decrease) increase in cash, cash equivalents, and restricted cash	$	(219,343	)	$	78,194

Operating Activities

Cash used in operating activities mainly consists of our net loss adjusted for certain non-cash items, including stock-based compensation and depreciation and amortization, as well as the effect of changes in operating assets and liabilities during each period.

Our main source of operating cash is payments received from our customers. Our primary use of cash from operating activities is for personnel-related expenses, partner fees, marketing and advertising expenses, indirect taxes, and third-party cloud infrastructure expenses.

For the three months ended March 31, 2022, net cash used in operating activities was $38.3 million, primarily consisting of our net loss of $38.3 million, adjusted for non-cash charges of $28.8 million and net cash outflows of $28.8 million used in changes in our operating assets and liabilities. The main drivers of the changes in operating assets and liabilities were a $20.0 million increase in accounts receivables due to timing of invoicing for Enterprise and Degrees customers, a $11.5 million increase in prepaid expenses and other assets due to the timing of license subscription renewals and advertising services, a $6.7 million decrease in accounts payable and accrued expenses due to timing of payments, a $1.8 million decrease in accrued compensation and other liabilities due to payout of accrued compensation, offset by $11.5 million increase in deferred revenue, resulting primarily from our Enterprise business growth.

For the three months ended March 31, 2021, net cash used in operating activities was $4.3 million, primarily consisting of our net loss of $18.7 million, adjusted for non-cash charges of $8.5 million and net cash inflows of $5.8 million provided by changes in our operating assets and liabilities. The main drivers of the changes in operating assets and liabilities were a $8.1 million increase in deferred revenue, resulting primarily from our Consumer business growth, a $5.0 million decrease in accounts receivable due to timing of invoicing and cash receipts from Enterprise customers, partially offset by a $4.3 million decrease in accrued compensation and other liabilities resulting primarily from payout of accrued compensation, and a $3.0 million decrease in accounts payable and accrued expenses due to timing of vendor payments.

Cash used in operating activities decreased by $33.9 million during the three months ended March 31, 2022, compared to the three months ended March 31, 2021, primarily due to timing of invoicing and cash collections as well as timing of license subscription renewals and advertising services.

Investing Activities

For the three months ended March 31, 2022, net cash used in investing activities was $185.1 million, primarily as a result of purchases of marketable securities and capital expenditures to develop internal-use software.

For the three months ended March 31, 2021, net cash provided by investing activities was $78.0 million, primarily as a result of proceeds from maturities of marketable securities, offset by capital expenditures to develop internal-use software.

Financing Activities

For the three months ended March 31, 2022, net cash provided by financing activities was $4.0 million, primarily as a result of proceeds from issuance of common stock following employee stock option exercises, offset by employee payroll taxes paid for vesting of restricted stock units.

For the three months ended March 31, 2021, net cash provided by financing activities was $4.5 million, primarily as a result of proceeds from issuance of common stock following employee stock option exercises, partially offset by payments of deferred offering costs related to our IPO.

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Key Business Metrics and Non-GAAP Financial Measures

We monitor the key business metrics and non-GAAP financial measures set forth below to help us evaluate our business and growth trends, establish budgets, measure the effectiveness of our sales and marketing efforts, and assess operational efficiencies. These key business metrics and non-GAAP financial measures are presented for supplemental informational purposes only, should not be considered a substitute for financial information presented in accordance with GAAP, and may differ from similarly titled metrics or measures presented by other companies. A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure is provided in “Non-GAAP Financial Measures" below.

Key Business Metrics

Registered Learners

We count the total number of registered learners at the end of each period. For purposes of determining our registered learner count, we treat each customer account that registers with a unique email as a registered learner and adjust for any spam, test accounts, and cancellations. Our registered learner count is not intended as a measure of active engagement. New registered learners are individuals that register in a particular period. We believe that the number of registered learners is an important indicator of the growth of our business and future revenue trends.

	Three Months Ended March 31,
	2022			2021
	(in millions, except percentages)
New Registered Learners		4.9			5.0
Total Registered Learners		101.7			81.5
Total Registered Learners year-over-year ("YoY") growth		25	%

Number of Degrees Students

We count the total number of Degrees students for each period. For purposes of determining our Degrees student count, we include all the students that are matriculated in a bachelor’s, master’s, or postgraduate diploma and who are enrolled in one or more courses in such a degree program during the period. If a degree term spans across multiple quarters, the student is counted as active in all quarters of the degree term. For purposes of determining our Degrees student count, we do not include students who are matriculated in the degree but are not enrolled in a course in that period. We believe that the number of Degrees students is an important indicator of the growth of our Degrees business and future Degrees segment revenue trends.

The Degrees student count is affected by the seasonality of the school class cycles, combined with the underlying growth interacting with those trends. The number of Degrees students fluctuates in part because the academic terms for each degree program often begins and/or ends within different calendar quarters, and the frequency with which each degree program is offered within a given year varies.

	Three Months Ended March 31,
	2022			2021
Number of Degrees Students		16,481			13,493
YoY growth		22	%

Paid Enterprise Customers

We count the total number of Paid Enterprise Customers that are active on our platform at the end of each period. For purposes of determining our customer count, we treat each customer account that has a corresponding contract as a unique customer, and a single organization with multiple divisions, segments, or subsidiaries may be counted as multiple customers. We define a “Paid Enterprise Customer” as a customer who purchases Coursera via our direct sales force. For purposes of determining our Paid Enterprise Customer count, we exclude our Enterprise customers who do not purchase Coursera via our direct sales force, which include organizations engaging on our platform through our Coursera for Teams offering or through our channel partners. For the three months ended March 31, 2022, approximately 87% of our total Enterprise segment revenue was generated from our Paid Enterprise Customers. We believe that the number of Paid Enterprise Customers and our ability to increase this number is an important indicator of the growth of our Enterprise business and future Enterprise segment revenue trends.

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	Three Months Ended March 31,
	2022			2021
Paid Enterprise Customers		917			479
YoY growth		91	%

Net Retention Rate for Paid Enterprise Customers

We disclose Net Retention Rate for Paid Enterprise Customers as a supplemental measure of our Enterprise revenue growth. We believe Net Retention Rate for Paid Enterprise Customers is an important metric that provides insight into the long-term value of our subscription agreements and our ability to retain and grow revenue from our Paid Enterprise Customers.

We calculate annual recurring revenue (“ARR”) by annualizing each customer’s monthly recurring revenue (“MRR”) for the most recent month at period end. We calculate “Net Retention Rate” as of a period end by starting with the ARR from all Paid Enterprise Customers as of the 12 months prior to such period end, or Prior Period ARR. We then calculate the ARR from these same Paid Enterprise Customers as of the current period end, or Current Period ARR. Current Period ARR includes expansion within Paid Enterprise Customers and is net of contraction or attrition over the trailing 12 months but excludes revenue from new Paid Enterprise Customers in the current period. We then divide the total Current Period ARR by the total Prior Period ARR to arrive at our Net Retention Rate for Paid Enterprise Customers. Our Net Retention Rate for Paid Enterprise Customers decreased to 109% as of March 31, 2022 from 113% as of March 31, 2021. Our Net Retention Rate for Paid Enterprise Customers is expected to fluctuate in future periods due to a number of factors, including the growth of our revenue base, the penetration within our Paid Enterprise Customer base, expansion of products and features, and our ability to retain our Paid Enterprise Customers.

Segment Revenue

Our revenue is generated from three sources: Consumer, Enterprise, and Degrees, each of which is an individual segment of our business.

	Three Months Ended March 31,
	2022			2021
	(dollars in thousands)
Consumer revenue	$	68,096		$	51,908
YoY growth		31	%
Enterprise revenue	$	39,046		$	24,493
YoY growth		59	%
Degrees revenue	$	13,291		$	11,961
YoY growth		11	%
Total revenue	$	120,433		$	88,362
YoY growth		36	%

Segment Gross Profit

We monitor segment gross profit as a key metric to help us evaluate the financial performance of our individual segments. Segment gross profit represents segment revenue less content costs paid to educator partners; segment gross margin is the quotient of segment gross profit and segment revenue. Content costs only apply to the Consumer and Enterprise segments as there is no content cost attributable to the Degrees segment. Instead, in the Degrees segment, we earn a Degrees service fee based on a percentage of the total online student tuition collected by the university partner. Given that content costs are the largest individual cost of our revenue, and contractually vary as a percentage of revenue between our Consumer and Enterprise offerings, and the fact that no content costs are payable in our Degrees offering, shifts in mix between our three segments is expected to be a significant driver of our overall financial performance and profitability.

	Three Months Ended March 31,
	2022			2021
	(dollars in thousands)
Consumer gross profit	$	48,296		$	29,655
Consumer segment gross margin %		71	%		57	%
Enterprise gross profit	$	27,952		$	16,581
Enterprise segment gross margin %		72	%		68	%
Degrees gross profit	$	13,291		$	11,961
Degrees segment gross margin %		100	%		100	%

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Consumer segment gross margin increased to 71% in the three months ended March 31, 2022 from 57% in the three months ended March 31, 2021 due to a greater proportion of Consumer revenue generated from sales of subscriptions with no associated content cost. Enterprise segment gross margin increased to 72% from 68% when comparing to the prior year due to a higher proportion of Enterprise revenue generated from subscription licenses where learners enrolled in content with no associated content cost.

Non-GAAP Financial Measures

Non-GAAP Gross Profit and Non-GAAP Net Loss

We define non-GAAP gross profit and non-GAAP net loss as GAAP gross profit and GAAP net loss excluding the impact of stock-based compensation and payroll tax expense related to stock-based activities. We believe the presentation of operating results that exclude these non-cash items provides useful supplemental information to investors and facilitates the analysis of our operating results and comparison of operating results across reporting periods.

The following tables provide a reconciliation of GAAP gross profit and GAAP net loss, the most directly comparable GAAP financial measure, to non-GAAP gross profit and non-GAAP net loss:

		Three Months Ended March 31,
		2022		2021
		(in thousands)
Gross profit		$	77,630	$	49,536
	Stock-based compensation expense		577		107
	Payroll tax expense related to stock-based activities		10		1
Non-GAAP gross profit		$	78,217	$	49,644

		Three Months Ended March 31,
		2022			2021
		(in thousands)
Net loss		$	(38,268	)	$	(18,663	)
	Stock-based compensation expense		21,978			5,284
	Payroll tax expense related to stock-based activities		465			27
Non-GAAP net loss		$	(15,825	)	$	(13,353	)

Adjusted EBITDA and Adjusted EBITDA Margin

“Adjusted EBITDA” and “Adjusted EBITDA Margin”, which are non-GAAP financial measures, are key measures used by our management to help us analyze our financial results, establish budget and operational goals for managing our business, evaluate our performance, and make strategic decisions.

We define Adjusted EBITDA as our net loss excluding: (1) depreciation and amortization; (2) interest income, net; (3) stock-based compensation; (4) income tax expense; and (5) payroll tax expense related to stock-based activities. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue.

The following table provides a reconciliation of net loss, the most directly comparable GAAP financial measure, to Adjusted EBITDA.

28

	Three Months Ended March 31,
	2022			2021
	(dollars in thousands)
Net loss	$	(38,268	)	$	(18,663	)
Depreciation and amortization		4,182			2,931
Interest income, net		(335	)		(80	)
Stock-based compensation		21,978			5,284
Income tax expense		1,008			375
Payroll tax expense related to stock-based activities		465			27
Adjusted EBITDA	$	(10,970	)	$	(10,126	)
Net loss margin		(32	)%		(21	)%
Adjusted EBITDA Margin		(9	)%		(11	)%

Free Cash Flow

“Free Cash Flow” is a non-GAAP financial measure that we calculate as net cash (used in) provided by operating activities, less cash used for purchases of property, equipment, and software and capitalized internal-use software costs as we consider these capital expenditures necessary to support our ongoing operations.

We consider Free Cash Flow to be a liquidity measure that provides useful information to management and investors in understanding and evaluating our liquidity and future ability to generate cash that can be used for strategic opportunities, including investing in our business and strengthening our balance sheet, but it is not intended to represent the residual cash flow available for discretionary expenditures.

The following table provides a reconciliation of net cash used in operating activities, the most directly comparable GAAP financial measure, to Free Cash Flow.

	Three Months Ended March 31,
	2022			2021
	(in thousands)
Net cash used in operating activities	$	(38,257	)	$	(4,347	)
Less: purchases of property, equipment, and software		(400	)		(307	)
Less: capitalized internal-use software costs		(3,544	)		(3,985	)
Free Cash Flow	$	(42,201	)	$	(8,639	)
Net cash (used in) provided by investing activities	$	(185,113	)	$	78,038
Net cash provided by financing activities	$	4,027		$	4,503

Critical Accounting Policies and Estimates

Our unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Actual results may differ from these estimates. To the extent that there are material differences between these estimates and our actual results, our future financial statements will be affected.

There have been no material changes to our critical accounting policies and estimates as compared to those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in our Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the SEC on March 3, 2022.

Recent Accounting Pronouncements

See Note 2 to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for information regarding recently issued accounting pronouncements.

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JOBS Act Transition Period

We are an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. We have elected to use the extended transition period under the JOBS Act for the adoption of certain accounting standards until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our unaudited condensed consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We have operations both within the United States and internationally, and we are exposed to market risks in the ordinary course of our business, including the effects of interest rate changes and foreign currency fluctuations. Information relating to quantitative and qualitative disclosures about these market risks is described below.

Interest Rate Sensitivity

As of March 31, 2022, of our cash, cash equivalents, and marketable securities, $419.1 million of marketable securities, which consist of U.S. government Treasury bills, are subject to interest rate sensitivity. Our cash, cash equivalents, and marketable securities are held for working capital purposes. A hypothetical 100 basis point increase or decrease in interest rates would have resulted in $2.3 million decrease or increase, respectively, in the market value of our marketable securities as of March 31, 2022.

Foreign Currency Risk

Our reporting currency and the functional currency of our wholly owned foreign subsidiaries is the U.S. dollar. With limited exceptions, all of our sales are denominated in U.S. dollars; therefore, our revenue is not currently subject to significant foreign currency risk. Our operating expenses are denominated in the local currencies of the countries in which our operations are located and may be subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the Canadian Dollar, Pound Sterling, and Indian Rupee. Fluctuations in foreign currency exchange rates may cause us to recognize transaction gains and losses in our consolidated statement of operations. To date, we have not entered into any hedging arrangements with respect to foreign currency risk or other derivative financial instruments, although we may choose to do so in the future. A 10% increase or decrease in current exchange rates would have resulted in an impact of $2.0 million on our quarterly unaudited condensed consolidated statement of operations for the three months ended March 31, 2022.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, that are designed to ensure information required to be disclosed in our reports that we file or furnish pursuant to the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer), as appropriate to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by 13a-15(b) under the Exchange Act, we carried out an evaluation, under the supervision and the participation of our management, including our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer), of the effectiveness of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and 15d-15(e) promulgated under the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective at the reasonable assurance level.

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Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings

See discussion of legal proceedings in Note 12 "Commitments and Contingencies" in Item 1 of Part I of this Quarterly Report

on Form 10-Q, which is incorporated by reference into this Item 1 of Part II.

Item 1A. Risk Factors

Risk Factors Summary

The following is a summary of the key risks and uncertainties associated with our business, industry, and ownership of our common stock. The below summary does not contain all of the information that may be important to you, and you should read this summary together with the more detailed description of each risk factor contained in the subheadings below.

•Fluctuations in our quarterly and annual revenue and operating results, which could cause our stock price to fluctuate and the value of your investment to decline;

•Our rapid growth, which may not be indicative of our future growth, and our expected decline in revenue growth rate compared to prior years;

•Our limited operating history, which makes it difficult to predict our future financial and operating results;

•We have incurred significant net losses since inception, and anticipate that we will continue to incur losses for the foreseeable future;

•The impact of the COVID-19 pandemic, which has impacted, and may continue to impact, our business, key metrics, and results of operations in volatile and unpredictable ways;

•The nascency of online learning solutions and the market adoption of which may not grow as we expect;

•Our ability to maintain and expand our partnerships with our university and industry partners;

•Our ability to attract and retain learners;

•Our ability to increase sales of our Enterprise offerings;

•Our ability to compete effectively;

•Any disclosure of sensitive information about our partners, their employees, or our learners, whether due to cyber-attack or otherwise;

•Our and our partners’ ability to comply with international, federal, and state education laws and regulations, including applicable state authorizations for their programs;

•Any failure to obtain, maintain, protect, and enforce our intellectual property and proprietary rights and successfully defend against claims of infringement, misappropriation, or other violations of third-party intellectual property;

•Any changes to the validation or applicability of the U.S. Department of Education (“DOE”) “dear colleague letter,” on which our business model relies;

•Any disruption or failure of our platform or operations; and

•Our status as a public benefit corporation, which may negatively impact our financial performance.

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Risks Related to Our Business and Industry
 

Our quarterly and annual revenue and operating results have fluctuated from period to period and may do so in the future, which could cause our stock price to fluctuate and the value of your investment to decline.

Our quarterly and annual revenue and operating results have historically fluctuated from period to period, and our future operating results may vary significantly from quarter to quarter due to a variety of factors, many of which are beyond our control. You should not rely on period-to-period comparisons of our operating results as an indication of our future performance. Factors that may cause fluctuations in our quarterly operating results include, but are not limited to, the following:

•our ability to maintain existing customers and attract new customers, including businesses, governments, and educational institutions that subscribe to our Enterprise platform, as well as learners who access the content and credentialing programs available on our platform;

•our ability to continue to offer compelling content and degrees or other credentialing programs created by our industry and university partners;

•changes in, or trends affecting, subscriptions to our Enterprise platform from businesses, governments, and educational institutions;

•changes in, or trends affecting, learner enrollment and retention levels, including with respect to learners electing to access our paid offerings;

•our ability to increase and manage the growth of our international operations, including our international customer base, and our ability to manage the risks associated therewith;

•the timing of our costs incurred in connection with the launch of new course content and offerings and new certification, degree, or other credentialing programs, and the timing and amount of revenue we generate from new offerings and programs;

•trends and factors impacting the demand for, and acceptance of, online learning and credentialing programs, including the COVID-19 pandemic, and the prices consumers and businesses are willing to pay for such programs;

•changes in, or trends affecting, the mix of partners, including educational institutions, offering open online courses only and those offering certification, degree, or other credentialing programs;

•changes in the rate, volume, and demand for new content and credentialing programs created and offered by our partners on our platform;

•changes in the terms of our existing partnership agreements;

•the timing and terms of any new partnership agreements;

•the timing and amount of our sales and marketing expenses;

•costs necessary to improve and maintain our platform;

•changes in our key metrics or the methods used to calculate our key metrics;

•seasonality, including seasonal engagement patterns of learners and Enterprise customers, which may vary from quarter to quarter or year to year, and seasonal operating practices or engagement patterns of partners resulting from academic calendars or fiscal years that may differ from our own;

•changes in laws, regulations, or accounting principles that impact our business; and

•general political, economic, or market conditions and events affecting any of the above, including the impact of the COVID-19 pandemic, the outcome of political elections, and geopolitical tensions or hostilities such as the military conflict in Ukraine.

These and other factors may cause our revenue and operating results to fall below the expectations of market analysts and investors in future periods, which could cause the market price of our common stock to decline substantially. Any decline in the market price of our common stock would cause the value of your investment to decline.

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Our recent, rapid growth may not be indicative of our future growth, and we expect our revenue growth rate to decline compared to prior years.

We have experienced rapid revenue growth in recent periods with revenue of $120.4 million and $88.4 million in the three months ended March 31, 2022 and 2021, respectively. You should not rely on our revenue for any previous quarterly period as any indication of our revenue or revenue growth in future periods. As we grow our business, we expect our revenue growth rates to decline compared to prior years for a number of reasons, which may include more challenging comparisons to prior periods as our revenue grows, slowing demand for our platform, increasing competition, increasing regulation, a decrease in the growth of our overall market or market saturation, and our failure to capitalize on growth opportunities. In addition, our growth rates are likely to experience increased volatility, and may decline, as the COVID-19 pandemic evolves and societal and economic circumstances shift.

We have a limited operating history, which makes it difficult to predict our future financial and operating results.

We were founded in 2011; introduced our first open online course in 2012, our first certificates of completion in 2013, our first Specialization in 2014, Coursera for Business, our Enterprise platform offering for businesses, in 2016, our first MasterTrack certification in 2018, Guided Projects in 2019, and Coursera for Campus, our Enterprise platform offering for educational institutions, in late 2019; and enrolled the first students in the Degrees programs offered through our platform in 2016. As a result of our limited operating history, our forecast of future operating results may be less accurate than if we had a longer operating history, and such forecasts are subject to a number of uncertainties, including those discussed in this “Risk Factors” section and elsewhere in this Quarterly Report on Form 10-Q. If we do not manage these risks successfully, our operating and financial results may differ materially from our expectations and our business and stock price may suffer.

We have incurred significant net losses since inception, and anticipate that we will continue to incur losses for the foreseeable future.

We incurred net losses of $38.3 million and $18.7 million in the three months ended March 31, 2022 and 2021, respectively, and we had an accumulated deficit of $527.0 million as of March 31, 2022. We expect to incur significant losses in the future. We will need to generate and sustain increased revenue levels in future periods to achieve profitability, and even if we achieve profitability, we may not be able to maintain or increase our level of profitability. We anticipate that our operating expenses will increase substantially for the foreseeable future as we continue to, among other things:

•expand our course offerings and the robustness of our platform;

•expand our learner base and our sales and marketing efforts;

•improve and scale our technology;

•enter and expand into additional international markets;

•address increased competition; and

•incur significant accounting, legal, and other expenses as a public company that we did not incur as a private company.
 

These expenditures will make it more difficult for us to achieve and maintain profitability. Our efforts to grow our business may be more costly than we expect, and we may not be able to increase our revenue enough to offset our higher operating expenses. If we are forced to or elect to reduce our expenses, it could negatively impact our growth and growth strategy. As a result, we can provide no assurance as to whether or when we will achieve profitability. If we are not able to achieve and maintain profitability, the value of our company and our common stock could decline significantly, and you could lose some or all of your investment.

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Market adoption of online learning solutions is relatively new and may not grow as we expect, which may harm our business and results of operations.

Our future success will depend in part on the growth, if any, in the demand for online learning solutions. While the COVID-19 pandemic has accelerated the market for online learning solutions, it is still less mature than the market for in-person learning and training, which many businesses currently utilize, and these businesses may be slow or unwilling to migrate from these legacy approaches. As COVID-19 vaccines and treatment options have become more widely available, many educational institutions have re-opened their campuses and businesses have reversed or materially limited remote work policies, which may slow demand for online learning solutions. As such, it is difficult to predict learner or partner demand for our platform, learner or partner adoption and renewal, the rate at which existing learners and partners expand their engagement with our platform, the size and growth rate of the market for our platform, the entry of competitive offerings into the market, or the success of existing competitive offerings. Furthermore, even if educators and enterprises want to adopt an online learning solution, it may take them a substantial amount of time and resources to fully transition to this type of learning solution or they could be delayed due to budget constraints, weakening economic conditions, or other factors. Even if market demand for online learning solutions generally increases, we cannot assure you that adoption of our platform will also increase. If the market for online learning solutions does not grow as we expect or our platform does not achieve widespread adoption, it could result in reduced customer spending, learner and partner attrition, and decreased revenue, any of which would adversely affect our business and results of operations.

The COVID-19 pandemic has impacted, and may continue to impact, our business, key metrics, and results of operations in volatile and unpredictable ways.

The uncertainty around the COVID-19 pandemic in the United States and worldwide will likely continue to adversely impact the national and global economy. The full extent of the impact of the COVID-19 pandemic on our business, key metrics, and results of operations in the United States and worldwide depends on future developments that are uncertain and unpredictable, including the duration and severity, of the pandemic, the impact of new strains or variants of the virus, the effectiveness and availability of vaccines and boosters, future and ongoing actions that may or may not be taken by governmental authorities, the impact on the businesses of our customers and partners,s the impact on capital and financial markets, and any new information that may emerge concerning the virus or vaccines or other efforts to control the virus.

As a result of the COVID-19 pandemic, we have transitioned to a primarily remote work environment, and we may continue to operate on a significantly remote and geographically (including internationally) dispersed basis for the foreseeable future, including for our executive officers. This remote and dispersed work environment could have a negative impact on the execution of our business plans and operations and create productivity, connectivity, and oversight challenges. For example, if a natural disaster, power outage, connectivity issue, or other event occurred that impacted our employees’ ability to work remotely, it may be difficult or, in certain cases, impossible, for us to continue our business for a substantial period of time. Further, as the COVID-19 pandemic continues, we may experience disruptions if our employees or our partners’ or third-party service providers’ employees become ill and are unable to perform their duties, and our operations, Internet, or mobile networks, or the operations of one or more of our third-party service providers, is impacted. The increase in remote working may also result in consumer privacy, IT security, and fraud vulnerabilities, which, if exploited, would result in significant recovery costs and harm to our reputation. Transitioning to a fully or predominantly remote work environment and providing and maintaining the operational infrastructure necessary to support a remote work environment also present significant challenges to maintaining our corporate culture, including employee engagement and productivity, both during the immediate pandemic crisis and beyond.

We have also seen significant and rapid shifts in the traditional models of education and training as this pandemic has evolved. Although we believe our business has also been positively impacted to some extent by several trends related to the COVID-19 pandemic, including the increased need or willingness of businesses, governments, and educational institutions to adopt remote, online, and asynchronous learning and training, we cannot predict whether these trends will continue if and when the pandemic begins to subside, restrictions ease, and the risk and barriers associated with in-person learning and training decrease. In addition, the COVID-19 pandemic may negatively impact the financial resources available to learners or the operating budgets of our partners or customers, any of which could in turn negatively impact our business and operating results.

Even after the COVID-19 pandemic has subsided, we may experience an adverse impact to our business and the value of our common stock as a result of its global economic impact, including any recession that has occurred or may occur in the future. Further, to the extent the COVID-19 pandemic adversely affects our business, results of operations, financial condition, and cash flows, it may also heighten many of the other risks described in this “Risk Factor” section.

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We may change the contract terms, including our pricing model, for the course content and credentialing programs offered on our platform, which in turn could impact our operating results.

We have limited experience with respect to determining the optimal prices and contract length for the course content and certification, degree, and other credentialing programs offered on our platform, and as a result, we have in the past, and expect that we may in the future, change our pricing model or target contract length from time to time, which could impact our operating and financial results. For example, in February 2020, we launched Coursera Plus, an annual subscription plan with unlimited access to a variety of our courses, Specializations, and professional certificates, at a fixed annual cost, and in the second quarter of 2020, we augmented our Coursera Plus pricing model to include a monthly subscription option. We may need to continue to adjust our pricing model as we gain experience with our offerings. For instance, we are currently testing pricing localization to account for market segmentation and conducting other pricing experiments. As the market for our learning platform grows (if ever), as new competitors introduce competitive applications or services, or as we enter into new international markets, we may be unable to attract new customers at the same price or based on the same pricing models we have historically used, or for contract lengths consistent with our historical averages. Pricing and contract length decisions may also impact the mix of adoption among our offerings and negatively impact our overall revenue. Moreover, competition may require us to make substantial price concessions or accept shorter contract durations or other unfavorable contract terms. Our revenue and financial position may be adversely affected by any of the foregoing, and we may have increased difficulty achieving profitability.

If we fail to maintain and expand our partnerships with university and industry partners, our ability to grow our business and revenue will suffer.

The success of our business depends in large part on the continued and increased development and volume of compelling course content and credentialing programs by our university and industry partners, which we refer to collectively as our educator partners, as well as maintaining existing and credentialing programs. We may face several challenges in maintaining, establishing, and expanding these relationships. For instance, our university and industry partners who use our platform are required to invest significant time and resources to adjust the manner in which they develop course content and degree programs for an online learning environment. The delivery of degree programs online at educational institutions has not yet achieved widespread acceptance, and many administrators and faculty members may have concerns regarding the perceived loss of control over the educational process that might result from offering courses and degrees online and the effectiveness of asynchronous learning, as well as concerns regarding the ability to provide high-quality education online that maintains the standards they set for their on-campus programs. There can be no assurance that online programs, such as those offered on our platform, will ever achieve significant market acceptance, and universities and organizations may therefore decline to engage with our platform. Further, if we were to lose a significant number of university and industry partners, including those who provide a significant portion of the content and credentialing programs available on our platform, or are no longer able to offer certain content or credentialing programs on our platform, particularly those in high demand, our reputation, growth, and revenue would be materially and adversely impacted. For the three months ended March 31, 2022, we generated approximately 29% of our total revenue from the content and credentialing programs of five partners. Total revenue includes both revenue directly attributable to a particular partner and revenue which we do not consider directly attributable, such as revenue from site-wide subscriptions or our Coursera for Teams offering. The loss of or reduction in content and credentialing programs from such partners would materially and adversely affect our business if we are unable to secure comparable content from other partners.

If we change the contract terms with our educator partners, including with respect to pricing or contract length, it could materially and adversely affect our business, financial condition, and results of operations.

We work with our educator partners to deliver a broad portfolio of content and credentials on our platform. For our Consumer and Enterprise offerings, we incur content costs in the form of fees paid to educator partners. In addition, our Degrees services revenue is based on a percentage of the total tuition collected from Degrees students by the university partner. As a result, our revenue, gross profit, and operating results generally could be significantly and negatively impacted if the university partner raises or lowers tuition, or if we renegotiate or change the terms of our agreements with our partners. For example, if a significant number of university partners, or university partners whose courses or credentialing programs account for a significant volume of learner enrollment on our platform, were to seek to renegotiate the content fees payable by us or the percentage of tuition payable to us, it could have a material impact on our business and operating results. Further, we may change the terms of these agreements, including the pricing terms or contract length, due to competitive, regulatory, or other reasons. Any significant change in our pricing or other contract terms with these partners could materially and adversely affect our business, financial condition, and results of operations.

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Our financial performance depends heavily on our ability to attract and retain learners, and if we fail to do so, our business and operating results will suffer.

Building awareness and acceptance of the online course content and certification, degree, and other credentialing programs offered on our platform among learners is critical to our ability to attract prospective learners and generate revenue. We must also continue to successfully work with our partners to maintain course content and credentialing programs and develop new and compelling course content as well as additional certification, degree, and other credentialing programs to maintain the relevancy of content and keep learners interested and engaged. A significant portion of our expenses is attributable to marketing efforts dedicated to attracting potential learners to our platform. Because we generate revenue based on fees from, or as a result of, learners enrolled in the online courses and certification, degree, and other credentialing programs offered on our platform, we must attract learners in a cost-effective manner and increase the rate at which learners enroll in and complete the courses and credentialing programs offered by our partners. We also must retain learners and convert learners from our freemium model to paying customers, which depends in part on our ability to offer engaging and frequently updated content as well as quality customer support and service. The following factors, many of which are largely outside of our control, may prevent us from increasing and maintaining learner enrollment in the online courses and credentialing programs offered on our platform in a cost-effective manner or at all:

•Negative perceptions about online learning. Online education programs may not be successful or operate efficiently, which in turn could create the perception that online education in general is not effective. Learners may also be reluctant to enroll in online programs due to concerns that the learning experience may be substandard, that employers may be hesitant to hire learners who received their education or credentials online, or that organizations granting professional licenses or certifications may be reluctant to grant them based on credentials, including degrees, earned through online education or training.

•Reduced support from partners. If partners cease to offer new and compelling course content or certification, degree, or other credentialing programs, maintain existing content and credentialing programs, or limit our ability to promote their courses or programs, learners may reduce or terminate their use of our platform.

•Harm to partner reputation. Many factors affecting our partners’ reputations are beyond our control and can change over time, including their academic performance and ranking among educational institutions, including with respect to a specific degree, certification, or other credentialing program.

•Lack of interest in the certifications, degrees, or other credentials offered on our platform. We may encounter difficulties attracting learners to enroll in certification, degree, or other credentialing programs that are not in demand due to shifting employer or societal preferences and priorities or that are in emerging or unproven fields.

•Learner dissatisfaction. Learner dissatisfaction with the quality of the course content and presentation or the course presenters, changing views of the value of our partners’ programs and certification, degree, or other credentialing programs offered, and perceptions of employment prospects following completion of a program on our platform may negatively impact learner retention.

•Ineffective marketing efforts. Our marketing efforts, which use search engine optimization, paid search, and custom website development and deployment, may prove unsuccessful or cost inefficient.

•Lack of financial resources for learners. Any developments that reduce the availability of financial aid for higher education generally or that reduce the disposable income available to potential learners (including macro-economic developments such as continued or worsening recession or unemployment or the ongoing COVID-19 pandemic) could impair learners’ abilities to meet their financial obligations, which in turn could result in reduced enrollment and harm our ability to generate revenue.

•General economic conditions. Enrollment in the courses and certification, degree, and other credentialing programs offered on our platform may be affected by changes in the U.S. economy and by global economic conditions. For example, an improvement in economic conditions may reduce demand for higher educational services as potential learners may find adequate employment without additional education. Conversely, a decline in employment opportunities or economic conditions may reduce employers’ willingness to sponsor higher educational opportunities for employees given a lack of employer need for enhanced skill sets or an inability to fund such programs and could discourage learners from pursuing higher education due to an inability to afford our programs or a perception that the financial investment may not result in increased earning potential or improved employment opportunities.

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Any of these factors could reduce enrollment and retention and could cause our costs associated with attracting and retaining learners to increase, which could materially harm our ability to increase our revenue or achieve profitability. These developments could also harm our reputation and make it more difficult for us to maintain our current content and credentialing programs and engage our partners for new course content or other offerings, which in turn may negatively impact our ability to expand our business and improve our financial performance.

If our learners do not expand beyond our freemium offerings and free trials available on our platform, our ability to grow our business and improve our results of operations may be adversely affected.

Many of our learners initially use the freemium version of our platform or free trials available on our platform, and many of our Enterprise customers engage with our platform only for a specific use case. For instance, as part of our COVID-19 initiative in 2020, we offered free unlimited access to Coursera for Campus to students and faculty at campuses around the world. We subsequently began offering Coursera for Campus Basic, which allows universities and students access to Guided Project enrollments. Our ability to grow our business depends in part on our ability to persuade learners and other customers to expand their use of our platform to address additional use cases and to convert free subscriptions to paid subscriptions over time.

Further, to continue to grow our business, it is important that our customers renew their subscriptions when existing contracts expire and that we expand our relationships with our existing customers. Our customers have no obligation to renew their subscriptions, and our customers may decide not to renew their subscriptions with a similar contract period, at the same prices and terms, with the same or a greater number of learners, or at all.

If we pursue unsuccessful partner opportunities, we may forego more profitable opportunities and our operating results and growth would be harmed.

The process of identifying course content and certification, degree, and other credentialing programs that we believe will be a good fit for our platform and negotiating agreements with potential partners is complex and time-consuming. Because of the initial reluctance on the part of some educational institutions, businesses, and other organizations to embrace online delivery of education, training, and credentialing programs and the complicated approval process within some of these entities, our process to attract and engage a new partner can be lengthy. In addition, we may face resistance from university administrators or faculty members.

We, our partners, and production providers may devote a significant number of hours, and up to a year or more, to develop and launch a new course offering or new certification, degree, or other credentialing program. We may spend substantial effort and management resources on securing a new partnership, working with our existing partners to maintain course content and credentialing programs, and working with our existing and new partners to develop and launch new course content and new degree, certification, or other credentialing programs without any assurance that our efforts will result in the successful launch of a new offering or the generation of revenue. If we invest substantial resources pursuing opportunities that do not attract sufficient interest from learners, we may forego other more successful content and program development efforts, and our operating results, revenue and growth would be harmed.

We must incur significant expense in technology and content development to launch a new offering or program, and we may not generate sufficient revenue from a new offering to offset our costs.

Our platform enables our partners to offer learners the opportunity to enroll in live, or synchronous, courses and programs and pre-produced, or asynchronous, educational content that can be accessed at any time. To launch a new course offering or new certification, degree, or other credentialing program, whether synchronous or asynchronous, we must integrate our platform with the various learner information and other operating systems our partners use to manage functions within their institutions. In addition, our content development team must work closely with that partner’s faculty members or staff to produce engaging online course content, and we must commence learner acquisition activities. During the term of our agreement with the partner, we are responsible for the costs associated with maintaining our technology platform and providing non-academic and other support for learners enrolled in the program. We invest significant resources in these new programs from the beginning of our relationship with a partner, including marketing and other learner acquisition costs to attract and fulfill enrollment cohorts for a program, and in some cases, content development grants to provide assistance to our partners as they invest resources preparing content for an online medium. There is no guarantee that we will ever recoup these costs. In addition, delays in the implementation of a new program, including Specialization, certification, or Degrees programs, could negatively impact our revenue and operating results.

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Because we receive fees from learners enrolling in, and, in some cases, completing, courses and certification, degree, or other credentialing programs on our platform, we only begin to recover these costs once learners are enrolled and begin paying fees. In addition, in some cases, learners may audit a course or courses toward a certification free of charge and elect not to pay for the certification itself. Further, our Degrees services revenue is determined based on a percentage of the total tuition collected from Degrees students by the university partner. As a result, the revenue we earn from the Degrees offerings on our platform is dependent on the number of learners enrolled in the Degrees program and the tuition charged by the university partner. The time that it takes for us to recover our investment in a new course or program depends on a variety of factors, primarily our learner acquisition costs, learner retention rate, and the rate of growth in learner enrollment in and, in some cases, completion of, the course or program. Because of the lengthy period required to recoup our investment in a program, unexpected developments beyond our control could occur that result in the partner ceasing or significantly curtailing a course offering or certification, degree, or other credentialing program before we generate any revenue therefrom. In addition, partners generally do not grant us exclusive rights to their content, and any such arrangements are of limited duration. As such, partners may choose to offer the same content on one of our competitors’ platforms, which could limit the number of learners enrolled in such partner’s courses or programs on our platform. In addition, if a partner were to terminate an existing program, learners enrolled in that program may stop using our platform, which in turn would negatively impact our learner enrollment generally. As a result of any of the foregoing, we may ultimately be unable to recover the full investment that we make in a new offering or achieve any level of profitability from such offering.

Failure to effectively expand our sales and marketing capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our platform.
 

Our ability to broaden our customer base, particularly our Enterprise customer base, and achieve broader market acceptance of our platform, will depend to a significant extent on the ability of our sales and marketing organizations to work together to increase our sales pipeline and cultivate customer and partner relationships to drive revenue growth. Our marketing efforts include the use of search engine optimization, paid search, and custom website development and deployment.

We have invested in and plan to continue expanding our sales and marketing organizations, both domestically and internationally. Identifying, recruiting, and training sales personnel requires significant time, expense, and attention. If we are unable to hire, develop, and retain talented sales or marketing personnel, if our new sales or marketing personnel are unable to achieve desired productivity levels in a reasonable period of time (including as a result of working remotely), or if our sales and marketing programs are not effective, or if expected sales and marketing programs by our partners do not materialize or are not effective, our ability to broaden our customer base and achieve broader market acceptance of our platform could be harmed. In addition, the investments we make in our sales and marketing organization will occur in advance of experiencing benefits from such investments, making it difficult to determine in a timely manner if we are efficiently allocating our resources in these areas.

If we fail to quickly and efficiently scale our operations to support the needs of new and existing partners, our reputation and our revenue will suffer.

Our continued growth and potential profitability depend on our ability to successfully scale our operations to support newly launched course offerings and new certification, degree, or other credentialing programs with our partners. If we cannot quickly and efficiently scale up our sales and marketing teams and our technology teams, which includes the hiring and training of new employees, we may not be successful in attracting potential learners to our platform, which would negatively impact our ability to generate revenue, and our partners and learners could lose confidence in our platform. If we cannot quickly and efficiently scale up our technology and operations to handle increases in the volume and rate of learner enrollment and of new course offerings or new certification, degree, or other credentialing programs, our partners’ and learners’ experiences with our platform may suffer, which in turn could damage our reputation. Our ability to effectively manage any significant increase in the volume of new offerings or programs or in the rate or volume of learner enrollment and retention will depend on a number of factors, including our ability to:

•assist our partners in maintaining existing course content and credentialing programs and developing and producing an increased volume of engaging course content that is accessible to a wide variety of learners;

•successfully introduce new features and enhancements on our platform;

•maintain a high level of functionality and cross-functionality, and technological robustness of our platform; and

•deliver high-quality professional services and support (including training, implementation, and consulting services) to our partners, their faculty and employees, and learners on our platform.

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Establishing new course offerings and new certification, degree, or other credentialing programs or expanding existing ones will require us to make investments in management and key staff, increase capital expenditures, incur additional marketing expenses, and potentially reallocate other resources. If we are unable to scale our platform, maintain and increase its interoperability, develop an increasingly robust mix of engaging content or otherwise manage new offerings effectively, our ability to grow our business and achieve profitability would be impaired, and the quality of our solutions and the satisfaction of our partners and learners could suffer.

Disruptions to the operations of one or more of our third-party service providers may adversely affect our business operations and financial condition.

We and our educator partners rely on a variety of third-party service providers to support our operations by providing customer support, mobile network, Internet, content production, platform integration, and other services. We and our educator partners may not have the resources or technical sophistication to anticipate disruptions to the operations of our third-party service providers, which could arise from any of a number of different reasons, including financial instability, work stoppages or slowdowns or staffing difficulties, or inclement weather. Disruptions to the operations of our third-party service providers could result in communication, content production, platform performance, or platform availability problems for us and our educator partners, which could adversely affect our business operations and financial condition.

If we fail to adapt and respond effectively to rapidly changing technology, evolving industry standards and changing customer needs or requirements, our platform may become less competitive.

Our future success depends on our ability to adapt and enhance our platform. To attract new learners and partners and increase revenue from existing learners and partners, we will need to continuously enhance and improve our offerings to meet learner and partner needs at prices that our customers are willing to pay. Such efforts will require adding new functionality and responding to technological advancements, which will increase our research and development costs. If we are unable to develop content that addresses learners’ and partners’ needs, or enhance and improve our platform in a timely manner, we may not be able to maintain or increase market acceptance and use of our platform. Further, some of our competitors expend a considerably greater amount of funds on their research and development programs, and their sales and marketing practices, and those that do not may be acquired by larger companies that would allocate greater resources to our competitors’ research and development programs. If we fail to maintain adequate research and development resources or compete effectively with the research and development programs of our competitors, our business could be harmed. Our ability to grow is also subject to the risk of future disruptive technologies. Access to and use of our platform is provided via the Internet, which, itself, was disruptive to the previous enterprise software model. If new technologies emerge that can deliver online learning programs at lower prices, more efficiently, more conveniently, more securely, or with stronger mechanisms to detect and prevent plagiarism, and if we fail to adopt such technologies or fail to do so in a timely manner, our ability to compete would be adversely affected.

If we fail to increase sales of our Enterprise offerings, or if we need to change the contract terms associated therewith, including with respect to pricing or contract length, it could negatively affect our business, financial condition, and results of operations.

In addition to our offerings for individuals, we sell our Enterprise offerings to businesses, academic institutions, and governments. These customers utilize our platform to provide relevant training, skills, and credentialing programs to current and potential employees and citizens through our online platform. To maintain and expand our relationships with these entities, we must demonstrate the value, benefits, and return on investment of providing education, training, skills, and credentialing through our online platform and achieve acceptance from both employees and these entities of the merits and legitimacy of our offerings.

Our growth strategy is dependent upon increasing sales of our Enterprise offerings to these entities, which we offer on a subscription basis. We have a limited history with our subscription and pricing models and changes in our models could adversely affect our revenue and financial condition. In addition, as the market for our learning platform grows (if ever), as new competitors introduce competitive applications or services, or as we enter into new international markets, we may be unable to attract new customers at the same price or based on the same pricing models we have historically used, or for contract lengths consistent with our historical averages. For example, we often enter into subscription arrangements with businesses, academic institutions, and governments in which we offer more favorable pricing terms in exchange for larger total contract values or longer contract terms. Changes to our pricing models or contract lengths could negatively impact our revenue and financial position, and we may have increased difficulty achieving growth or profitability. As we drive a greater portion of our revenue through subscriptions to our Enterprise platform, this may also result in reduced margins in the future.

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We recognize revenue from Enterprise customer subscriptions ratably over the subscription term of the underlying contract, which generally ranges from one to three years. Consequently, a decline in new or renewed subscriptions in any quarter will not be fully reflected in revenue or other results of operations in that quarter but will negatively affect our revenue and other results of operations across future quarters. Further, any increases in the average term of subscriptions would result in revenue for those contracts being recognized over longer periods of time with less positive impact on our results of operations in the near term. Accordingly, such changes could adversely affect our financial performance, cause us to miss industry or analyst expectations and cause our stock price to decline.

As we seek to increase sales of our Enterprise offerings, we face upfront sales costs, higher customer acquisition costs, more complex customer requirements, and discount requirements. In addition, entities that subscribe to our Enterprise platform may elect to begin to use our platform on a limited basis, but nevertheless require education and interactions with our sales team, which increases our upfront investment in the sales effort with no guarantee that our platform will be used widely enough across their organization to justify our upfront investment. If we are unable to maintain or increase the number of subscriptions to our Enterprise platform while mitigating the risks associated with serving subscribers, our business, financial condition, and results of operations will suffer.

If we fail to maintain sufficient high-quality content from partners, we will be unable to attract and retain customers.

Our success depends on our ability to provide learners and partners with the information they seek, which in turn depends on the quantity, quality and format of the content provided by our partners. We may be unable to provide learners with the information they seek if our partners do not contribute content that is helpful and reliable, or if they remove content they previously submitted.
 

We believe that many of our new learners find us by word of mouth and other non-paid referrals from existing learners. If existing learners and partners are dissatisfied with their experience on our platform, they may stop accessing our content and may stop referring others to us. Likewise, if existing learners do not find our content appealing, whether because of a negative experience or declining interest in or relevancy of the content, they may stop referring others to us. In turn, if partners perceive that our platform lacks an adequate learner audience, partners may be less willing to provide content to offer on our platform, and the experience of learners could be further negatively impacted. If we are unable to retain existing learners and partners and attract new learners and partners who contribute to an active community, our growth prospects would be harmed, and our business could be adversely affected.

If we fail to manage the growth of our business both in terms of scale and complexity, our operating results and financial condition could be adversely affected.

Our revenue increased to $120.4 million in the three months ended March 31, 2022 from $88.4 million in the three months ended March 31, 2021. Our growth has placed, and we expect will continue to place, a significant strain on our administrative and operational infrastructure, facilities, and other resources, and we face challenges of integrating, developing, training, and motivating a rapidly growing employee base in various locations around the world and maintaining our company culture across multiple locations globally. Our ability to manage our operations and growth will require us to continue to expand our sales and marketing and content development personnel, and technology, finance, and administration teams globally, as well as our facilities and infrastructure. We will also be required to refine our operational, financial, and management controls and reporting systems and procedures. If we fail to efficiently manage this global expansion of our business, our costs and expenses may increase more than anticipated and we may not successfully expand our partnerships with businesses, governments, educational institutions, and other organizations, enhance our platform and technology-enabled services, increase the volume of new course content and credentialing programs developed by our partners, attract a sufficient number of learners in a cost-effective manner, satisfy the requirements of our existing partners, increase the volume of subscriptions to our Enterprise platform, respond to competitive challenges, or otherwise execute our business plan. Although our business has experienced significant growth in the past, we cannot provide any assurance that our business or revenue will continue to grow at the same rate or at all in the future.

Our ability to effectively manage any significant growth of our business will depend on a number of factors, including our ability to:

•effectively recruit, integrate, train, and motivate a large number of new employees while retaining existing employees and effectively executing our business plan;

•continue to improve our operational, financial, and management controls;

•protect and further develop our strategic assets, including our intellectual property rights; and

•make sound business decisions in light of the scrutiny associated with operating as a public company.

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These activities will require significant capital expenditures and allocation of valuable management and employee resources, and our growth will continue to place significant demands on our management and our operational and financial infrastructure. We may be unable to effectively manage any future growth in an efficient, cost-effective or timely manner, or at all. Any failure to successfully implement systems enhancements and improvements will likely negatively impact our ability to manage our expected growth, ensure uninterrupted operation of key business systems, and comply with the rules and regulations that are applicable to public reporting companies. Moreover, if we do not effectively manage the growth of our business and operations globally, the quality of our platform could suffer, which would negatively affect our reputation, results of operations, and overall business.

We face competition from established companies as well as other emerging companies, which could divert partners to our competitors, result in pricing pressure, impact our market share, and significantly reduce our revenue.

The market for global adult online learning is highly fragmented and rapidly evolving. We expect alternative modes of learning to continue to accelerate as players in this industry introduce new and more competitive products, enhancements, and bundles.
 

Participants in the global adult online learning ecosystem include:

•Direct-to-consumer, online education companies: 2U, Inc. through its subsidiary edX Inc., and FutureLearn Limited;

•Companies that provide technology solutions and services to universities offering online learning programs: 2U, Inc., Eruditus Learning Solutions Pte. Ltd., Noodle Partners, Inc., and upGrad Education Private Limited;

•Corporate training companies: Degreed, Inc., LinkedIn Corporation through its LinkedIn Learning services, Pluralsight, Inc., Udacity, Inc. and Udemy, Inc.;

•Providers of free educational resources: Khan Academy, Inc., The Wikimedia Foundation, Inc., and Google LLC (“Google”) through its YouTube services; and

•Internal online degree platforms: Online degree programs developed in-house by universities.

We expect these and other existing competitors and new entrants to the online learning market to continually revise and improve their business models. If these or other market participants introduce new or improved delivery of online education and technology-enabled services that are more compelling or widely accepted than ours, our ability to grow our revenue and achieve profitability could suffer. Several new and existing companies in the online education industry provide or may provide offerings similar to what we offer on our platform, and these companies may pursue relationships with our partners that may reduce the content our partners produce for our platform. In addition, educational institutions, as well as businesses, governments, and other organizations, may choose to continue using or develop their own online learning or training solutions in-house, rather than pay for our solutions.

Some of our competitors and potential competitors have significantly greater resources than we do. Increased competition may result in pricing pressure for us in terms of the percentage of tuition we are able to negotiate to receive from a partner. The competitive landscape may also result in a longer and more complex process of recruiting and maintaining current and prospective partners or a decrease in our market share, any of which could negatively affect our revenue and future operating results and our ability to grow our business.

A number of factors could impact our ability to compete, including:

•the availability or development of alternative online education services that are more compelling than ours;

•changes in pricing policies and terms offered by our competitors or by us;

•the ability to adapt to new technologies and changes in requirements of our partners and learners;

•learner acquisition and retention costs;

•the ability of our current and future competitors to establish relationships with businesses, governments, educational institutions, and other organizations to enhance their services and expand their markets; and

•industry consolidation (such as the recent acquisition of edX Inc. by 2U, Inc.) and the number and rate of new entrants.
 

We may not be able to compete successfully against current and future competitors. In addition, competition may intensify as our competitors raise additional capital and as established companies in other market segments or geographic markets expand into our market segments or geographic markets. If we cannot compete successfully against our competitors, our ability to grow our business and achieve profitability could be impaired.

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If for-profit postsecondary institutions, which offer online education alternatives different from ours, perform poorly, it could nonetheless tarnish the reputation of online education as a whole, which could impair our ability to grow our business.

For-profit postsecondary institutions, many of which provide course offerings predominantly online, are under intense regulatory and other scrutiny, which has led to media attention that has sometimes portrayed that sector in an unflattering light. Some for-profit online school operators have been subject to governmental investigations alleging the misuse of public funds, financial irregularities, and failure to achieve positive outcomes for learners, including the inability to obtain employment in their fields. These allegations have attracted significant adverse media coverage and have prompted legislative hearings and regulatory responses. These investigations have focused on specific companies and individuals, as well as entire industries in the case of recruiting practices by for-profit higher education companies. Even though we do not market our solutions to these institutions, this negative media attention may nevertheless add to the skepticism about online higher education generally, including our solutions.

The impact of these negative public perceptions on our current and future business is difficult to predict. If these few situations, or any additional misconduct, cause all online learning programs to be viewed by the public or policymakers unfavorably, we may find it difficult to enter into or renew agreements with our partners or attract additional learners for our partners’ programs. In addition, this perception or any further governmental investigation could serve as the impetus for more restrictive legislation or regulation, which could limit our future business opportunities. Moreover, allegations of abuse of federal financial aid funds and other statutory violations against for-profit higher education companies could negatively impact our ability to succeed due to increased regulation and decreased demand. Any of these factors could negatively impact our ability to increase our partner base and grow our partners’ programs, which would make it difficult to continue to grow our business and could negatively affect our stock price.

We may acquire other companies or technologies that could divert our management’s attention, result in additional dilution to our stockholders, and otherwise disrupt our operations and harm our results of operations.

We may choose to expand by making acquisitions that could be material to our business. To date, we have only completed one acquisition, and our ability as an organization to successfully acquire and integrate technologies or businesses is unproven and limited. Acquisitions involve many risks, including the following:

•an acquisition may negatively affect our results of operations and financial condition because it may require us to incur charges or assume substantial debt or other liabilities, may cause adverse tax consequences or unfavorable accounting treatment, may expose us to claims and disputes by third parties, including intellectual property claims and disputes, or may not generate sufficient financial return to offset additional costs and expenses related to the acquisition;

•we may encounter difficulties or unforeseen expenditures in integrating the business, technologies, products, personnel or operations of any company or business that we acquire, particularly if key personnel of the acquired company or business decide not to work for us;

•an acquisition may disrupt our ongoing business and distract our management;

•an acquisition may result in a delay or reduction of customer purchases for both us and the company or business we acquired due to customer uncertainty about continuity and effectiveness of service from either company;

•an acquisition may involve the entry into geographic or business markets in which we have little or no prior experience or where competitors have stronger market positions;

•we may face challenges inherent in effectively managing an increased number of employees in diverse locations;

•we may experience strain on our financial and managerial controls and reporting systems and procedures;

•our use of cash to pay for acquisitions would limit other potential uses for our cash;

•if we incur debt to fund such acquisitions, such debt may subject us to material restrictions on our ability to conduct our business;

•we may incur impairment charges related to potential write-downs of acquired assets or goodwill; and

•to the extent that we issue a significant amount of equity or equity-linked securities in connection with an acquisition, existing stockholders may be diluted.

We may not succeed in addressing these or other risks, which could harm our business and operating results.

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We may invest in private companies and if the value of any such equity investments were to decline, it could adversely affect our results of operations and financial condition.

We may from time to time make equity investments in private companies where we do not have the ability to exercise significant influence over results. Investments in private companies are inherently risky. The companies in which we may invest include early-stage companies that may still be developing products and services with limited cash to support the development, marketing, and sales of their products, and whose financial statements are often unaudited. Further, our ability to liquidate such investments will typically be dependent on a liquidity event, such as a public offering or acquisition, as no public market currently exists for the securities held in the investees. Valuations of privately held companies are inherently complex and uncertain due to the lack of a liquid market for the securities of such companies and the potential lack of comparable acquisitions in the market as a comparison for such valuations, among other factors. If we determine that any of our investments in such companies have experienced a decline in value, we will recognize an expense to adjust the carrying value to its estimated fair value. Negative changes in the estimated fair value of private companies in which we invest could have a material adverse effect on our results of operations and financial condition.

Our directors may encounter conflicts of interest involving us and other organizations with which they may be affiliated, including matters that involve corporate opportunities.

Most of our directors are, and any future directors may be, affiliated with other entities, including venture capital or private equity funds or businesses that may be complementary, competitive, or potentially competitive to our company. They may also in the future become affiliated with entities that are engaged in business or other activities similar to our business. Additionally, all of our officers and directors, in the course of their other business activities, may become aware of investments, business opportunities, or information that may be appropriate for presentation to us as well as to other entities to which they owe a fiduciary duty. As a result, directors and officers may encounter perceived or actual conflicts of interest involving us and other entities with which they are or become affiliated, including matters that involve corporate opportunities. For example, a portfolio company of a director-affiliated venture fund may become a competitor of ours or a potential strategic partner. In addition, as our growth strategy includes considering potential acquisitions, it is possible an entity affiliated with one of our directors could be an acquisition target or a competitive acquirer. Further, to the extent we engage in transactions with any director-affiliated entity, it could create actual, or the perception of, additional conflicts of interest, including with respect to our ability to negotiate terms equivalent to those that could be obtained in an arms’-length negotiation with an unaffiliated third party. For instance, Dr. Ng, one of our co-founders and Chairman of our board of directors, owns DeepLearning.AI Corp., a developer of educational content relating to artificial intelligence that offers courses through our platform. Although we view DeepLearning.AI Corp. as a valued business partner and believe our agreement is on commercially reasonable terms, there may nonetheless be a perception of a conflict of interest. As a result of the foregoing, our directors and officers may have conflicts of interest in determining to which entity particular opportunities or information should be presented. If, as a result of such potential conflicts, we are deprived of investment, business, or information, the execution of our business plan and our ability to effectively compete may be adversely affected. Our directors are also not obligated to commit their time and attention exclusively to our business and accordingly, they may encounter conflicts of interest in allocating their time and resources between us and other entities with which they are affiliated.

If we do not retain our senior management team and key employees, we may not be able to sustain our growth or achieve our business objectives.

Our future success is substantially dependent on the continued service of our senior management team, and in particular of our Chief Executive Officer. The expertise of our senior management in negotiating with businesses, governments, educational institutions, and other organizations is critical in navigating the complex approval processes of these entities. We do not maintain key-person insurance on any of our employees, including our senior management team, and our management and other U.S. employees are generally employed on an at-will basis. The loss of the services of any individual on our senior management team would make it more difficult to successfully operate our business and pursue our business goals.

Our future success also depends heavily on the retention of our sales and marketing, data science, technology and content development, and support teams to continue to attract and retain qualified learners in our partners’ programs, thereby generating revenue for us. In particular, our technology and content development employees provide the technical expertise underlying our technology-enabled services that support our online course offerings and the certification, degree and other credentialing programs offered on our platform, as well as the learners enrolled in these programs. Competition for these employees is intense. We may be unable to attract or retain these key personnel that are critical to our success, resulting in harm to our relationships with partners, loss of expertise or know-how, and unanticipated recruitment and training costs.

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We may need additional capital in the future to pursue our business objectives. Additional capital may not be available on favorable terms, or at all, which could compromise our ability to grow our business.

We believe that our existing cash balances will be sufficient to meet our minimum anticipated cash requirements for at least the next 12 months. We may, however, need to raise additional funds to respond to business challenges or opportunities, accelerate our growth, develop new offerings, or enhance our platform. If we seek to raise additional capital, it may not be available on favorable terms or may not be available at all. In addition, if we seek debt financing, we may be subject to onerous terms and restrictive covenants. Lack of sufficient capital resources could significantly limit our ability to manage our business and to take advantage of business and strategic opportunities. Further, any additional capital raised through the sale of equity or issuance of debt securities with an equity component would dilute our existing stockholders. If adequate additional funds are not available if and when needed, we may be required to delay, reduce the scope of, or eliminate material parts of our business strategy.

We believe our long-term value as a company will be greater if we focus on growth, which may negatively impact our results of operations in the near term.

We believe our long-term value as a company will be greater if we focus on longer-term growth over short-term results. As a result, our results of operations may be negatively impacted in the near term relative to a strategy focused on maximizing short-term profitability. Significant expenditures on sales and marketing efforts, developing and enhancing our platform, and expanding our research and development efforts may not ultimately grow our business or lead to expected long-term results. If our strategy does not lead to expected growth or if we are ultimately unable to achieve results of operations at the levels expected by securities analysts and investors, the market price of our common stock could decline.

Our current operations are international in scope, and we plan to expand our international operations, which exposes us to risks inherent in international operations.

Operating in international markets requires significant resources and management attention and subjects us to regulatory, economic, and political risks that are different from those in the United States. In addition to our employee base in the United States, including Puerto Rico, we have employees in Australia, Bulgaria, Canada, Germany, India, Singapore, the United Arab Emirates, and the United Kingdom in several functional areas, including product and software development, sales and marketing, talent recruitment, and general facilities management, and we have retained professional employer organizations and staffing agencies to engage personnel in certain international locations. Our international operations subject us to the compensation and benefits regulations of those jurisdictions, as well as other employer duties and obligations, that differ from the compensation and benefits regulations and duties and obligations in the United States. Further, enrollments of learners from other countries requires us to comply with international data privacy regulations of those countries. Failure to comply with international regulations or to adequately adapt to international markets could harm our ability to successfully operate our business and pursue our business goals.

We intend to expand our international operations and continue to establish a worldwide partner and learner base. Our expansion efforts into international markets may not be successful. In addition, we face risks in doing business internationally, including risks associated with sales to international governments and entities, that could constrain our operations, increase our cost structure, compromise our growth prospects and damage our reputation, including:

•the need to localize and adapt online certification, degree, and other credentialing programs for specific countries, including translation into foreign languages and ensuring that these programs enable our partners to comply with local education laws and regulations;

•local laws restricting learners from pursuing certifications, degrees, or other credentials through online education platforms such as ours or limiting the availability of financial aid to finance online education;

•different data privacy and protection laws, see “Risk Factors—Risks Related to Privacy, Cybersecurity, and Infrastructure”;

•difficulties in staffing and managing employees and contractors in foreign countries, including in countries in which foreign employees may become part of labor unions, employee representative bodies, workers’ councils or collective bargaining agreements, and challenges relating to work stoppages or slowdowns;

•different pricing environments, longer sales cycles, longer accounts receivable payment cycles, restrictions on remitting payments to the United States or converting local currency into U.S. dollars, difficulties in adopting and supporting new and different payment preferences, and collections issues;

•new and different sources of competition and practices which may favor local competitors;

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•weaker protection for intellectual property and other legal rights than in the United States and practical difficulties in enforcing intellectual property and other rights outside of the United States;

•compliance and operational challenges related to the complexity of multiple, conflicting and changing governmental laws and regulations, including, but not limited to, employment, tax, privacy and data protection, foreign investment restrictions or requirements, economic sanctions and export controls, U.S. and other anti-boycott authorities, anti-money laundering laws, supply chain transparency and anti-modern slavery laws, and anti-bribery and corruption laws and regulations such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act;

•increased financial accounting and reporting burdens and complexities;

•risks associated with foreign tax regimes, trade tariffs, foreign investment restrictions or requirements, or similar issues, which could negatively impact international adoption of our offerings;

•adverse tax consequences, including corporate tax consequences, such as double taxation, transfer pricing burdens, taxation of dividends, and the potential for required withholding taxes for our overseas employees;

•difficulties in managing foreign business operations, including the potential need to localize our business infrastructure, translating our policies and information technology systems into the local language, and local challenges related to technology, internet speed and availability, among other challenges; and

•regional, global, economic, and political conditions, including geopolitical tensions or hostilities within or beyond areas where we currently have, or may in the future have, international operations, such as the ongoing Ukraine-Russia military conflict.
 

Further, as we continue to expand internationally, we will become more exposed to fluctuations in currency exchange rates. Future agreements with international partners may provide for payments to us to be denominated in local currencies, and in such cases, fluctuations in the value of the U.S. dollar and foreign currencies could impact our operating results when translated into U.S. dollars which risks may be heightened due to increased volatility of foreign currency exchange rates as a result of the COVID-19 pandemic or other geopolitical events. Further, the strengthening of the U.S. dollar relative to foreign currencies could increase the real cost of our platform for our learners and partners outside of the United States, which could lead to the lengthening of our sales cycle or reduced demand for our platform. If we are not able to successfully hedge against the risks associated with currency fluctuations, our financial condition and results of operations would be adversely affected. To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedging transactions may be limited and we may not be able to successfully hedge our exposure, which would adversely affect our financial condition and results of operations.

Our results of operations could be adversely affected by natural disasters, public health crises, political crises, political or geopolitical crises or other catastrophic events.

Our business and operations could be materially and adversely affected in the event of earthquakes, floods, fires, telecommunications failures, blackouts or other power losses, break-ins, acts of terrorism, an outbreak of hostilities, political or geopolitical crises such as the military conflict in Ukraine, inclement weather, public health crises, pandemics or endemics, or other catastrophic events. For example, the uncertain nature, magnitude, and duration of hostilities stemming from Russia’s recent military invasion of the Ukraine, including the potential effects of sanctions and retaliatory cyber-attacks on the world economy and markets, have contributed to increased market volatility and uncertainty, which could negatively impact our results of operations. Furthermore, our executive offices are located in the San Francisco Bay Area, an earthquake-sensitive area and one that has been increasingly vulnerable to wildfires, and damage to or total destruction of our executive offices resulting from earthquakes may not be covered in whole or in part by any insurance we may have. If floods, fire, inclement weather including extreme rain, wind, heat, or cold, or accidents due to human error were to occur and cause damage to our properties or other locations from which our employees are working, or if our operations or the operations of our service providers were interrupted by telecommunications failures, blackouts, acts of terrorism or outbreak of hostilities, political or geopolitical crises or public health crises, our results of operations would suffer, especially if such events were to occur during peak periods. We may not be able to effectively shift our operations due to disruptions arising from the occurrence of such events, and our business could be affected adversely as a result. See also “Risk Factors—Risks Related to Our Business and Industry—Climate change may have an adverse impact on our business”.

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Our metrics and market estimates used to evaluate our performance are subject to inherent challenges in measurement, and real or perceived inaccuracies in those estimates may harm our reputation and negatively affect our business.

The metrics we use to evaluate our growth, measure our performance, and make strategic decisions are calculated using internal company data and have not been validated by a third party. Our metrics and market estimates may differ from estimates published by third parties or from similarly titled metrics of our competitors or peers due to differences in methodology or the assumptions on which we rely. Additionally, metrics and forecasts relating to the size and expected growth of our addressable market may prove to be inaccurate. Even if the markets in which we compete meet the size estimates and growth we have forecasted, our business could fail to grow at similar rates, if at all. If securities analysts or investors do not consider our or market metrics to be accurate representations of our business, or if we discover material inaccuracies in such estimates, then the market price of our common stock could decline, our reputation and brand could be harmed, and our business, financial condition, and results of operations could be adversely affected.

Increasing scrutiny and evolving expectations from customers, partners, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us, expose us to new or additional risks, or harm our reputation.

Companies are facing increasing scrutiny from customers, partners, regulators, investors, and other stakeholders related to their environmental, social, and governance (“ESG”) practices and disclosure. Investor advocacy groups, investment funds and influential investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, diversity, labor conditions and human rights. Increased ESG related compliance costs could result in increases to our overall operational costs. Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation, ability to do business with certain partners, and the price of our common stock. New government regulations could also result in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, diligence, and disclosure. Further, our current ESG disclosures, and any standards we may set for ourselves or a failure to meet these standards, may influence our reputation and the value of our brand. For example, we have elected to share publicly certain information about our ESG initiatives and information, and our commitment to the recruitment, engagement and retention of a diverse workforce. Our business may face increased scrutiny related to these activities, including from the investment community, and our failure to achieve progress in these areas on a timely basis, or at all, could adversely affect our reputation, business, and financial performance.

Climate change may have an adverse impact on our business.

Risks related to rapid climate change may have an increasingly adverse impact on our business and those of our customers, partners and learners in the longer term. Any of our primary locations and the locations of our customers, partners and learners may be vulnerable to the adverse effects of climate change. For example, our California headquarters has historically experienced, and is projected to continue to experience, climate-related events at an increasing frequency, including drought, water scarcity, heat waves, wildfires and resultant air quality impacts, and power shutoffs associated with wildfire prevention. Furthermore, it is more difficult to mitigate the impact of these events on our employees while they work from home as a result of the COVID-19 pandemic. Changing market dynamics, global policy developments, and the increasing frequency and impact of extreme weather events on critical infrastructure in the U.S. and elsewhere have the potential to disrupt our business and the business of our customers, partners and learners, and may cause us to experience higher attrition, losses and additional costs to maintain our operations. Further, the effects of climate change may negatively impact regional and local economic activity, which could lead to an adverse effect on our customers, partners, and learners and impact the communities in which we operate. Overall, climate change, its effects and the resulting, unknown impact could have a material adverse effect on our financial condition and results of operations.

Risks Related to Regulatory Matters and Litigation

If our partners fail to comply with international, federal and state education laws and regulations, including any applicable state authorizations for their programs, it could harm our business and reputation.

Higher education is heavily regulated in the United States and most international jurisdictions. For example, numerous states require education providers to be licensed or authorized in such state simply to enroll persons located in that state into an online education program or to conduct related activities such as marketing. If any of our partners were found to be in non-compliance with any of the laws, regulations, standards, or policies related to state authorization, the partner could lose their ability to operate in certain states, and if such non-compliance extended to a material contingent of our partners and such partners lost the ability to operate in certain states, our revenue could decline.

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Additionally, the vast majority of our U.S.-based college and university partners participate in the federal student financial assistance programs under Title IV of the Higher Education Act of 1965, as amended (“HEA”), and are subject to extensive regulation by the DOE, as well as various state agencies, licensing boards and accrediting agencies. To participate in the Title IV programs, an institution must receive and maintain authorization by the appropriate state education agencies, be accredited by an accrediting agency recognized by the DOE, and be certified by the DOE as an eligible institution.

The regulations, standards, and policies of our college and university partners’ regulators are complex, change frequently and are often subject to differing interpretation. Changes in, or new interpretations of, applicable laws, regulations or standards could compromise our college and university partners’ accreditation, authorization to offer online learning in various states or countries, permissible activities, or access to federal funds under the Title IV programs. We cannot predict with certainty how the requirements applicable to our college and university partners will be interpreted, including in the case of new laws or regulations for which no, or insufficient, interpretative guidance exists, or whether our college and university partners will be able to comply with these requirements in the future. Some regulations were designed to regulate in-person, correspondence or other types of learning experiences not offered online and may be difficult to interpret or apply to the types of programs offered by our partners on our platform. In addition, there is no assurance that degrees or certifications earned through an institution in one jurisdiction will be recognized as valid or sufficient in other jurisdictions, including internationally, for employment, to satisfy prerequisites for advanced degrees, or other opportunities. Our international college and university partners are subject to similarly extensive legislation, regulation, and oversight.

Our future growth could be impaired if we or our partners fail to obtain timely approval from applicable regulatory agencies to offer new programs, make substantive changes to existing programs or expand their programs into or within certain jurisdictions.

Our U.S.-based college and university partners are required to obtain the appropriate approvals from the DOE and applicable state and accrediting regulatory agencies for new programs, which may be conditioned, delayed, or denied in a manner that could impair our future growth. Similar approvals and reviews may be required for programs from our partners based outside the United States, and for our partners to offer programs in other countries. Education regulatory agencies may experience increases in the volume of requests for approvals as a result of new distance learning programs and adjustments to new regulations. Any such increases in volume could result in delays to various approvals our partner institutions request, and any such delays could in turn delay the timing of our ability to generate revenue from our partners’ programs.

Our partners, both U.S. and international, may be required to be authorized in certain states to offer online programs, engage in advertising or recruiting and operate externships, internships, technical training, or other forms of field experience, depending on state law. Although many of our programs are offered by U.S.-based higher education institutions that hold such authorizations or participate in an appropriate state reciprocity agreement such as SARA, other partners are not traditional education institutions or operate outside the United States and do not hold such state authorizations. Further, even U.S.-based higher education institutions could lose a necessary authorization either because it lapses or is revoked by a state agency. Such partners could also lack, or lose, the ability to participate in a reciprocity agreement that provides the basis for their authorization in multiple states. For example, California higher education institutions currently do not participate in SARA. Unless we choose to seek authorization in our own name, which we have not done to date, the loss of or failure by a partner to obtain a necessary state authorization would, among other things, limit our ability to deliver content to learners in that state, either for degree or nondegree programs, render the partner and its learners in that state ineligible to participate in Title IV or other financial aid programs, diminish the attractiveness of the partner’s programs, and ultimately compromise our ability to generate revenue. In addition, if we or any of our partners fail to comply with any state agency’s rules, regulations, or standards beyond authorizations, the state agency could limit the ability of the partner to offer programs in that state or limit our ability to perform our contractual obligations to our partner in that state.

We or our partners may also be required to obtain appropriate approvals under international education laws and regulations. For example, a recent Indian regulation relating to online higher education requires, among other things, that learning platforms utilized by Indian universities to offer online degrees be approved by a technical committee of the Indian regulator. Seeking such approval could be a complex and time-consuming process, since the requirement is new, and as such there is no certainty as to the timing and standard of review for international platforms, or even whether international platforms are permitted to apply for approval. In addition, we may lack the knowledge and resources to successfully pursue an application without the support of one or more of our Indian university partners. India’s Ministry of Education recently announced its intention to consolidate and strengthen the regulatory framework governing the Education Technology industry in the country. While the Ministry of Education has not yet released an official version of the framework, additional compliance requirements and regulatory restrictions may apply. If enacted, such new requirements and obligations would cause increased costs for compliance and could impact our financial and business operations in the region.

If we or our partners fail to obtain or maintain necessary authorizations, or we or our partners violate applicable laws and regulations, learners in relevant programs could be adversely affected and we could lose our ability to operate in that state or international market, and our ability to generate revenue would be adversely affected.

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If our partners fail to maintain institutional or programmatic accreditation for their programs, our revenue could be materially adversely affected.

The loss or suspension of a partner’s accreditation or other adverse action by the partner’s institutional accreditor would render the institution or its program ineligible to participate in Title IV programs or similar government funding programs that may be in place and available to students enrolled at our Degrees partners based in and outside the United States. This loss, suspension or other adverse action could prevent the partner from offering certain educational programs, could prevent students enrolled at our Degrees partners from accessing such funding programs, and could make it impossible for the graduates of the partner’s program to practice the profession for which they trained. If any of these results occurs, it could hurt our ability to generate revenue from that program.

Our activities are subject to international, federal, and state education accessibility and consumer protection laws and regulations and other requirements.

As a service provider to higher education institutions both in the United States and internationally, either directly or indirectly through our arrangements with partners, we are required to comply with certain education laws and regulations.

Our platform is also subject to various requirements relating to accessibility for learners with disabilities. Certain requirements of Title II and Title III of the Americans with Disabilities Act apply to us and to our public and private university partners, Section 504 of the Rehabilitation Act of 1974 (the “Rehabilitation Act”) applies to our partners that receive federal funding, and Section 508 of the Rehabilitation Act, which sets accessibility standards for websites of federal departments and agencies, applies to certain of our government customers. Further, in the absence of definitive federal rulemaking, the Web Content Accessibility Guidelines 2.1, a set of recommendations and technical standards for making websites accessible to individuals with disabilities published by the World Wide Web Consortium, have become the effective standard for learner-facing aspects of our platform. We may not be successful in ensuring that our offerings and services meet these changing statutory and regulatory requirements, which could make our solutions less attractive to our partners and customers and which could subject us to third-party lawsuits, regulatory fines, or other action or liability, and we expect to incur ongoing costs of compliance. In addition, we have structured our learner subscription plans to charge learners on a recurring basis, and as a result we must comply with complex international, federal and state laws and regulations related to automatic renewal, unfair competition, and false advertising. These laws, among other things, require us to make specific disclosures in specific ways at the time a learner purchases a subscription, and obtain the learner’s express consent to the recurring charges. The penalties for failing to comply with these requirements can be severe, including rendering the subscription contract null and void, and allowing the consumer to treat any services provided under such a contract as a gift, and any failure to comply with these requirements may constitute violations of more general consumer protection laws.

Failure to comply with any of these laws and regulations could result in breach of contract and indemnification claims and could cause damage to our reputation and impair our ability to grow our business and achieve profitability.

Activities of the U.S. Congress, such as changes in spending policies or budget priorities for government funding of colleges, universities, schools, and other education providers, could result in adverse legislation or regulatory action.

Our partners include colleges, universities, and other education providers, many of which depend substantially on government funding. Accordingly, any general decrease, delay, or change in federal, state, or local funding for colleges, universities, and other education providers could cause our current and potential partners to reduce their use of our platform, or delay development of content for our platform, any of which could cause us to lose learners and revenue.

In addition, the increased scrutiny and results-based accountability initiatives in the education sector, as well as ongoing policy differences in Congress regarding spending levels, could lead to significant changes in connection with the pending reauthorization of the HEA and the associated negotiated rulemaking or otherwise. These changes may place additional regulatory burdens on postsecondary schools participating in the Title IV programs generally, and specific changes may be targeted at companies like us that serve higher education within the United States. The adoption of any laws or regulations that limit our ability to provide our bundled services to our partners could compromise our ability to offer their programs or make our solutions less attractive to them. Congress could also enact laws or regulations that require us to modify our practices in ways that could increase our costs.

Regulatory activities and initiatives of the DOE may have similar consequences for our business even in the absence of Congressional action. No assurances can be given as to how any new rules may affect our business.

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Our business model has been validated by a DOE “dear colleague letter”, but such validation is not codified by statute or regulation and may be subject to change.

Each institution that participates in Title IV programs agrees, as a condition of its eligibility to participate in those programs, that it will not “provide any commission, bonus, or other incentive payment based in any part, directly or indirectly, upon success in securing enrollments or the award of financial aid, to any person or entity who is engaged in any student recruitment or admission activity, or in making decisions regarding the award of Title IV HEA program funds.” The vast majority of our U.S.-based partners participate in the Title IV programs. Although this rule, referred to as the incentive compensation rule, generally prohibits entities or individuals from receiving incentive-based compensation payments for the successful recruitment, admission, or enrollment of learners, the DOE provided clarifying guidance in March 2011 interpreting the incentive compensation rule as permitting tuition revenue-sharing arrangements known as the “bundled services exception.” Our current business model relies heavily on the bundled services exception to enter into tuition revenue-sharing agreements with partner colleges and universities.

The “dear colleague letter” (“DCL”) issued by the DOE on March 17, 2011 sets forth the official guidance of the DOE regarding various regulations that were implemented around that time. The DCL affirms that “[t]he Department generally views payment based on the amount of tuition generated as an indirect payment of incentive compensation based on success in recruitment and therefore a prohibited basis upon which to measure the value of the services provided.” The DCL, however, in Example 2-B, clarified an important exception to this prohibition for a business model that complies with the bundled services exception: “A third party that is not affiliated with the institution it serves and is not affiliated with any other institution that provides educational services, which third party provides bundled services to the institution including marketing, enrollment application assistance, recruitment services, course support for online delivery of courses, the provision of technology, placement services for internships, or student career counseling, may receive from an institution an amount based on tuition generated for the institution by the third-party’s activities for all bundled services that are offered and provided collectively, as long as the third party does not make prohibited compensation payments to its employees, and the institution does not pay the third party separately for student recruitment services provided by the entity.”

The DCL guidance indicates that an arrangement that complies with Example 2-B will be deemed to be in compliance with the incentive compensation provisions of the HEA and the DOE’s regulations. Our business model and contractual arrangements with our U.S.-based partners are designed to follow Example 2-B in the DCL. However, the inherent ambiguity in the DCL and the incentive compensation rule creates the risk that DOE or a court, including, notably, in the context of a “whistleblower” claim under the federal False Claims Act, could disagree with that interpretation. If the DOE or a court determined that our business model or even the practices of a subcontractor did not meet the bundled services exception, we could have contractual obligations to our U.S.-based partners such as indemnifying a partner from private claims or government investigations or demands for repayment of Title IV program funds. Even if such claims are without merit, they could cause reputational harm, cause us to incur significant defense costs, result in the termination of our U.S.-based partner agreements, and negatively impact our ability to enter into new agreements.

Further, because the bundled services rule was promulgated by agency guidance through the DCL and is not codified by statute or regulation, there is risk that the exception could be altered or removed without prior notice, public comment period, or other administrative procedural requirements that accompany formal agency rulemaking. In addition, the legal weight the DCL would carry in litigation over the propriety of any specific compensation arrangements under the HEA or the incentive compensation rule is uncertain. We can offer no assurances as to whether the exception in the DCL would be upheld by a court or how it would be interpreted. The revision, removal, or invalidation of the bundled services exception by Congress, the DOE, or a court, whether in an action involving our company or our partners, or in action that does not involve us, could require us to change our business model and renegotiate the terms of our college and university partner agreements and could compromise our ability to generate revenue.

If we violate the misrepresentation rule, or similar federal and state regulatory requirements, we could face fines, sanctions, and other liabilities.

Under our contracts with U.S.-based college and university partners, we are required to comply with other regulations promulgated by the DOE and comparable state laws that affect our marketing activities, including the misrepresentation rule. The misrepresentation rule is broad in scope and applies to statements our employees or agents may make about the nature of a partner’s program, a partner’s financial charges or the employability of a partner’s program graduates. A violation of this rule or other federal or state regulations applicable to our marketing activities by an employee or agent performing services for partners could damage our reputation, result in the termination of partner agreements, require us to pay fines or other monetary penalties, and require us to pay the fees associated with indemnifying a partner from private claims or government investigations.

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We are required to comply with the Family Educational Rights and Privacy Act (“FERPA”), and failure to do so could harm our reputation and negatively affect our business.

FERPA generally prohibits an institution of higher education from disclosing personally identifiable information from a learner’s education records without the learner’s consent. Our U.S.-based university degree and certificate partners and Coursera for Campus customers and their learners disclose to us certain information that originates from or composes a learner education record under FERPA. Through our contracts to provide services to institutions, we are indirectly subject to FERPA, and we may not transfer or otherwise disclose any personally identifiable information from a learner record to another party other than in a manner permitted under the statute and any applicable contract. If we violate FERPA, it could result in a material breach of agreement with one or more of our partners and could harm our reputation. Further, in the event that we disclose learner information in violation of FERPA, the DOE could require a partner to suspend our access to their learner information for at least five years.

We could face liability, or our reputation might be harmed, as a result of the activities of our customers and educators for content on or accessible through our platform.

In some instances, various articles or other third-party content may be posted to our platform by customers and educators for use in class discussions or within asynchronous lessons. The laws governing the fair use of these third-party materials are imprecise and adjudicated on a case-by-case basis, which makes it challenging to adopt and implement appropriately balanced institutional policies governing these practices. As a result, we could incur liability to third parties for the unauthorized duplication, distribution, or other use of this material. In addition, third parties may allege misappropriation, plagiarism, or similar claims related to content appearing on our platform. Any such claims, including claims of defamation, disparagement, negligence, breach of warranty, misappropriation, or personal harm, could subject us to costly litigation and impose a significant strain on our financial resources and management personnel, regardless of whether the claims have merit. Our various liability insurance coverages may not cover potential claims of this type adequately or at all, and we may be required to alter or cease our uses of such material, which may include changing or removing content from courses or altering the functionality of our platform, or be required to pay monetary damages.

While we rely on a variety of statutory and common-law frameworks and defenses, including those provided by the Digital Millennium Copyright Act of 1998 (“DMCA”), the Communications Decency Act (“CDA”), the fair-use doctrine in the United States and the E-Commerce Directive in the European Union, differences between statutes, limitations on immunity, requirements to maintain immunity, and moderation efforts in the many jurisdictions in which we operate may affect our ability to rely on these frameworks and defenses, or create uncertainty regarding liability for information or content uploaded by partners or learners or otherwise contributed by third-parties to our platform. For example, while Section 230 of the CDA provides certain legal protections to online platforms from litigation related to content posted by users of their platforms, Section 230 has faced increasing litigation challenges and legislative proposals regarding the scope of its protection. These actions may increase the uncertainty of litigation risk for online platforms such as ours. Moreover, regulators in the United States and in other countries in which we operate may introduce new regulatory regimes that increase potential liability for information or content available on our platform, or which impose additional obligations to monitor such information or content, which could increase our costs.

We are subject to governmental export and import controls and anti-corruption laws and regulations that could impair our ability to compete in international markets and subject us to liability if we are not in full compliance with applicable laws.

Our business activities are subject to various restrictions under U.S. export and import and similar laws and regulations, including the U.S. Department of Commerce’s Export Administration Regulations and various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Controls. The U.S. export control laws and U.S. economic sanctions laws include restrictions or prohibitions on the purchase or sale of certain technology, goods and services to U.S. embargoed or sanctioned countries, governments, persons, and entities. In addition, various countries regulate the import of certain technology and have enacted or could enact laws that could limit our ability to provide learners access to our platform or could limit our learners’ ability to access or use our services in those countries.

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Although we take precautions to prevent our platform from being provided in violation of such laws, our platform could be provided inadvertently in violation of such laws, despite the precautions we take. If we fail to comply with these laws and regulations, we and certain of our employees could be subject to civil or criminal penalties, including the possible loss of export privileges and fines. We may also be adversely affected through penalties, reputational harm, loss of access to certain markets, or otherwise. In addition, various countries regulate the import and export of certain encryption and other technology, including import and export permitting and licensing requirements, and have enacted laws that could limit our ability to distribute our platform or could limit our learners’ ability to access our platform in those countries. Changes in our platform, or changes in export and import regulations, such as recent changes or sanctions applicable to certain regions of Ukraine, the increase of sanctions on Russian parties, and discretionary decisions to suspend activities in Russia, may prevent our international learners from utilizing our platform or, in some cases, prevent the export or import of our platform to certain countries, governments, or persons altogether. Any change in export or import regulations, economic sanctions, or related legislation or changes in the countries, governments, persons, or technologies targeted by such regulations, could result in decreased use of our platform by, or in our decreased ability to export or sell subscriptions to our platform to, existing or potential learners internationally, or could restrict our ability to acquire technology, services, or content. Any decreased use of our platform or limitation on our ability to export or sell our platform would adversely affect our business, results of operations, and financial results.

We are also subject to various domestic and international anti-corruption laws, such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act, as well as other similar anti-bribery, anti-kickback laws and anti-money laundering regulations. These laws and regulations generally prohibit companies and their employees and intermediaries from authorizing, offering, providing, and accepting improper payments or benefits for improper purposes. These laws also require that we keep accurate books and records and maintain compliance procedures designed to prevent any such actions. Although we take precautions to prevent violations of these laws, our exposure for violating these laws increases as our international presence expands and as we increase sales and operations in foreign jurisdictions.

We may become involved in claims, lawsuits, government investigations, and other proceedings that could adversely affect our business, financial condition, and results of operations.

From time to time, we may become involved in litigation matters, such as matters incidental to the ordinary course of our business, including intellectual property, commercial, employment, class action, whistleblower, accessibility, and other litigation and claims, and governmental and other regulatory investigations and proceedings. Such matters can be time-consuming, divert management’s attention and resources, cause us to incur significant expenses or liability, or require us to change our business practices. In addition, the expense of litigation and the timing of these expenses from period to period are difficult to estimate, subject to change, and could adversely affect our financial condition and results of operations. Because of the potential risks, expenses, and uncertainties of litigation, we may, from time to time, settle disputes, even where we have meritorious claims or defenses, by agreeing to settlement agreements. Any of the foregoing could adversely affect our business, financial condition, and results of operations.

Risks Related to Privacy, Cybersecurity, and Infrastructure

If sensitive information about our partners, their employees, or our learners is disclosed, or if we or our third-party providers are subject to cyber-attacks, use of our platform could be curtailed, we may be exposed to liability and our reputation would suffer.

Although we do not directly collect, transmit, and store financial information such as credit cards and other payment information, we utilize third-party payment processors who provide these services on our behalf. We also collect and store certain personally identifiable information provided by our partners and learners, such as names and email addresses. The collection, transmission and storage of such information is subject to stringent legal and regulatory obligations. Some of our third-party service providers, such as identity verification and payment processing providers, also regularly have access to personal data. In an effort to protect sensitive information, we rely on a variety of security measures, including encryption and authentication technology licensed from third parties. However, advances in computer capabilities, increasingly sophisticated tools and methods used by hackers and cyber terrorists, new discoveries in the field of cryptography, or other developments may result in our failure or inability to adequately protect sensitive information.

Our platform is vulnerable to power outages, telecommunications failures, and catastrophic events, as well as computer viruses, worms, malicious code, break-ins, phishing attacks, denial-of-service attacks, ransomware, and other cyber-attacks. Any of these incidents could lead to interruptions or shutdowns of our platform, loss of data, or unauthorized disclosure of personally identifiable or other sensitive information. Cyber-attacks could also result in the theft of our intellectual property. If we gain greater visibility, we may face a higher risk of being targeted by cyber-attacks. Advances in computer capabilities, new technological discoveries, or other developments may result in cyber-attacks becoming more sophisticated and more difficult to detect.

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Any failure or perceived failure by us to comply with our privacy policies, our privacy or data protection obligations to learners or other third parties, or our privacy or data protection legal obligations, or any compromise of security that results in the unauthorized access, release, use or transfer of sensitive information, which may include personally identifiable information or other data, may result in governmental enforcement actions, litigation or public statements against us by consumer advocacy groups or others and could cause learners to lose trust in us, which could have an adverse effect on our business.

Further, if we or our third-party service providers experience security breaches that result in platform performance or availability problems or the loss or unauthorized disclosure of sensitive information, our reputation and ability to maintain existing, or attract new, partners and learners could be materially adversely affected, and our existing partners could scale back their programs or elect to not renew their agreements, prospective learners could decline to enroll or stay enrolled in our partners’ programs, and we could be subject to third-party lawsuits, regulatory fines, or other action or liability. Further, any reputational damage resulting from breach of our security measures could create distrust of our company by prospective partners or learners.

We and our third-party service providers may not have the resources or technical sophistication to anticipate or prevent all such cyber-attacks. Moreover, techniques used to obtain unauthorized access to systems change frequently and may not be known until launched against us or our third-party service providers. Security breaches can also occur as a result of non-technical issues, including intentional or inadvertent breaches by our employees or employees of our third-party service providers or theft or loss of devices.

We expect to incur ongoing costs associated with the detection and prevention of security breaches and other security-related incidents. We may incur additional costs in the event of a security breach or other security-related incident. Any actual or perceived compromise of our systems or data security measures or those of third parties with whom we do business, or any failure to prevent or mitigate the loss of personal or other confidential information and delays in detecting or providing notice of any such compromise or loss could disrupt our operations, harm the perception of our security measures, damage our reputation, cause some learners or partners to decrease or stop their use of our platform or relationships with us, and could subject us to litigation, government action, increased transaction fees, regulatory fines or penalties, or other additional costs and liabilities that could harm our business, financial condition, and operating results.

We cannot be certain that our insurance coverage will cover or be adequate for data handling or data security liabilities or loss of revenue if our platform is unavailable for any reason, that insurance will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material and adverse effect on our business, including our financial condition, operating results, and reputation.

If the personally identifiable information we collect from our partners, customers, and learners is unlawfully acquired, accessed, or obtained, we could be required to pay substantial fines and bear the cost of investigating the data breach and providing notice to individuals whose personally identifiable information was unlawfully accessed.

In providing services to our partners and customers, we may directly or indirectly have access to personally identifiable information from learners and prospective learners, such as names, email addresses, and sensitive personal information. In the event that sensitive personally identifiable information is unlawfully accessed or acquired, the majority of states and many international jurisdictions have laws that require institutions to investigate and promptly disclose the data breach to impacted individuals, usually in writing. Under the terms of our agreements with partners and customers, we may be responsible for the costs of investigating and disclosing data breaches to learners and, in many cases, to partners and customers as well. In addition to costs associated with investigating and fully disclosing a data breach in such instances, we could be subject to substantial costs to remedy the data breach, substantial monetary fines or private claims by affected parties and our reputation would likely be harmed.

Disruption to or failures of our platform could result in our partners and learners becoming unsatisfied with our platform and could harm our reputation.

The performance and reliability of our platform and the underlying technology are critical to our operations, reputation, and ability to attract and retain partners and learners. Our partners rely on our platform to offer their courses and programs online, and learners must access our platform on a frequent and reliable basis. Our platform is complex and relies on infrastructure provided by third parties, and may contain defects, errors, or vulnerabilities, or may not perform as contemplated. These errors, defects, disruptions, breaches, or other performance problems with our platform could damage our or our partners’ reputations, decrease partner and learner satisfaction and retention, negatively impact our ability to attract new learners and partners, and could result in large indemnity payments to learners and partners for losses suffered or incurred in connection with any such defects or errors on our platform, or other liabilities relating to or arising from our platform. In addition, sustained or recurring disruptions in our platform or its underlying technology could adversely affect our and our partners’ compliance with applicable regulations and accrediting body standards.

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Further, if we fail to accurately predict the rate or timing of the growth of our platform, we may be required to incur significant additional costs to maintain reliability. We also depend on the development and maintenance of the Internet infrastructure, including maintenance of reliable Internet networks with the necessary speed, data capacity and security. If we experience failures in our technology infrastructure or do not expand our technology infrastructure successfully, then our ability to attract and retain partners and learners, our growth prospects, and our business would suffer.

We have experienced, and expect that in the future we will experience, interruptions, delays, and outages in service and availability from time to time due to a variety of factors, including infrastructure changes, human or software errors, website hosting disruptions, and capacity constraints, which could affect the availability of services on our platform and prevent or inhibit the ability of learners to access or complete courses and programs on our platform. In particular, our technology infrastructure is currently hosted by third-party data center facilities operated by Amazon Web Services (“AWS”). Any disruption in its services, or any failure of AWS or any future third-party provider to handle the demands of our platform, could significantly harm our business and damage our reputation. We do not have control over the operations of the facilities of the third-party providers that we use, and these facilities may be vulnerable to damage or interruption from natural disasters, cybersecurity attacks, terrorist attacks, power outages, and similar events or acts of misconduct.

If we do not maintain the compatibility of our learning management platform with third-party applications that our customers use, our revenue will decline.

A number of our customers integrate our learning management platform with certain learning management systems or learning experience platforms using application programming interfaces (“APIs”) for user management, usage reporting, and content listings and we expect this number of customers to grow. The functionality and popularity of our platform depends, in part, on our ability to integrate our platform with third-party applications and software. Third-party providers of applications may change the features of their applications and software, restrict our access to their applications and software or alter the terms governing use of their applications and access to those applications and software in an adverse manner. Such changes could functionally limit or terminate our ability to use these third-party applications and software in conjunction with our platform, which could negatively impact our offerings and harm our business. If we fail to integrate our platform with new third-party applications and software that our learners and partners can utilize, we may not be able to offer the functionality that our learners and partners need, which would negatively impact our ability to generate revenue and adversely impact our business.

Our payments system depends on third-party providers and is subject to evolving laws and regulations.

We rely on third-party payment processors to process payments made by learners on our platform. We have engaged third-party service providers to perform underlying card processing, currency exchange, identity verification, and fraud analysis services. If these service providers do not perform adequately or if they terminate their relationships with us or refuse to renew their agreements with us on commercially reasonable terms, we will need to find an alternate payment processor and may not be able to secure similar terms or replace such payment processors in an acceptable timeframe. Further, the software and services provided by our third-party payment processors may not meet our expectations, contain errors or vulnerabilities, be compromised or experience outages. Any of these risks could cause us to lose our ability to accept online payments, make payments to our partners, or conduct other payment transactions, any of which could make our platform less convenient and attractive and harm our ability to attract and retain partners and learners. In addition, if these providers increase the fees they charge us, our operating expenses could increase.

The laws and regulations related to payments are complex and vary across different jurisdictions in the United States and globally. As a result, we are required to spend significant time and effort to comply with those laws and regulations. For example, the Reserve Bank of India has imposed additional requirements for recurring credit card payments. Any failure or claim of our failure to comply, or any failure by our third-party service providers to comply, could cost us substantial resources, could result in liabilities, or could force us to stop offering certain third-party payment services. In addition, as we expand our international operations, we will need to accommodate international payment method alternatives. As we expand the availability of new payment methods in the future, including internationally, we may become subject to additional regulations and compliance requirements.

Further, through our agreement with our third-party credit card processors, we are indirectly subject to payment card association operating rules and certification requirements, including the Payment Card Industry Data Security Standard. We are also subject to rules governing electronic funds transfers. Any change in these rules and requirements could make it difficult or impossible for us to comply. If we fail to comply with these rules or requirements, we may be subject to additional fines and higher transaction fees and lose our ability to accept credit and debit card payments from our learners, process electronic funds transfers or facilitate other types of online payments, and our business and operating results could be adversely affected.

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Our business depends to a significant degree on continued access to the Internet and mobile networks.

Our partners and learners rely on access to the Internet and mobile networks to access our platform. Internet service providers may choose to disrupt or degrade our access to our platform or increase the cost of such access. Internet service providers or mobile network operators could also attempt to charge us for providing access to our platform. In January 2018, the Federal Communications Commission (the “FCC”) released an order reclassifying broadband Internet access as an information service, subject to certain provisions of Title I of the Communications Act. Among other things, the order eliminates rules adopted in 2015 that prohibited broadband providers from blocking, impairing, or degrading access to legal content, applications, services, or non-harmful devices, or engaging in the practice of paid prioritization, e.g., the favoring of some lawful Internet traffic over other traffic in exchange for higher payments. The order was contested and affirmed in federal court, and the parties declined to appeal the decision to the Supreme Court. A number of states have also enacted or are considering legislation or executive actions that would regulate the conduct of broadband providers. On July 9, 2021, President Biden signed an executive order which, among other things, instructed the FCC to restore the net neutrality rules. We cannot predict whether the FCC order or state initiatives will be modified, overturned, or vacated by legal action of the court, federal or state legislation, or the FCC. If net neutrality rules are not implemented, our business could be subject to increased costs and a loss of existing users, impair our ability to attract new users, and materially and adversely impact our business and opportunities for growth. Outside of the United States, government regulation of the Internet, including the idea of network neutrality, may be developing or non-existent. As a result, we could face discriminatory or anti-competitive practices that could impede our growth prospects, increase our costs, and harm our business.

If the mobile solutions available to our learners and partners are not effective, the use of our platform could decline.

Learners have been increasingly accessing our platform on mobile devices through our app in recent years. The smaller screen size and reduced functionality associated with some mobile devices may make the use of our platform more difficult or our partners may believe that online learning through such mobile devices is not effective. Learners accessing our network primarily on mobile devices may not enroll in the courses or the certification, degree, or other credentialing programs offered on our platform as often as those accessing our platform through personal computers, which could result in less revenue for us. If we are not able to provide our partners with the functionality to deliver a rewarding experience on mobile devices, their ability to attract learners to their programs may be harmed and, consequently, our business may suffer.

As new mobile devices and mobile features are released, we may encounter problems in developing or supporting apps for them. In addition, supporting new devices and mobile device operating systems may require substantial time and resources.

The success of our mobile apps could also be harmed by factors outside our control, such as:

•actions taken by mobile app distributors;

•unfavorable treatment received by our mobile apps, especially as compared to competing apps, such as the placement of our mobile apps in a mobile app download store;

•increased costs in the distribution and use of our mobile app; or

•changes in mobile operating systems, such as iOS and Android, that degrade the functionality of our mobile website or mobile apps or that give preferential treatment to competitive offerings.
 

If our partners or customers, including learners, encounter difficulty accessing or using, or if they choose not to use, our mobile platform, our growth prospects and our business may be adversely affected.

Our use and processing of personal information and other data is subject to laws and obligations relating to privacy and data protection, and our failure to comply with such laws and obligations could harm our business.

In the ordinary course of business, and in particular in connection with merchandising our service to our learners, we collect, process, store and use personal information and data supplied by learners. Numerous federal, state, and foreign laws, rules and regulations govern privacy, data protection, and the collection, use and protection of personal information and other types of data we collect, use, disclose, and otherwise process. These laws, rules, and regulations are constantly evolving, and we expect that there will continue to be new proposed laws, regulations, and industry standards concerning privacy, data protection and information security in the United States, the European Union, and globally.

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In the United States, a significant example of this is the California Consumer Privacy Act (the “CCPA”), which provides data privacy rights for California consumers and new operational requirements for covered companies. The CCPA provides that covered companies must provide disclosures to California consumers and afford such consumers new data privacy rights that include the right to request a copy from a covered company of the personal information collected about them, the right to request deletion of such personal information, and the right to request to opt-out of certain sales of such personal information. On January 1, 2023 the California Privacy Rights Act (the “CPRA”) will come into effect and significantly modify the CCPA, including by imposing additional obligations on covered companies and expanding consumers’ rights with respect to certain sensitive personal information and rights to object to sharing information for behavioral advertising purposes, potentially resulting in further uncertainty and requiring us to incur additional costs and expenses in an effort to comply. The CPRA also creates a new state agency that will be vested with authority to implement and enforce the CCPA and the CPRA. Additionally, the Virginia Consumer Data Protection Act will come into effect on January 1, 2023, and the Colorado Privacy Act will enter into force on July 1, 2023, and the Utah Consumer Privacy Act will come into effect on December 31, 2023, each of which impose similar requirements on covered businesses. In addition, all 50 states have laws including obligations to provide notification of security breaches of computer databases that contain personal information to affected individuals, state officers and others. Aspects of the CCPA, the CPRA, and other laws and regulations relating to data protection, privacy, and information security, as well as their enforcement, remain unclear, and we may be required to modify our practices in an effort to comply with them.

The CCPA and CPRA could mark the beginning of a trend toward more stringent privacy legislation in the United States. In addition to California, Colorado, Utah, and Virginia, other states are also considering privacy legislation. The CCPA has prompted a number of additional proposals for federal and state privacy legislation that, if passed, could increase our potential liability, add layers of complexity to compliance in the U.S. market, increase our compliance costs and adversely affect our business.

The General Data Protection Regulation (the “GDPR”) imposes stringent EU data protection requirements on businesses processing personal data of EU data subjects. The GDPR is wide-ranging in scope and imposes numerous additional requirements on companies that process personal data, including imposing special requirements in respect of the processing of personal data, requiring that consent of individuals to whom the personal data relates is obtained in certain circumstances, requiring additional disclosures to individuals regarding data processing activities, requiring that safeguards are implemented to protect the security and confidentiality of personal data, creating mandatory data breach notification requirements in certain circumstances, and requiring that certain measures (including contractual requirements) are put in place when engaging third-party processors or transferring data overseas. The GDPR also provides individuals with various rights in respect of their personal data, including rights of access, erasure, portability, rectification, restriction, and objection. Complying with the GDPR remains an onerous and potentially costly obligation as interpretations of the specific requirements emerge through the courts and enforcement decisions. In addition, where we transfer data directly from customers in the EEA directly to us in the US (notwithstanding recent positive developments through the implementation of updated Standard Contractual Clauses) there is still considerable uncertainty surrounding the future trajectory of the perception of such transfers by EU data protection authorities following the decision on July 16, 2020 by the Court of Justice of the European Union (ECJ) in its Case C-311/18 Data Protection Commissioner v Facebook Ireland and Maximillian Schrems.

Similar data privacy laws, rules and regulations in other countries may also impact our business. The People’s Republic of China implemented the Personal Information Protection Law on November 1, 2021, which includes both similarities and differences to the GDPR. India has drafted a complete overhaul of its privacy regime with the draft Personal Data Protection Bill 2019. This bill, while not yet law, would grant Indian data subjects many of the same rights as granted by the GDPR to EU data subjects and impose similar obligations on businesses processing the personal data of Indian data subjects. Singapore also amended its privacy law in 2021, imposing additional obligations on businesses processing the data of Singaporean data subjects, including restrictions on foreign transfers. In addition, the Brazilian General Data Protection Law, in force since late 2020, may also have implications for our business.

We cannot yet fully determine the impact these or future laws, rules, and regulations may have on our business or operations. These laws, rules and regulations may be inconsistent from one jurisdiction to another, subject to differing interpretations and may be interpreted to conflict with our practices.

Additionally, we may be bound by contractual requirements applicable to our collection, use, processing and disclosure of various types of data, including personal information, and may be bound by, or voluntarily comply with, self-regulatory or other industry standards relating to these matters.

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Any failure or perceived failure by us or any third parties with which we do business to comply with these laws, rules and regulations, or with other obligations to which we or such third parties are or may become subject, may result in actions against us by governmental entities or private claims and litigation. Any such action would be expensive to defend, may require the expenditure of substantial legal and other costs and substantial time and resources, may result in fines, penalties, or other liabilities, and likely would damage our reputation and adversely affect our business and operating results. In many jurisdictions, enforcement actions and consequences for non-compliance with protection, privacy, and information security laws and regulations are rising. In the United States, possible consequences for non-compliance include enforcement actions in response to rules and regulations promulgated under the authority of federal agencies and state attorneys general and legislatures and consumer protection agencies. In the EU, data protection authorities may impose large penalties for violations of the data protection laws, including potential fines of up to €20 million or 4% of annual global revenue, whichever is greater. The authorities have shown a willingness to impose significant fines and issue orders preventing the processing of personal data on non-compliant businesses. Data participants also have a private right of action, as do consumer associations, to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of applicable data protection laws. In addition, privacy advocates and industry groups have regularly proposed, and may propose in the future, self-regulatory standards that may legally or contractually apply to us. If we fail to follow these security standards, even if no customer information is compromised, we may incur significant fines or experience a significant increase in costs.

Further, in view of new or modified federal, state, or foreign laws and regulations, industry standards, contractual obligations, and other legal obligations, or any changes in their interpretation, we may find it necessary or desirable to fundamentally change our business activities and practices or to expend significant resources to modify our services, and otherwise adapt to these changes. We may be unable to make such changes and modifications in a commercially reasonable manner or at all, and our ability to develop new features could be limited. Privacy, data protection, and information security concerns, whether valid or invalid, may inhibit the use and growth of our platform, particularly in certain foreign countries.

Use of social media, emails, push notifications, and text messages in ways that do not comply with applicable laws and regulations, lead to the loss or infringement of intellectual property, or result in unintended disclosure may harm our reputation or subject us to fines or other penalties.

We use social media, emails, push notifications and text messages as part of our omni-channel approach to marketing. As laws and regulations evolve to govern the use of these channels, the failure by us, our employees, our partners, or third parties acting at our direction to comply with applicable laws and regulations in the use of these channels could adversely affect our reputation or subject us to fines or other penalties. In addition, our employees, our partners, or third parties acting at our direction may knowingly or inadvertently make use of social media in ways that could lead to the loss or infringement of intellectual property, as well as the public disclosure of proprietary, confidential, or sensitive personal information of our business, employees, learners, partners, or others. Information concerning us or our partners and learners, whether accurate or not, may be posted on social media platforms at any time and may have an adverse impact on our brand, reputation, or business. The harm may be immediate without affording us an opportunity for redress or correction and could have a material adverse effect on our reputation, business, operating results, financial condition, and prospects.

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Risks Related to Intellectual Property

Any failure to obtain, maintain, protect or enforce our intellectual property and proprietary rights could impair our ability to protect our proprietary technology and our brand and could materially harm our business.

We rely on a combination of intellectual property rights, contractual protections, and other practices to protect our brand, proprietary information, technologies, and processes. We primarily rely on copyright and trade secret laws to protect our proprietary technologies and processes, including the algorithms we use throughout our business. Others may independently develop the same or similar technologies and processes, or may improperly acquire and use information about our technologies and processes, which may allow them to provide a service similar to ours, which could harm our competitive position. Our principal trademark assets include the registered trademark “Coursera” and our logos and taglines. We also hold the rights to the “Coursera.org” Internet domain name and various related domain names, which are subject to Internet regulatory bodies and trademark and other related laws of each applicable jurisdiction. If we are unable to protect our trademarks or domain names, our brand recognition and reputation would suffer, we would incur significant expense establishing new brands and our operating results would be adversely impacted. As of March 31, 2022, we had 16 issued patents relating to technology features of our platform, including identity verification, content delivery and navigation, and automation, which patents expire between 2034 and 2039, and a number of U.S. pending patent applications also relating to certain technology features of our platform. We cannot predict whether any pending patent application will result in an issued patent that will effectively protect and enforce our intellectual property. Even if a patent issues, the patent may be circumvented or its validity may be challenged in proceedings before the U.S. Patent and Trademark Office. In addition, we cannot assure you that every significant feature of technology and services will be protected by any patent or patent application. Further, to the extent we pursue patent protection for our innovations, patents we may apply for may not issue, and patents that do issue or that we acquire may not provide us with any competitive advantages or may be challenged by third parties. There can be no assurance that any patents we obtain will adequately protect our inventions or survive a legal challenge, as the legal standards relating to the validity, enforceability, and scope of protection of patent and other intellectual property rights are uncertain.

Third parties may challenge any patents, copyrights, trademarks, and other intellectual property and proprietary rights owned or held by us or may knowingly or unknowingly infringe, misappropriate or otherwise violate our patents, copyrights, trademarks, and other proprietary rights. We may be required to spend significant resources to monitor and protect our intellectual property rights, and the efforts we take to protect and enforce our proprietary rights may not be sufficient. Even if we do detect violations, we may need to engage in litigation to enforce our intellectual property rights. Any enforcement efforts we undertake, including litigation, could be time-consuming and expensive and could divert our management’s attention. In addition, our efforts may be met with defenses and counterclaims challenging the validity and enforceability of our intellectual property rights or may result in a court determining that our intellectual property rights are unenforceable. If we are unable to cost-effectively protect or enforce our intellectual property rights, then our business could be harmed. An adverse decision in any of these legal actions could limit our ability to assert our intellectual property or proprietary rights, limit the value of our intellectual property or proprietary rights or otherwise negatively impact our business, financial condition and results of operations. If the protection of our intellectual property and proprietary rights is inadequate to enforce and prevent use or misappropriation by third parties, the value of our brand and other intangible assets may be diminished, competitors may be able to more effectively mimic our service and methods of operations, the perception of our business and service to customers and potential customers may become confused in the marketplace and our ability to attract customers may be adversely affected.

We may be subject to intellectual property claims, which are extremely costly to defend, could require us to pay significant damages and could limit our ability to use certain technologies in the future.

Companies in the technology industry are frequently subject to litigation based on allegations of infringement or other violations of intellectual property rights. We periodically receive notices that claim we have infringed, misappropriated, or misused other parties’ intellectual property rights. To the extent we gain greater public recognition, we may face a higher risk of being the subject of intellectual property claims. Any intellectual property claims against us, with or without merit, could be time consuming and expensive to settle or litigate and could divert the attention of our management. Litigation regarding intellectual property rights is inherently uncertain due to the complex issues involved, and we may not be successful in defending ourselves in such matters.

In addition, some of our competitors have extensive portfolios of issued patents. Many potential litigants, including some of our competitors and patent holding companies, have the ability to dedicate substantial resources to enforcing their intellectual property rights. Any claims successfully brought against us could subject us to significant liability for damages and we may be required to stop using technology or other intellectual property alleged to be in violation of a third party’s rights. We also might be required to seek a license for third-party intellectual property. Even if a license is available, we could be required to pay significant royalties or submit to unreasonable terms, which would increase our operating expenses. We may also be required to develop alternative non-infringing technology, which could require significant time and expense. If we cannot license or develop technology for any allegedly infringing aspect of our business, we would be forced to limit our service and may be unable to compete effectively. Any of these results could harm our business.

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Confidentiality agreements with employees and others may not adequately prevent disclosure of trade secrets and proprietary information.

We have devoted substantial resources to the development of our intellectual property and proprietary rights. In order to protect our intellectual property and proprietary rights, we rely in part on confidentiality agreements with our employees, licensees, independent contractors and other advisors. These agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. In addition, others may independently discover trade secrets and proprietary information, and in such cases we could not assert any trade secret rights against such parties. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position.

Our use of “open source” software could negatively affect our ability to offer our solutions and subject us to possible litigation.

A substantial portion of our platform and our solutions incorporates so-called “open source” software, and we may

incorporate additional open source software in the future. Open source software is generally freely accessible, usable and modifiable. Certain open source licenses may, in certain circumstances, require us: (i) to offer our solutions that incorporate the open source software for no cost; (ii) to make available source code for modifications or derivative works we create based upon, incorporating or using the open source software; and (iii) to license such modifications or derivative works under the terms of the particular open source license. If an author or other third party that distributes open source software we use were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal expenses defending against such allegations, could be required to disclose our proprietary code and could be subject to significant damages, including being enjoined from the offering of our solutions that contained the open source software and being required to comply with one or more of the foregoing conditions, which could disrupt our ability to offer the affected solutions. We could also be subject to suits by parties claiming ownership of what we believe to be open source software. Litigation could consume management’s time and attention, could be costly for us to defend, and have a negative effect on our operating results and financial condition.

Individuals that appear in content hosted on our platform may claim violation of their rights.

Faculty and learners that appear in video segments hosted on our platform may claim that proper assignments, licenses, consents, and releases were not obtained for use of their likenesses, images, or other contributed content. Our partners are contractually required to ensure that proper assignments, licenses, consents, and releases are obtained for their course material, but we do not know with certainty that they have obtained all necessary rights. Moreover, the laws governing rights of publicity and privacy, and the laws governing faculty ownership of course content, are imprecise and adjudicated on a case-by-case basis, such that the enforcement of agreements to transfer the necessary rights is unclear. As a result, we could incur liability to third parties for the unauthorized duplication, display, distribution, or other use of this material. Any such claims could subject us to costly litigation and impose a significant strain on our financial resources and management personnel, regardless of whether the claims have merit. Our various liability insurance coverages may not cover potential claims of this type adequately or at all, and we may be required to alter or cease our use of such material, which may include changing or removing content from courses, or to pay monetary damages. Moreover, claims by faculty and learners could damage our reputation, regardless of whether such claims have merit.

Risks Relating to Our Existence as a Public Benefit Corporation

Although we operate as a Delaware public benefit corporation, we cannot provide any assurance that we will achieve our public benefit purpose.

As a Delaware public benefit corporation (“PBC”), we are required to produce a public benefit and to operate in a responsible and sustainable manner, balancing our stockholders’ pecuniary interests, the best interests of those materially affected by our conduct, and the public benefit identified by our certificate of incorporation. There is no assurance that we will achieve our public benefit purpose or that the expected positive impact from being a PBC will be realized, which could have a material adverse effect on our reputation, which in turn may have a material adverse effect on our business, results of operations and financial condition.

As a PBC, we are required to publicly report at least biennially on our overall public benefit performance and on our assessment of our success in achieving our specific public benefit purpose. If we are not timely or are unable to provide this report or if the report is not viewed favorably by parties doing business with us or by regulators or others reviewing our credentials, our reputation and status as a PBC may be harmed.

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If our publicly reported B Corp score declines, our reputation could be harmed and our business could suffer.

We have been certified as a B Corp through B Lab. B Corp certification requires us to meet rigorous standards of social and environmental performance, accountability, and transparency. We believe that our B Corp status enables us to strengthen our credibility and trust among our customers and partners. Our business model and brand could be harmed if we are unable to maintain certification as a B Corp. To maintain certification, we must undergo a reassessment in the year following our initial public offering, and every three years thereafter. Whether due to our choice or our failure to meet B Lab’s certification requirements, any change in our status could create a perception that we are more focused on financial performance and no longer as committed to the values shared by B Corps. Likewise, our reputation could be harmed if our publicly reported B Corp score declines and there is a perception that we are no longer committed to the B Corp standards. Similarly, our reputation could be harmed if we take actions that are perceived to be misaligned with B Corp values.

As a PBC, our focus on a specific public benefit purpose and producing a positive effect for society may negatively impact our financial performance.

Unlike traditional Delaware corporations, whose directors have a fiduciary duty to focus exclusively on maximizing stockholder value, our directors have a fiduciary duty to consider not only the stockholders’ interests, but also the company’s specific public benefit and the interests of other stakeholders affected by our actions. Therefore, we may take actions that we believe will be in the best interests of those stakeholders materially affected by our specific benefit purpose, even if those actions do not maximize our financial results. While we intend for this public benefit designation and obligation to provide an overall net benefit to us and our partners and learners, it could instead cause us to make decisions and take actions without seeking to maximize the income generated from our business, and hence available for distribution to our stockholders. Our pursuit of longer-term or non-pecuniary benefits may not materialize within the timeframe we expect or at all and may have an immediate negative effect on any amounts available for distribution to our stockholders. Accordingly, being a PBC and complying with our related obligations could harm our business, results of operations, and financial condition, which in turn could cause our stock price to decline.

Additionally, as a PBC, we may be less attractive as a takeover target than a traditional company and, therefore, your ability to realize your investment through an acquisition may be limited. PBCs may also not be attractive targets for activists or hedge fund investors because new directors would still have to consider and give appropriate weight to the public benefit along with stockholder value, and stockholders can enforce this through derivative suits. Further, by requiring the boards of directors of PBCs to consider additional constituencies other than maximizing stockholder value, Delaware public benefit corporation law could potentially make it easier for a board to reject a hostile bid, even where the takeover would provide the greatest short-term financial yield to investors.

Our directors have a fiduciary duty to consider not only our stockholders’ interests, but also our specific public benefit and the interests of other stakeholders affected by our actions. If a conflict between such interests arises, there is no guarantee such a conflict would be resolved in favor of our stockholders.

While directors of traditional Delaware corporations are required to make decisions they believe to be in the best interests of their stockholders, directors of a PBC have a fiduciary duty to consider not only the stockholders’ interests, but also the company’s specific public benefit and the interests of other stakeholders affected by the company’s actions. Under Delaware law, directors are shielded from liability for breach of these obligations if they make informed and disinterested decisions that serve a rational purpose. Thus, unlike traditional Delaware corporations that must focus exclusively on stockholder value, our directors are not merely permitted, but obligated, to consider our specific public benefit and the interests of other stakeholders. In the event of a conflict between the interests of our stockholders and the interests of our specific public benefit or our other stakeholders, our directors must only make informed and disinterested decisions that serve a rational purpose; thus, there is no guarantee such a conflict would be resolved in favor of our stockholders, which could harm our business, results of operations, and financial condition, which in turn could cause our stock price to decline.

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Our focus on the long-term best interests of our company as a PBC and our consideration of all of our stakeholders, including our stockholders, learners, partners, employees, the communities in which we operate, and other stakeholders that we may identify from time to time, may conflict with short- or medium-term financial interests and business performance, which may negatively impact the value of our common stock.

We believe that focusing on the long-term best interests of our company as a PBC and our consideration of all of our stakeholders, including our stockholders, learners, partners, employees, the communities in which we operate, and other stakeholders we may identify from time to time, is essential to the long-term success of our company and to long-term stockholder value. Therefore, we have made, and may in the future, make decisions that we believe are in the long-term best interests of our company and our stockholders, even if such decisions may negatively impact the short- or medium-term performance of our business, results of operations, and financial condition or the short- or medium-term performance of our common stock. Our commitment to pursuing long-term value for the company and its stockholders, potentially at the expense of short- or medium-term performance, may materially adversely affect the trading price of our common stock, including by making owning our common stock less appealing to investors who are focused on returns over a shorter time horizon. Our decisions and actions in pursuit of long-term success and long-term stockholder value, which may include changes to our platform to enhance the experience of our learners, partners, and the communities in which we operate, including by improving the trust and safety of our platform, changes in the manner in which we deliver community support, investing in our relationships with our learners, partners, and employees, investing in and introducing new offerings and services, investing in social impact initiatives consistent with our public benefit objectives, or changes in our approach to working with local or national jurisdictions on laws and regulations governing our business, may not result in the long-term benefits that we expect, in which case our business, results of operations, and financial condition, as well as the trading price of our common stock, could be materially adversely affected.

As a PBC, we may be subject to increased derivative litigation concerning our duty to balance stockholder and public benefit interest, the occurrence of which may have an adverse impact on our financial condition and results of operations.

Stockholders of a PBC (if they, individually or collectively, own the lesser of (i) two percent of the company’s outstanding shares, or (ii) shares with a market value of $2 million or more on the date the lawsuit is instituted) are entitled to file a derivative lawsuit claiming the directors failed to balance stockholder and public benefit interests. Such derivative suits would be subject to the exclusive forum provision in our amended and restated certificate of incorporation, requiring them to be heard in the Delaware Chancery Court (or, if that court lacks subject matter jurisdiction, another federal or state court situated in the State of Delaware). This potential liability does not exist for traditional corporations. Therefore, we may be subject to the possibility of increased derivative litigation, which would require the attention of our management, and, as a result, may adversely impact our management’s ability to effectively execute our strategy. Additionally, any such derivative litigation may be costly, which may harm our financial condition and results of operations.

If we cannot maintain our company culture and public benefit commitment, our business could be harmed.

We believe that our company culture has been critical to our success. In addition, we believe that our status as a PBC and our commitment to providing global access to flexible and affordable world-class learning that supports personal development, career advancement, and economic opportunity distinguish us from our competitors and promote a relationship among our partners, learners, and employees founded on trust. However, we face a number of challenges that may affect our ability to sustain our corporate culture, including:

•a need to identify, attract, reward, and retain people in leadership positions in our organization who share and further our culture, values, mission, and public benefit objectives;

•the increasing size and geographic diversity of our workforce, and our ability to promote a uniform and consistent culture across all our offices and employees, including in a remote work environment;

•the market perception about our public benefit objectives;

•competitive pressures that may divert us from our mission, vision, and values;

•the continued challenges of a rapidly evolving industry; and

•the increasing need to develop expertise in new areas of business that affect us.

If we are unable to maintain our company culture and demonstrate our commitment to our mission as a PBC, it could harm our business and reputation.

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Risks Related to Tax, Accounting, and Operations

Our business may be subject to sales and other taxes.

The application of indirect taxes, such as sales and use tax, value-added tax (“VAT”), provincial taxes, goods and services tax, business tax, digital service and gross receipt tax to businesses like ours is a complex and evolving issue. For example, as of January 1, 2015, the European Union imposed an obligation on platforms to collect and remit VAT on sales of automatically downloaded digital items. Significant judgment is required to evaluate applicable tax obligations and as a result amounts recorded are estimates and could change. In many cases, the ultimate tax determination is uncertain because it is not clear how existing statutes apply to our business. One or more U.S. states, the federal government or other countries may seek to impose additional reporting, record-keeping, or indirect tax collection obligations on businesses like ours that facilitate online commerce. For example, in 2018, the U.S. Supreme Court ruled that, in certain situations, states may require online merchants to collect and remit sales taxes on transactions in the state, despite not having a physical presence in the state. New taxes could also require us to incur substantial costs to capture data and collect and remit taxes. If such obligations were imposed, the additional costs associated with tax collection, remittance, and audit requirements could make accessing offerings through our platform less attractive and more costly, which could harm our business.

Amendments to existing tax laws, rules or regulations or enactment of new unfavorable tax laws, rules or regulations could have an adverse effect on our business and operating results.

Many of the underlying laws, rules and regulations imposing taxes and other obligations were established before the growth of the Internet and ecommerce. U.S. federal, state and local taxing authorities are currently reviewing the appropriate treatment of companies engaged in Internet commerce and considering changes to existing tax or other laws that could levy sales, income, consumption, use, or other taxes relating to our activities, and/or impose obligations on us to collect such taxes. If such tax or other laws, rules or regulations are amended, or if new unfavorable laws, rules or regulations are enacted, the results could increase our tax payments or other obligations, prospectively or retrospectively, subject us to interest and penalties, decrease the demand for our services if we pass on such costs to our partners or learners, result in increased costs to update or expand our technical or administrative infrastructure, or effectively limit the scope of our business activities if we decided not to conduct business in particular jurisdictions. As a result, these changes may have a material adverse effect on our business, results of operations, financial condition, and prospects.

Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

We have incurred substantial net operating losses (“NOLs”) during our history. Unused NOLs may carry forward to offset future taxable income if we achieve profitability in the future, unless such NOLs expire under applicable tax laws. However, under the rules of Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change,” generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the corporation’s ability to use its NOLs and other pre-change tax attributes to offset its post-change taxable income or taxes may be limited. The applicable rules generally operate by focusing on changes in ownership among stockholders considered by the rules as owning, directly or indirectly, 5% or more of the stock of a company, as well as changes in ownership arising from new issuances of stock by the company. As a result of these rules, in the event that we experience one or more ownership changes as a result of future transactions in our stock, then we may be limited in our ability to use our NOL carryforwards to offset our future taxable income, if any. In addition, the Tax Cuts and Jobs Act imposes certain limitations on the deduction of NOLs generated in tax years that began on or after January 1, 2018, including a limitation on use of NOLs to offset only 80% of taxable income and the disallowance of NOL carrybacks. Although NOLs generated in tax years before 2018 may still be used to offset future income without limitation, the recent legislation may limit our ability to use our NOLs to offset any future taxable income.

Our reported results of operations may be adversely affected by changes in generally accepted accounting principles.

Generally accepted accounting principles are subject to interpretation by the Financial Accounting Standards Board, the SEC and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported results of operations and could affect the reporting of transactions completed before the announcement of a change. It is difficult to predict the impact of future changes to accounting principles or our accounting policies, any of which could negatively affect our reported results of operations.

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If our internal control over financial reporting or our disclosure controls and procedures are not effective, we may not be able to accurately report our financial results, prevent fraud or file our periodic reports in a timely manner, which may cause investors to lose confidence in our reported financial information and may lead to a decline in our stock price.

We are required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act following the later of the date we are deemed to be an “accelerated filer” or a “large accelerated filer,” each as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or the date we are no longer an “emerging growth company,” as defined in the JOBS Act. In addition, we will be required, pursuant to Section 404(a) to include a report by management on, among other things, the effectiveness of our internal control over financial reporting as of December 31, 2022. Section 404 of the Sarbanes-Oxley Act (“Section 404”) requires that we maintain effective internal control over financial reporting and disclosure controls and procedures. In particular, we must perform system and process evaluations, document our controls and perform testing of our key controls over financial reporting to allow management and our independent public accounting firm to report on the effectiveness of our internal control over financial reporting. Our testing, or the subsequent testing by our independent public accounting firm, may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses. If we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our stock would likely decline and we could be subject to lawsuits, sanctions, or investigations by regulatory authorities, which would require additional financial and management resources.

We may encounter difficulties in the timely and accurate reporting of our financial results, which would impact our ability to provide our investors with information in a timely manner. As a result, our investors could lose confidence in our reported financial information, and our stock price could decline.

We are an emerging growth company, and the decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors.

We are an “emerging growth company” as defined in the JOBS Act. We take advantage of certain exemptions under the JOBS Act from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved. We may take advantage of these exemptions for up to five years or until we are no longer an “emerging growth company,” whichever is earlier.

In addition, Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. We have elected to use the extended transition period under the JOBS Act. Accordingly, our consolidated financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.

We cannot predict if investors will find our common stock less attractive if we choose to rely on any of the exemptions afforded to emerging growth companies. If some investors find our common stock less attractive because we rely on any of these exemptions, there may be a less active trading market for our common stock and the market price of our common stock may be more volatile.

We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) in which the fifth anniversary of the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion or (c) in which we become a large accelerated filer, which means that we have been public for at least 12 months, have filed at least one annual report and the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last day of our then-most recently completed second fiscal quarter, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

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Our operations as a public company have required, and are expected to continue to require, substantial costs and substantial management attention, and we may not be able to manage our transition into, and operations as, a public company effectively or efficiently.

As a public company, we have incurred, and expect to incur, significant legal, accounting, and other expenses. Our management team and other personnel devote, and will need to continue to devote, a substantial amount of time to, and we may not effectively or efficiently manage our operations as a public company. For example, we are subject to the reporting requirements of the Exchange Act, the applicable requirements of the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations of the SEC and the NYSE. If, notwithstanding our efforts to comply with these laws, regulations and standards, we fail to comply, regulatory authorities may initiate legal proceedings against us, and our business may be harmed. Further, failure to comply with these rules might make it more difficult for us to obtain some types of insurance, including director and officer liability insurance, and we might be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, on committees of our board of directors or as members of senior management. As such, we have invested, and intend to continue to invest, resources to comply with evolving laws, regulations, and standards. This investment has resulted in and may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities.

We also expect that our management and other personnel will need to divert attention from other business matters to devote substantial time to the reporting and other requirements applicable to a public company. In particular, we expect to incur significant expense and devote substantial management effort to complying with the requirements of Section 404. We have hired resources with expertise in compliance with the Sarbanes-Oxley Act and recently commenced the process of compiling the system and processing documentation necessary to perform the evaluation needed to comply with Section 404. As we continue to grow, we will hire additional accounting and financial personnel with requisite technical and public company experience. If we are unable to recruit and retain additional accounting and finance personnel or if our accounting and finance team is unable for any reason to respond adequately to the increased demands that will result from being a public company, the quality and timeliness of our financial reporting may suffer, which could result in the identification of material weaknesses in our internal controls. Any consequences resulting from inaccuracies or delays in our reported consolidated financial statements could cause our stock price to decline and could harm our business, financial condition, and results of operations.

Risks Related to Our Common Stock

The price of our common stock could be volatile and declines in the price of common stock could subject us to litigation.

Our stock price may be volatile and may decline. The trading price and volume of our common stock could fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

•variations in our operating results and other financial and operational metrics, including the key financial and operating metrics disclosed in this Quarterly Report on Form 10-Q, as well as how those results and metrics compare to analyst and investor expectations;

•speculation in the market about our operating results;

•the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;

•failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates or ratings by any securities analysts who follow us, or our failure to meet these estimates or the expectations of investors;

•events or factors resulting from global health crises such as the COVID-19 pandemic, war or other outbreak of hostilities, geopolitical tensions, acts of terrorism, or responses to these events or the perception that any such factors or events may occur;

•announcements of new services or enhancements, strategic alliances or significant agreements, or other developments by us or our competitors;

•announcements by us or our competitors of mergers or acquisitions or rumors of such transactions involving us or our competitors;

•changes in management, other key personnel, or our board of directors;

•disruptions in our platform due to hardware, software or network problems, security breaches, or other issues;

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•the strength of the global economy or the economy in the jurisdictions in which we operate, and market conditions in our industry and those affecting our partners and learners;

•trading activity by our principal stockholders, and other market participants, in whom ownership of our common stock may be concentrated;

•price and volume fluctuations in the overall stock market;

•the performance of the equity markets in general and in our industry;

•the operating performance of other similar companies;

•actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally;

•new laws or regulations or new interpretations of existing laws, or regulations applicable to our business;

•litigation or other claims against us;

•the number of shares of our common stock that are available for public trading; and

•any other factors discussed in this Quarterly Report on Form 10-Q.

In addition, if the market for technology stocks, education stocks, or the stock market in general experiences a loss of investor confidence, whether due to any of the foregoing factors or otherwise, the price of our common stock could decline for reasons unrelated to our business, results of operations, or financial condition. The price of our common stock might also decline in reaction to events that affect other companies, even if those events do not directly affect us. Some companies that have experienced volatility in the trading price of their stock have been the subject of securities class action litigation. If we are the subject of such litigation, it could result in substantial costs and could divert our management’s attention and resources, which could adversely affect our business.

Future sales of a substantial number of shares of our common stock in the public market, or the perception that such sales could occur, could cause the price of our common stock to decline.

The market price of our common stock could decline as a result of substantial sales of our common stock, particularly sales by our directors, executive officers, and significant stockholders, a large number of shares of our common stock becoming available for sale, or the perception in the market that such sales could occur.

In addition, as of March 31, 2022, 28,853,470 shares were issuable upon exercise of outstanding stock options or the vesting of outstanding RSUs. Sales of stock by these equity holders or the perception that such sales could occur could adversely affect the trading price of our common stock.

In addition, registration of shares with existing registration rights would result in the shares becoming freely tradable without restriction under the Securities Act, except for shares held by our affiliates as defined in Rule 144 under the Securities Act, which are subject to the limitations of Rule 144. Sales of securities by any of these stockholders or the perception that such sales could occur could adversely affect the trading price of our common stock.

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Future sales and issuances of our common stock or rights to purchase common stock could result in additional dilution to our stockholders and could cause the price of our common stock to decline.

We may issue additional common stock, convertible securities, or other equity in the future. We also expect to issue common stock to our employees, directors, and other service providers pursuant to our equity incentive plans. Such issuances will be dilutive to investors and could cause the price of our common stock to decline. New investors in such issuances could also receive rights senior to those of holders of our common stock.

Our actual operating results may not meet our guidance or analyst or investor expectations, which would likely cause our stock price to decline.

From time to time, we have released and may continue to release guidance in our earnings releases, earnings conference calls, or otherwise, regarding our future performance that represent our management’s estimates as of the date of release. If given, this guidance, which will include forward-looking statements, will be based on projections prepared by our management. Projections are based upon a number of assumptions and estimates that, while presented with numerical specificity, are inherently subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond our control. The principal reason that we expect to continue to release guidance is to provide a basis for our management to discuss our business outlook with analysts and investors. With or without our guidance, analysts and investors may publish or otherwise have expectations regarding our business, financial condition, and results of operations, for which we do not accept any responsibility. Guidance is necessarily speculative in nature, and it can be expected that some or all of the assumptions of the guidance furnished by us or analysts will not materialize or will vary significantly from actual results. If our actual performance does not meet or exceed our guidance or analyst or investor expectations, the trading price of our common stock is likely to decline.

If securities analysts or industry analysts downgrade our common stock, publish negative research or reports, or fail to publish reports about our business, our stock price and trading volume could decline.

The market price and trading market for our common stock is influenced by the research and reports that industry or securities analysts publish about us, our business, and our market. If one or more analysts adversely change their recommendation regarding our stock or change their recommendation about our competitors’ stock, our stock price could decline. If one or more analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline or become volatile.

We do not intend to pay dividends on our common stock, so any returns on your investment will be limited to changes in the value of our common stock.

We have never declared or paid any dividends on our common stock. We currently anticipate that we will retain future earnings for the development, operation, and expansion of our business and do not anticipate declaring or paying any dividends for the foreseeable future. In addition, if we were to enter into loan or similar agreements in the future, these agreements may contain restrictions on our ability to pay dividends or make distributions. Any return to stockholders will therefore be limited to the increase, if any, in our stock price, which may never occur.

Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current management, and limit the market price of our common stock.

Provisions in our amended and restated certificate of incorporation and bylaws, may have the effect of delaying or preventing a change of control or changes in our management. Our amended and restated certificate of incorporation and bylaws include provisions that:

•authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights, and preferences determined by our board of directors that may be senior to our common stock;

•require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent;

•specify that special meetings of our stockholders can be called only by our board of directors, the Chairman of our board of directors, our President, or our Chief Executive Officer;

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•establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors;

•establish that our board of directors is divided into three classes, with each class serving three-year staggered terms;

•prohibit cumulative voting in the election of directors;

•provide that our directors may be removed only for cause;

•provide that vacancies on our board of directors may be filled by a majority of directors then in office, even if less than a quorum; and

•require the approval of our board of directors or the holders of at least 66 2/3% of our outstanding shares of capital stock to amend our bylaws and certain provisions of our certificate of incorporation.

These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in a broad range of business combinations with any interested stockholder for a period of three years following the date on which such stockholder became an interested stockholder. Further, as a PBC, we may be less attractive as a takeover target than a traditional company and, therefore, your ability to realize your investment through an acquisition may be limited. Any delay or prevention of a change of control transaction or changes in our management could cause our stock price to decline or could prevent or deter a transaction that you might support.

Our amended and restated charter documents designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, and provides that federal district courts will be the sole and exclusive forum for Securities Act claims, which could limit our stockholders’ ability to obtain what they believe to be a favorable judicial forum for disputes with us or our directors, officers, or other employees.

Our amended and restated certificate of incorporation and bylaws provide that, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, the Court of Chancery of the State of Delaware (or, if that court lacks subject matter jurisdiction, another federal or state court situated in the State of Delaware) shall be the sole and exclusive forum for (a) any derivative action or proceeding brought on our behalf, (b) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, or other employees to us or our stockholders, (c) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our certificate of incorporation or our bylaws, or (d) any action asserting a claim against us governed by the internal affairs doctrine. Our amended and restated charter and bylaws further provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts are the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.

Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Accordingly, the exclusive forum provision does not designate the Court of Chancery as the exclusive forum for any derivative action arising under the Exchange Act, as there is exclusive federal jurisdiction in that instance, and instead designates the federal district court for the District of Delaware for such an action.

Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. As a result, the enforceability of our exclusive forum provision is uncertain, and a court may determine that such provision will not apply to suits brought to enforce any duty or liability created by the Securities Act or any other claim for which the federal and state courts have concurrent jurisdiction. Further, compliance with the federal securities laws and the rules and regulations thereunder cannot be waived by investors in our common stock.

Any person or entity purchasing or otherwise acquiring any interest in our capital stock shall be deemed to have notice of and consented to the provisions of our amended and restated certificate of incorporation and bylaws described above. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage such lawsuits against us and our directors, officers, or other employees. Alternatively, if a court were to find these provisions of our bylaws inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition, and results of operations and result in a diversion of the time and resources of our management and board of directors.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Recent Sales of Unregistered Equity Securities

None.

(b) Use of Proceeds

On April 5, 2021, we completed our initial public offering of common stock, in which we sold 14,664,776 shares. The shares

were sold at a price to the public of $33.00 per share for net proceeds of $452.5 million after deducting underwriting discounts and commissions of $31.5 million. Additionally, offering costs incurred by us were $6.4 million.

On April 19, 2021, the underwriters exercised in full the right to purchase 2,359,500 additional shares of common stock from us,

resulting in additional net proceeds of $72.8 million after deducting underwriting discounts and commissions of $5.1 million.

All of the shares issued and sold in our IPO were registered under the Securities Act pursuant to a registration statement on

Form S-1 (File No. 333-253932), which was declared effective by the SEC on March 30, 2021. Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC acted as representatives of the underwriters for the offering. We incurred offering expenses of $6.4 million. Upon completion of the sale of the shares of our common stock referenced in the preceding sentences, the IPO terminated.

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Item 6. Exhibits

Exhibit Number	Description
10.1	Offer Letter between Coursera, Inc. and Michele M. Meyers, dated February 9, 2022.
10.2	Coursera, Inc. Amended and Restated Executive Severance Plan.
31.1	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1#	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2#	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document.
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document).

# In accordance with Item 601(b)(32)(ii) of Regulation S‑K and SEC Release No. 34‑47986, the certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10‑Q and will not be deemed “filed” for purposes of Section 18 of the Exchange Act or deemed to be incorporated by reference into any filing under the Exchange Act or the Securities Act of 1933 except to the extent that the Company specifically incorporates it by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	COURSERA, INC.
Date: May 6, 2022	By:	/s/ Jeffrey N. Maggioncalda
		Jeffrey N. Maggioncalda
		Chief Executive Officer and Director
		(Principal Executive Officer)
Date: May 6, 2022	By:	/s/ Kenneth R. Hahn
		Kenneth R. Hahn
		Chief Financial Officer
		(Principal Financial Officer)
Date: May 6, 2022	By:	/s/ Michele M. Meyers
		Michele M. Meyers
		Chief Accounting Officer
		(Principal Accounting Officer)

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EX-10.1

Exhibit 10.1

 

381 E. Evelyn Avenue Mountain View CA 94041 Tel: 1.650.963.9884

February 9, 2022

Michele M. Meyers

Dear Michele,

On behalf of Coursera, Inc. (“the Company”), it is my pleasure to formalize our offer to you for the position of Chief Accounting Officer, VP, Accounting, reporting to Kenneth Hahn.

This is a full-time position. Your base salary will be $330,000.00 on an annual basis, less applicable withholdings and deductions, payable semi-monthly in accordance with the Company’s usual payroll procedures as presently exist or may exist in the future. Because the position you are being offered is exempt, you will not be eligible for overtime pay.

You will be eligible to participate in the Coursera Broad Based Compensation Incentive Plan (the “Plan”) pursuant to which you will also be eligible to earn annual cash incentive compensation, with a target percentage equal to 30% of your earnings, less applicable withholdings and deductions, payable in accordance with the Company’s incentive compensation payout procedures as presently exist or may exist in the future. In accordance with the terms and conditions of the Plan, the actual incentive compensation payout is determined by achievement of individual and company performance objectives and will be prorated in accordance with your start date.

Please understand that the Company reserves the right to alter or amend the Plan periodically as it deems appropriate. Please also understand that nothing in the Plan, or this letter, changes the at-will nature of your employment with Coursera.

Subject to approval by the Company’s Board of Directors (or a designated committee of the Company’s Board of Directors), you will be granted restricted stock units (“RSUs”) having a value equal to $3,000,000.00.1 The number of RSUs to be granted will be determined by dividing the dollar value of the RSU grant by the average closing price of the Company’s Common Stock during the month of your start date, rounded up to the nearest whole share. The RSUs will vest over a four-year period with twenty-five percent (25%) of the RSUs vesting on the Company’s first quarterly vesting date following the one-year anniversary of your start date and another six-and-a-quarter percent (6.25%) of the RSUs vesting on each quarterly anniversary thereafter, subject to your continued service on the applicable vesting dates. Upon vesting, the RSUs represent the right to receive shares of our Common Stock subject to applicable withholding taxes but without any obligation to pay an exercise price. The RSUs will be subject to the terms set forth in the Company’s 2021 Stock Incentive Plan and an award agreement approved by the Board.

We are pleased to offer you a signing bonus of $45,000.00. This bonus will be paid in one lump sum in a separate check on the next regularly scheduled pay date after you start employment with the Company. The signing bonus is taxable, and all regular payroll taxes will be withheld. In the event that you leave the Company within 12 months of your employment start date, you will be responsible for reimbursing the Company for the entire signing bonus.

You will be eligible for reimbursement for reasonable out-of-pocket costs you incur which are associated with your duties, subject to the approval of the Company and in accordance with its then applicable business expense guidelines.

1 This should represent a dollar value.

 

381 E. Evelyn Avenue Mountain View CA 94041 Tel: 1.650.963.9884

You will devote your best efforts to the performance of your job for the Company. While employed at the Company, you will not undertake any other activity that interferes with the performance of your job duties, except as otherwise approved by the Company in advance in writing, nor support (by way of investment or otherwise) any activity that may be competitive with the Company's business or pose a conflict of interest with that business. You will follow the Company's policies and procedures currently in place or developed over time (including but not limited to the Company’s policies prohibiting discrimination and sexual harassment) as made available to you from time to time.

As an employee of the Company, you will have access to certain sensitive, confidential and proprietary information relating to the Company’s business. In order to safeguard such information, you will be required as a condition of employment to sign the Company’s standard Proprietary Information and Inventions Assignment (PIIA) Agreement for employees in the U.S., a copy of which will be provided for your review and signature on your first day of employment.

You acknowledge that you have been instructed not to use, and you agree not to use for the benefit of the Company, any confidential information or trade secrets of any prior employer or third party. In particular, you acknowledge and agree that you have returned to any prior employers all tangible expressions of confidential information and trade secrets of or related to such prior employers. You represent and warrant that you can undertake your obligations to the Company and your duties as a Company employee without breaching any obligation you may have to any prior employer or third party.

Additionally, you will be required to provide the Company, within the first three days of your employment, with documentary evidence of your identity and eligibility for employment in the United States in order to satisfy the requirements of Employment Eligibility Verification (Form I-9) as required by Federal law.

As a regular employee of the Company, you will be eligible to participate in Company-sponsored benefits that are generally available to all employees in accordance with Company policies. The Company provides 5 days of paid sick leave in each year of employment, as well as unlimited paid time off (neither of which accrue, except as required by the law). You will be provided additional information about these and other benefits on your first day of work.

Employment with Coursera is at-will and nothing in this letter changes the at-will nature of your employment with Coursera. While we hope and expect that this will be the beginning of a rewarding employment relationship, your employment with Coursera is at will. You are not being promised any particular term of employment and you should be aware that either you or Coursera may rescind this offer letter or terminate the employment relationship at any time for any reason. Likewise, Coursera may reassign you or change the terms and conditions of your employment at any time for any reason. The at-will nature of your employment is not subject to change or modification of any kind except if in writing and signed by you and the CEO of Coursera.

This offer of employment contains the entire agreement between you and the Company with respect to any benefit conferred upon you, and all prior agreements, representations, or understandings between us, whether oral or written, are expressly superseded by this offer.

This offer will expire on February 11, 2022 and is contingent upon a successful employment verification of criminal, education, and employment background information and satisfactory reference checks. This offer can be rescinded based upon data received in the course of these verification efforts in compliance with applicable law.

Please confirm your acceptance of this offer and start date by returning a signed copy of this letter to the sender. The entire Coursera team is looking forward to working with you!

 

381 E. Evelyn Avenue Mountain View CA 94041 Tel: 1.650.963.9884

/s/ Richard Jacquet

Richard Jacquet

Chief People Officer

Agreed to and accepted by:

/s/ Michele M. Meyers

Michele M. Meyers

Anticipated Start Date:

March 14, 2022

EX-10.2

Exhibit 10.2

COURSERA, INC.

AMENDED & RESTATED

EXECUTIVE SEVERANCE PLAN

(As amended and restated effective as of March 24, 2022)

This Amended and Restated Executive Severance Plan (this “Plan”) was adopted by Coursera, Inc., a Delaware public benefit corporation (the “Company”), effective as of January 5, 2021 (the “Effective Date”), and has been amended and restated as set forth herein effective as of March 24, 2022. The following executive employees of the Company shall participate in the Plan as “Class A Executives”: (a) executive employees of the Company designated on Schedule A hereto as a “Class A Executive” and any successor in corporate title thereto, and (b) any other employees of the Company named as a Senior Vice President or President and reporting directly to the Company’s Chief Executive Officer. Those executive employees of the Company designated by the Committee (defined below) as a “Class B Executive” shall participate in the Plan as “Class B Executives” and shall be listed on Schedule B hereto. Each Class A Executive and each Class B Executive is individually referred to as an “Executive” and collectively such executives are referred to as the “Executives”.

The Leadership, Diversity, Equity, Inclusion and Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of the Company may, in its sole and absolute discretion, designate additional executive employees of the Company to participate in the Plan. For purposes of this Plan, all references to the Company shall include the Company’s affiliates and subsidiaries unless the context otherwise requires.

The purpose of the Plan is to provide for the payment of specified severance benefits to eligible executive employees of the Company in the event that such individuals become subject to certain involuntary terminations of employment.

Certain capitalized terms used in this Plan are defined in Section 4 below.

1.General.

(a)Plan Administration. The Plan shall be administered by the Committee. The Committee shall have the authority to amend, terminate and interpret the Plan, select and designate executive employees of the Company to participate in the Plan, and to make any and all other determinations necessary or advisable for the administration of the Plan. For the avoidance of doubt, the Committee shall have the authority to amend or terminate the Plan at any time and for any reason; provided, however, that except as otherwise permitted by the Plan or as required to comply with any applicable law, regulation or rule, the termination of the Plan, or any amendment thereof, shall not have a material adverse effect on the Executive’s benefits under the Plan without the Executive’s consent. All determinations and interpretations of the Committee shall be final, binding, and conclusive as to all persons. The Committee may delegate any and all of its powers and responsibilities hereunder to other persons and such persons shall have the full authority to exercise the duties so delegated.

(b)Term of Plan. The Plan shall have an initial term commencing on the Effective Date and ending on the third (3rd) anniversary of the Effective Date (the “Initial Term”). At the end of the Initial Term, this Plan shall automatically renew for successive additional terms of three (3) years (each, an “Additional Term”) on the same terms and conditions, unless this Plan is either terminated or amended by the Committee in its sole discretion at the end of the Initial Term or an Additional Term, in which case this Plan shall either terminate at the end of the applicable term or continue under the new terms approved by the Committee. Notwithstanding the foregoing provisions, if a Change in Control occurs when there are fewer than twelve (12) months remaining in the Initial Term or an Additional Term, as applicable, then such Initial Term or Additional Term, as applicable, shall extend automatically through the date that is twelve (12) months following a Change in Control. If the Executive becomes entitled to benefits under Section 3 during the term of this Plan, this Plan shall not terminate with respect to such Executive until all of the obligations of the parties hereto with respect to this Plan have been satisfied. For clarity, if the Executive becomes entitled to a benefit under Section 3(c)(A) after the term of the Plan has ended, the provisions of this Plan applicable to such benefit shall not terminate with respect to such Executive until all of the obligations of the parties hereto with respect to such benefit have been satisfied.

2.At-Will Employment. The Executive’s employment with the Company is “at-will” employment and may be terminated by the Company at any time with or without cause or notice. This Plan does not create any right to continued employment. Further, the Executive’s job performance or promotions, commendations, bonuses or the like from the Company do not give rise to or in any way serve as the basis for modification, amendment, or extension, by implication or otherwise, of his or her employment with the Company.

3.Severance and Termination.

(a)Termination for Any Reason. In addition to any other benefits provided under this Section 3, if the Executive’s employment with the Company is terminated by the Company or the Executive for any reason or without reason, the Executive shall be entitled to receive the Executive’s Accrued Compensation. The Executive’s Accrued Compensation shall be payable in accordance with applicable law.

(b)Termination without Cause Not in Connection with a Change in Control: Class A Executives. If any Class A Executive’s employment with the Company is terminated by the Company without Cause more than three (3) months prior to or more than twelve (12) months following a Change in Control, the Class A Executive shall be entitled to receive (i) a lump sum cash payment equal to the sum of (A) six (6) months of the Class A Executive’s then current base salary, plus (B) an additional week of the Class A Executive’s then current base salary for every full year the Class A Executive was employed by the Company prior to such termination, payable on the first business day after the sixtieth (60th) day following the Executive’s termination of employment, and (ii) if the Class A Executive timely elects to continue health insurance coverage under COBRA for the Class A Executive and the Class A Executive’s eligible dependents, then the Company will pay the COBRA premium for a period of six (6) months following the Class A Executive’s termination of employment for such coverage as of the date of the Class A Executive’s termination, provided that the Class A Executive shall be responsible for timely filing any necessary paperwork for COBRA coverage, payable commencing on the first business day after

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4871-0437-3532.v5

the sixtieth (60th) day following the Executive’s termination of employment (with any COBRA payments delayed in accordance with this paragraph payable in a lump sum on such date and all other amounts payable thereafter in accordance with the applicable payment schedule).

(c)Change in Control Benefits: Class A Executives and Class B Executives. If any Class A Executive’s or Class B Executive’s employment with the Company is terminated (i) by such Executive with Good Reason or by the Company without Cause, and (ii) such termination occurs during the period commencing three (3) months prior to and ending twelve (12) months following a Change in Control, such Executive shall be entitled to:

(A)accelerated service-based vesting of 100% of the then unvested portion of the Executive’s stock options, liquidity contingent restricted stock unit award(s) and other equity award(s) subject only to service-based vesting granted under the Company’s 2014 Executive Stock Incentive Plan, the Company’s Stock Incentive Plan, the Company’s 2021 Stock Incentive Plan, or any other equity incentive plan of the Company, and outstanding during the Initial Term or Additional Term of the Plan and on the date of the Executive’s termination of employment, whether such termination occurs during or following Initial Term or Additional Term of this Plan (each an “Equity Award”) (other equity awards shall continue according to the terms of the applicable award agreement with respect to such provisions); provided, however, that notwithstanding any contrary term of the applicable award agreement governing the Equity Award, if the Executive is entitled to accelerated vesting as a result of the Executive’s termination with Good Reason or termination by the Company without Cause within three (3) months prior to a Change in Control: (x) the portion of the Equity Award subject to such accelerated vesting shall not be forfeited or terminated upon the Executive’s termination date pending the Change in Control and (y) the accelerated vesting shall be deemed to take place immediately prior to the effective date of the Change in Control;

(B)a lump sum payment equal to the sum of (x) six (6) months of the Executive’s then current base salary, plus (y) an additional week of the Executive’s then current base salary for every full year the Executive was employed by the Company prior to such termination;

(C) a lump sum payment equal to any annual cash bonus earned in the calendar year prior to the Change in Control but not yet paid;

(D)a lump sum payment equal to 100% of the Executive’s then current target annual cash bonus pro-rated for the number of days in the calendar year that have elapsed prior to the Change in Control; and

(E)if the Executive timely elects to continue health insurance coverage under COBRA for the Executive and the Executive’s eligible dependents, then for a period of six (6) months following the Executive’s termination of employment, the Company will pay the COBRA premiums for such coverage as of the date of the Executive’s termination, provided that the Executive shall be responsible for timely filing any necessary paperwork for COBRA coverage.

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The payments set forth in subsections (A)-(D) shall be paid, and the payments set forth in subsection (E) shall commence to be paid, on the first business day after the sixtieth (60th) day following the later of the Executive’s termination of employment or the Change in Control, as applicable (with any COBRA payments delayed in accordance with this paragraph payable in a lump sum on such date and all other amounts payable thereafter in accordance with the applicable payment schedule). For purposes of clarity, if the Executive is terminated by the Company without Cause within three (3) months prior to a Change in Control, the Executive shall receive the benefits under this Section 3(c) less any amounts already paid pursuant to Section 3(b).

(d)Termination for Cause, Death, Disability, or Voluntary Termination. In the event the Executive is subject to a Termination for Cause, in the event of the Executive’s death or Disability (as defined below), or in the event of the Executive’s voluntary resignation or resignation for Good Reason not addressed in Section 3(b), the Executive (or the Executive’s estate, as applicable) shall only be entitled to the Executive’s Accrued Compensation (as defined below).

4.Definitions.

(a)Accrued Compensation. For purposes of this Plan, “Accrued Compensation” means (i) any earned but unpaid base salary, (ii) earned and accrued but unused vacation or paid time off (if applicable pursuant to the Company’s policies) and (iii) reimbursement for all reasonable and necessary expenses incurred by the Executive in connection with the Executive’s performance of services on behalf of the Company in accordance with applicable Company policies and guidelines (including submitting to the Company proper documentation evidencing such incurred expenses), in each case as of the effective date of Executive’s termination of employment.

(b)Cause. For purposes of this Plan, “Cause” means

(i)the Executive’s material failure to perform the Executive’s stated duties, and the Executive’s inability or unwillingness to cure such failure to the reasonable satisfaction of the Company within thirty (30) days following written notice of such failure to the Executive from the Company;

(ii)the Executive’s material violation of a Company policy or material breach of any written agreement or covenant with the Company, including, but not limited to, any applicable invention assignment and confidentiality agreement or similar agreement between the Company and the Executive;

(iii)the Executive’s conviction of, or entry of a plea of guilty or nolo contendere to, a felony (other than motor vehicle offenses the effect of which do not materially impair the Executive’s performance of the Executive’s employment duties);

(iv)the Executive’s commission of a willful act that constitutes gross misconduct and which is materially injurious to the Company;

(v)the Executive’s commission of any act of fraud or embezzlement;

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(vi)the Executive’s commission of any act of dishonesty or any other willful misconduct that has caused or is reasonably expected to result in a material injury to the Company; or

(vii)the Executive’s willful failure to cooperate with an investigation authorized by the Company or initiated by a governmental or regulatory authority, in either case, relating to the Company, its business, or any of its directors, officers or employees.

The Executive will be provided with notice and thirty calendar days opportunity to cure any event that is curable. The determination as to whether the Executive is being terminated for Cause will be made in good faith by the Board and will be final and binding.

(c)Change in Control. For purposes of this Plan, “Change in Control” means the occurrence of any of the following events:

(i)a change in the composition of the Board occurs, as a result of which fewer than one-half of the incumbent directors are directors who either:

(A)had been directors of the Company on the “look-back date” (as defined below) (the “original directors”); or

(B)were elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the aggregate of the original directors who were still in office at the time of the election or nomination and the directors whose election or nomination was previously so approved (the “continuing directors”);

provided, however, that for this purpose, the “original directors” and “continuing directors” shall not include any individual whose initial assumption of office occurred as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents, by or on behalf of a person other than the Board;

(ii)Any “person” (as defined below) who by the acquisition or aggregation of securities, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the combined voting power of the Company’s then outstanding securities ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of directors (the “Base Capital Stock”); except that any change in the relative beneficial ownership of the Company’s securities by any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such person’s ownership of securities, shall be disregarded until such person increases in any manner, directly or indirectly, such person’s beneficial ownership of any securities of the Company;

(iii)The consummation of a merger or consolidation of the Company or a Subsidiary of the Company with or into another entity or any other corporate reorganization, if persons who were not stockholders of the Company immediately prior to such merger, consolidation or other reorganization own immediately after such merger, consolidation or other reorganization fifty percent (50%) or more of the voting power of the outstanding securities of

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each of (A) the Company (or its successor) and (B) any direct or indirect parent corporation of the Company (or its successor); or

(iv)The sale, transfer, or other disposition of all or substantially all of the Company’s assets.

For purposes of subsection (c)(i) above, the term “look-back” date means the later of (1) the Effective Date and (2) the date that is twenty-four (24) months prior to the date of the event that may constitute a Change in Control.

For purposes of subsection (c)(ii) above, the term “person” shall have the same meaning as when used in Sections 13(d) and 14(d) of the Exchange Act, but shall exclude (1) a trustee or other fiduciary holding securities under an employee benefit plan maintained by the Company or a Parent or Subsidiary and (2) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the Stock.

Any other provision of this Section (c) notwithstanding, a transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction, and a Change in Control shall not be deemed to occur if the Company files a registration statement with the United States Securities and Exchange Commission in connection with an initial or secondary public offering of securities or debt of the Company to the public.

(d)COBRA. For purposes of this Plan, “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”).

(e)Disabled. For purposes of this Plan, “Disabled” means any permanent and total disability as defined by Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”).

(f)Exchange Act. For purposes of this Plan, “Exchange Act” means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

(g)Good Reason. For purposes of this Plan, “Good Reason” means, the occurrence of one or more of the following, without the Executive’s written consent:

(i)a material reduction by the Company of the Executive’s base salary as in effect immediately prior to such reduction (other than a proportionate reduction in connection with a general reduction of compensation to the vice presidents of the Company and the employees senior to vice presidents of the Company); or

(ii)a relocation of the Executive’s principal place of employment to a location that increases the Executive’s one-way commute by more than 35 miles; or

(iii)a material diminution in the Executive’s responsibilities, title, duties, and reporting lines, provided however, that if the Executive is a senior executive officer of a division

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of the parent company following a Change in Control (with no material reduction of the level of the Executive’s compensation or benefits), such new role does not constitute Good Reason; or

(iv)any breach by the Company of this Agreement.

In order for an event to qualify as “Good Reason,” the Executive must provide the Company with written notice of the acts or omissions constituting the grounds for “Good Reason” within sixty (60) days of the initial existence of the grounds for “Good Reason” and a reasonable cure period of thirty (30) days following the date of written notice (the “Cure Period”), such grounds must not have been cured during such time, and the Executive must resign within ninety (90) days following the end of the Cure Period.

5.Limitation on Payments.

(a)In the event that the severance and other benefits provided for in this Plan or otherwise payable to the Executive (i) constitute “parachute payments” within the meaning of Section 280G of Code and (ii) but for this Section 5, would be subject to the excise tax imposed by Section 4999 of the Code, then the Executive’s severance benefits and other payments under Section 3(d) shall be either: (A) delivered in full, or (B) delivered as to such lesser extent which would result in no portion of such severance benefits and other payments being subject to excise tax under Section 4999 of the Code, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, results in the receipt by the Executive on an after-tax basis, of the greatest amount of severance benefits and other payments, notwithstanding that all or some portion of such severance benefits and other payments may be taxable under Section 4999 of the Code.

(b)If a reduction in severance and other benefits constituting “parachute payments” as defined in Section 280G of the Code, is necessary so that benefits are delivered to a lesser extent, reduction shall occur in the following manner:

(i)first a pro-rata reduction of cash payments subject to Section 409A of the Code as deferred compensation and cash payments not subject to Section 409A of the Code, and

(ii)second a pro rata cancellation of (A) equity-based compensation subject to Section 409A of the Code as deferred compensation and (B) equity-based compensation not subject to Section 409A of the Code.

Reduction in either cash payments or equity compensation benefits shall be made pro-rata between and among benefits which are subject to Section 409A of the Code and benefits which are exempt from Section 409A of the Code. In the event that the accelerated vesting of equity awards is to be cancelled, such vesting acceleration shall be cancelled in the reverse chronological order of the Executive’s equity awards’ grant dates.

(c)Unless the Company and the Executive otherwise agree in writing, any determination required under this Section 5 shall be made in writing by the Company’s independent public accountants immediately prior to the Change in Control (the “Accountants”), whose determination shall be conclusive and binding upon the Executive and the Company for all

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purposes. For purposes of making the calculations required by this Section 5, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and the Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 5.

6.Section 409A. Notwithstanding anything to the contrary in this Plan, if the Company determines that the Executive is a “specified employee” within the meaning of Section 409A of the Code (“Section 409A”) at the time of the Executive’s termination of employment (other than due to death), then to the extent delayed commencement of any portion of the benefits to which the Executive is entitled pursuant to this Plan, when considered together with any other severance payments or separation benefits that are considered deferred compensation under Section 409A (together, the “Deferred Compensation Separation Benefits”), is required to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, then such benefits shall be delayed until the first payroll date that occurs on or after the date six (6) months and one (1) day following the date of the Executive’s termination of employment. All subsequent Deferred Compensation Separation Benefits, if any, shall be payable in accordance with the payment schedule applicable to each payment or benefit. Notwithstanding anything herein to the contrary, if the Executive dies following the Executive’s termination of employment but prior to the six (6) month anniversary of the Executive’s termination of employment, then any payments delayed in accordance with this paragraph shall be payable in a lump sum as soon as administratively practicable after the date of the Executive’s death and all other Deferred Compensation Separation Benefits shall be payable in accordance with the payment schedule applicable to each payment or benefit.

Each payment and benefit payable under this Plan is intended to constitute a separate payment for purposes of Treasury Regulation Section 1.409A-2(b)(2). Notwithstanding anything to the contrary in this Plan, no Deferred Compensation Separation Benefits payable under this Plan shall be considered due or payable until and unless the Executive has a “separation from service” within the meaning of Section 409A. Similarly, no severance payable to the Executive pursuant to this Plan that otherwise would be exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9) shall be payable until the Executive has a “separation from service” within the meaning of Section 409A. To the extent that any reimbursements payable pursuant to this Plan are subject to Section 409A, any such reimbursements payable to the Executive pursuant to this Plan shall be paid no later than December 31 of the year following the year in which the expense was incurred, the amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, and the Executive’s right to reimbursement under this Plan shall not be subject to liquidation or exchange for another benefit.

The foregoing provisions are intended to comply with the requirements of Section 409A so that none of this Plan’s benefits shall be subject to the additional tax imposed under Section 409A, and any ambiguities herein shall be interpreted to so comply. The Company reserves the right to amend this Plan and to take such reasonable actions which are necessary, appropriate, or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to the Executive under Section 409A, provided that such amendment or action may not materially reduce the benefits provided or to be provided to the Executive under this Plan.

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Notwithstanding anything herein to the contrary, the Company shall have no liability to the Executive or to any other person if the payments and benefits provided in this Plan that are intended to be exempt from or compliant with Section 409A are not so exempt or compliant, as applicable.

7.Release of Claims. The receipt of any payments and benefits pursuant to Sections 3(b) and 3(c) is subject to the Executive’s compliance with the terms of any restrictive covenants to which the Executive is subject and the Executive signing and not revoking the Company’s standard release of claims in favor of the Company (the “Release”); provided that such Release is effective within sixty (60) days following the Executive’s termination of employment or, if payable pursuant to 3(c), the later of the Executive’s termination of employment or the Change in Control (the “Release Deadline”). No payments or benefits pursuant to Sections 3(b) and 3(c)shall be paid or provided until the Release becomes effective. If the Release is not effective by the Release Deadline, the Executive forfeits the Executive’s right to the payments and benefits under this Plan.

8.Successors.

(a)Company’s Successors. Any successor to the Company (whether direct or indirect and whether by purchase, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets shall assume the obligations under this Plan and agree expressly to perform the obligations under this Plan in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Plan, the term “Company” shall include any successor to the Company’s business and/or assets which executes and delivers the assumption agreement described in this Section 8(a) or which becomes bound by the terms of this Plan by operation of law.

(b)Executive’s Successors. The terms of this Plan and all rights of the Executive hereunder shall inure to the benefit of, and be enforceable by, the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

9.Notices. All notices, requests, demands and other communications called for hereunder shall be in writing and shall be deemed given as follows (a) if sent by email, when sent, provided that (i) the subject line of such email states that it is a notice delivered pursuant to this Plan and (ii) the sender of such email does not receive a written notification of delivery failure, (b) if sent by a well-established commercial overnight service, on the date of delivery, or, if earlier, one (1) day after being sent, (c) if sent by registered or certified mail, three (3) days after being mailed, return receipt requested, prepaid and addressed to the parties or their successors at the following addresses, or at such other addresses as the parties may later designate in writing:

If to the Company: Coursera, Inc. 381 E. Evelyn Avenue Mountain View CA 94041 Attention: General Counsel Email: acappel@coursera.org

or to such other address or the attention of such other person as the recipient party has previously furnished to the other party in writing in accordance with this paragraph.

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10.Miscellaneous Provisions.

(a)Other Agreements. To the extent that the Executive participates in any Company plan or has entered into another agreement with the Company that also provides for one or more of the severance benefits set forth in this Plan upon termination of employment, then with respect to each such payment or benefit, the Executive shall be entitled to receive either (i) such payment or benefit under such other agreement or (ii) the payment or benefit provided under this Plan, whichever of the foregoing results in the receipt by the Executive on an after-tax basis of the greater payment or benefit and subject to compliance with Section 409A, to the extent applicable, and provided that the Executive does not receive any duplication of payments or benefits. For the avoidance of doubt, in no event shall the Executive become entitled to a duplication of benefits under this Plan and any other severance plan or program of the Company. Notwithstanding any provision of this Plan to the contrary, to the extent that any Executive is entitled to any period of paid notice under federal or state law including, but not limited to, the Worker Adjustment Retraining Notification Act of 1988, the benefits and amounts payable under this Plan shall be reduced (but not below zero) by the base pay received by the Executive during the period of such paid notice.

(b)Headings. All captions and section headings used in this Plan are for convenient reference only and do not form a part of this Plan.

(c)Severability. The invalidity or unenforceability of any provision or provisions of this Plan shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

(d)Withholding. All payments made pursuant to this Plan shall be subject to withholding of applicable income and employment taxes.

(e)Governing Law. The validity, interpretation, construction and performance of this Plan shall in all respects be governed by the laws of the State of California, without preference to principles of conflict of law.

(f)Survival. Those provisions and obligations of this Plan which are intended to survive shall survive notwithstanding termination of the Executive’s employment with the Company or any of its affiliates or subsidiaries or the termination of this Plan.

(g)No Effect on Other Benefits. Benefits under this Plan, if any, shall not be counted as compensation for purposes of determining benefits under other benefit plans, programs, policies or agreements, except to the extent expressly provided therein or herein.

(h)ERISA. The Plan is an unfunded compensation arrangement for a select group of management or highly compensated employees of the Company and any exemptions under the Employee Retirement Income Security Act of 1974, as amended, applicable to such an arrangement shall be applicable to the Plan.

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To record the amendment and restatement of this Plan by the Committee, the Company has caused its authorized officer to execute the same.

COURSERA, INC.
By:	/s/ Anne T. Cappel
Name:	Anne T. Cappel
Title:	SVP, General Counsel and Secretary

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SCHEDULE A

“CLASS A EXECUTIVES”

The following executive employees of the Company are “Class A Executives” for purposes of the Plan:

●Jeffrey N. Maggioncalda, President and Chief Executive Officer

●Kenneth R. Hahn, Chief Financial Officer

●Anne T. Cappel, General Counsel

●Leah F. Belsky, Chief Enterprise Officer

●Kimberly A. Caldbeck, Chief Marketing Officer

●Shravan K. Goli, Chief Product Officer and Head of Consumer Revenue

●Richard Jacquet, Chief People Officer

●Betty M. Vandenbosch, Chief Content Officer

●Xueyan Wang, Senior Vice President of Services

●Chun Yu (“Richard”) Wong, Senior Vice President of Engineering

SCHEDULE B

“CLASS B EXECUTIVES”

The following executive employees of the Company are “Class B Executives” for purposes of the Plan:

●Alan Cardenas, Vice President, Deputy General Counsel and Assistant Secretary

●Apurva Shah, Vice President Corporate Development

●Michele M. Meyers, Vice President, Accounting and Chief Accounting Officer

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jeffrey N. Maggioncalda, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Coursera, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 6, 2022	By:	/s/ Jeffrey N. Maggioncalda
		Jeffrey N. Maggioncalda
		Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Kenneth R. Hahn, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Coursera, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 6, 2022	By:	/s/ Kenneth R. Hahn
		Kenneth R. Hahn
		Chief Financial Officer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Coursera, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: May 6, 2022	By:	/s/ Jeffrey N. Maggioncalda
		Jeffrey N. Maggioncalda
		Chief Executive Officer (Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Coursera, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: May 6, 2022	By:	/s/ Kenneth R. Hahn
		Kenneth R. Hahn
		Chief Financial Officer (Principal Financial Officer)

XML

Cover - shares	3 Months Ended
	Mar. 31, 2022	Apr. 28, 2022
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2022
Document Fiscal Year Focus	2022
Entity File Number	001-40275
Entity Registrant Name	COURSERA, INC.
Entity Tax Identification Number	45-3560292
Entity Address, Address Line One	381 E. Evelyn Ave.
Entity Address, City or Town	Mountain View
Entity Incorporation, State or Country Code	DE
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94041
City Area Code	650
Local Phone Number	963-9884
Title of 12(b) Security	Common Stock, $0.00001 par value
Trading Symbol	COUR
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		144,051,175
Entity Central Index Key	0001651562
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q1

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 361,315	$ 580,658
Marketable securities	419,104	241,117
Accounts receivable, net of allowance for doubtful accounts of $195 and $105 as of March 31, 2022 and December 31, 2021, respectively	54,185	34,396
Deferred costs, net	20,031	19,666
Prepaid expenses and other current assets	23,269	16,494
Total current assets	877,904	892,331
Property, equipment and software, net	26,403	24,725
Operating lease right-of-use assets	15,050	16,321
Intangible assets, net	9,703	10,091
Restricted cash	2,061	2,061
Other assets	15,743	13,381
Total assets	946,864	958,910
Current liabilities:
Educator partners payable	53,897	49,206
Other accounts payable and accrued expenses	11,263	23,257
Accrued compensation and benefits	16,036	18,353
Operating lease liabilities, current	8,060	8,031
Deferred revenue, current	106,836	94,637
Other current liabilities	7,745	7,639
Total current liabilities	203,837	201,123
Operating lease liabilities, non-current	10,278	11,864
Deferred revenue, non-current	3,109	3,851
Other liabilities	955	559
Total liabilities	218,179	217,397
Commitments and contingencies (Note 12)
Stockholders' equity:
Preferred stock, $0.00001 par value- 10,000,000 shares authorized as of March 31, 2022 and December 31, 2021, respectively; no shares issued and outstanding as of March 31, 2022 and December 31, 2021	0	0
Common stock, $0.00001 par value 300,000,000 shares authorized as of March 31, 2022 and December 31, 2021; 146,578,434 shares issued and 143,830,496 shares outstanding as of March 31, 2022, and 144,653,979 shares issued and 141,906,041 shares outstanding as of December 31, 2021	1	1
Additional paid-in capital	1,262,283	1,235,231
Treasury stock- at cost, 2,747,938 shares as of March 31, 2022 and December 31, 2021	(4,701)	(4,701)
Accumulated other comprehensive loss	(1,864)	(252)
Accumulated deficit	(527,034)	(488,766)
Total stockholders' equity	728,685	741,513
Total liabilities and stockholders' equity	$ 946,864	$ 958,910

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 195	$ 105
Preferred stock, par value (in dollars per share)	$ 0.00001	$ 0.00001
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.00001	$ 0.00001
Common stock, shares authorized (in shares)	300,000,000	300,000,000
Common stock, shares issued (in shares)	146,578,434	144,653,979
Common stock, shares outstanding (in shares)	143,830,496	141,906,041
Treasury stock, shares	2,747,938	2,747,938

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Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Income Statement [Abstract]
Revenue	$ 120,433	$ 88,362
Cost of revenue	42,803	38,826
Gross profit	77,630	49,536
Operating expenses:
Research and development	37,955	22,140
Sales and marketing	51,667	32,613
General and administrative	25,178	13,144
Total operating expenses	114,800	67,897
Loss from operations	(37,170)	(18,361)
Interest income	335	80
Other expense, net	(425)	(7)
Loss before income taxes	(37,260)	(18,288)
Income tax expense	1,008	375
Net loss	$ (38,268)	$ (18,663)
Net loss per shares-basic and diluted	$ (0.27)	$ (0.45)
Weighted average shares used in computing net loss per share-basic and diluted	143,026,907	41,218,355

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Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Statement of Comprehensive Income [Abstract]
Net loss	$ (38,268)	$ (18,663)
Change in unrealized (loss) gain on marketable securities, net of tax	(1,612)	3
Comprehensive loss	$ (39,880)	$ (18,660)

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Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit) (Unaudited) - USD ($) $ in Thousands	Total	Redeemable Convertible Preferred Stock	Common Stock	Additional Paid-In Capital	Treasury Stock	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit
Beginning balance at Dec. 31, 2020		$ 462,293
Beginning balance (in shares) at Dec. 31, 2020		75,305,400
Beginning balance at Dec. 31, 2020	$ (221,824)			$ 126,408	$ (2,747,938)	$ 20	$ (343,551)
Beginning balance (in shares) at Dec. 31, 2020			43,049,228
Treasury Stock, Value, Beginning Balance at Dec. 31, 2020					(4,701)
Issuance of common stock upon exercise of options	8,564			8,564
Issuance of common stock upon exercise of options (in shares)			2,891,926
Vesting of early exercise stock options	21			21
Stock-based compensation expense	5,810			5,810
Change in unrealized loss on marketable securities	3					3
Net loss	(18,663)						(18,663)
Ending balance at Mar. 31, 2021		$ 462,293
Ending balance (in shares) at Mar. 31, 2021		75,305,400
Ending balance at Mar. 31, 2021	(226,089)			140,803	(2,747,938)	23	(362,214)
Ending balance (in shares) at Mar. 31, 2021			45,941,154
Treasury Stock, Value, Ending Balance at Mar. 31, 2021					(4,701)
Beginning balance at Dec. 31, 2021		$ 0
Beginning balance (in shares) at Dec. 31, 2021		0
Beginning balance at Dec. 31, 2021	$ 741,513		$ 1	1,235,231	(2,747,938)	(252)	(488,766)
Beginning balance (in shares) at Dec. 31, 2021	141,906,041		144,653,979
Treasury Stock, Value, Beginning Balance at Dec. 31, 2021	$ 4,701				(4,701)
Issuance of common stock upon exercise of options	6,450			6,450
Issuance of common stock upon exercise of options (in shares)			1,728,006
Vesting of restricted stock units (in shares)			322,335
Tax withholding on vesting of restricted stock units	(2,625)			(2,625)
Tax withholding on vesting of restricted stock units (in shares)			(125,886)
Stock-based compensation expense	23,227			23,227
Change in unrealized loss on marketable securities	(1,612)					(1,612)
Net loss	(38,268)						(38,268)
Ending balance at Mar. 31, 2022		$ 0
Ending balance (in shares) at Mar. 31, 2022		0
Ending balance at Mar. 31, 2022	$ 728,685		$ 1	$ 1,262,283	(2,747,938)	$ (1,864)	$ (527,034)
Ending balance (in shares) at Mar. 31, 2022	143,830,496		146,578,434
Treasury Stock, Value, Ending Balance at Mar. 31, 2022	$ 4,701				$ (4,701)

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Cash flows from operating activities:
Net loss	$ (38,268)	$ (18,663)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	4,182	2,931
Stock-based compensation	21,978	5,284
Amortization or accretion of marketable securities	510	177
Other	2,119	98
Changes in operating assets and liabilities:
Accounts receivable, net	(19,997)	5,041
Prepaid expenses and other assets	(11,467)	260
Operating lease right-of-use assets	1,271	1,345
Accounts payable and accrued expenses	(6,670)	(3,032)
Accrued compensation and other liabilities	(1,815)	(4,330)
Operating lease liabilities	(1,557)	(1,582)
Deferred revenue	11,457	8,124
Net cash provided by operating activities	(38,257)	(4,347)
Cash flows from investing activities:
Purchases of marketable securities	(180,552)	0
Proceeds from maturities of marketable securities	0	82,500
Purchases of property, equipment, and software	(400)	(307)
Capitalized internal-use software costs	(3,544)	(3,985)
Net cash (used in) provided by investing activities	(185,113)	78,038
Cash flows from financing activities:
Proceeds from exercise of stock options and warrants	6,947	8,564
Payment of deferred offering costs	(295)	(4,061)
Payment of tax withholding on vesting of restricted stock units	(2,625)	0
Net cash provided by financing activities	4,027	4,503
Net (decrease) increase in cash, cash equivalents, and restricted cash	(219,343)	78,194
Cash, cash equivalents, and restricted cash—Beginning of period	582,719	82,426
Cash, cash equivalents, and restricted cash—End of period	363,376	160,620
Reconciliation of cash, cash equivalents, and restricted cash:
Cash and cash equivalents	361,315	158,072
Restricted cash	2,061	2,548
Total cash, cash equivalents, and restricted cash	363,376	160,620
Supplemental disclosure of cash flow information:
Cash paid for income taxes	808	530
Supplemental disclosure of noncash investing and financing activities:
Stock-based compensation capitalized as internal-use software costs	1,249	526
Unpaid deferred offering costs	0	2,182
Content Asset
Cash flows from investing activities:
Purchases of content assets	$ (617)	$ (170)

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Organization and Description of Business

3 Months Ended

Mar. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Description of Business

1.ORGANIZATION AND DESCRIPTION OF BUSINESS

Description of Business

Coursera, Inc., a Delaware public benefit corporation, together with its subsidiaries (“Coursera”, the “Company”, “we”, “us” or “our”), is an online learning platform that connects learners, educators, and institutions with the goal of providing world-class educational content that is affordable, accessible, and relevant. We combine content, data, and technology into a platform that is customizable and extensible to both individual learners and institutions. We partner with leading university and industry partners (“educator partners”) to bring quality higher education to a broad range of individuals, businesses, organizations, and governments. We also sell directly to institutions, including employers, colleges and universities, organizations, and governments, to enable their employees, students, and citizens to gain critical skills aligned to the job markets of today and tomorrow. Our corporate headquarters is located in Mountain View, California.

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Basis of Presentation and Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

Basis of Presentation and Summary of Significant Accounting Policies

2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation—The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and following the requirements of the Securities and Exchange Commission (“SEC”), for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP can be condensed or omitted. These unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, that are necessary for a fair statement of the Company’s financial information. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any other interim period or for any other future year. The balance sheet as of December 31, 2021 has been derived from audited consolidated financial statements at that date but does not include all information required by GAAP for annual consolidated financial statements.

These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the SEC on March 3, 2022.

Principles of Consolidation—The unaudited condensed consolidated financial statements include the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Segment Information—The Company defines its segments as those operations the chief operating decision maker (“CODM”), determined to be the Chief Executive Officer of the Company, regularly reviews to allocate resources and assess performance. For the three months ended March 31, 2022 and 2021, the Company operated under three segments: Consumer, Enterprise, and Degrees. The Company continually monitors and reviews its segment reporting structure in accordance with Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting, to determine whether any changes have occurred that would impact its reportable segments. For further information on the Company’s segment reporting, see Note 15 “Segment and Geographic Information.”

Use of Estimates—The preparation of these unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and related disclosures at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, the Company evaluates its estimates, including those related to the fair value of common stock and stock-based awards; period of benefit for capitalized commissions; internal-use software costs; useful lives of long-lived assets; the carrying value of operating lease right-of-use assets; valuation of intangible assets and income tax expense, including the valuation of deferred tax assets and liabilities, among others.

Summary of Significant Accounting Policies

There have been no significant changes to the Company’s significant accounting policies as of and for the three months ended March 31, 2022 as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the SEC on March 3, 2022.

Concentration of Credit Risk—Financial instruments that potentially subject the Company to concentration of credit risk consist of cash, cash equivalents, and marketable securities. The Company invests only in high-credit-quality instruments and maintains its cash equivalents and marketable securities in fixed-income securities. The Company places its cash primarily with domestic financial institutions that are federally insured within statutory limits.

For purposes of assessing concentration of credit risk and significant customers, a group of customers under common control or customers that are affiliates of each other are regarded as a single customer. For the three months ended March 31, 2022 and 2021, the Company did not have any customers that accounted for more than 10% of the Company’s revenue. As of March 31, 2022, the Company had one customer that accounted for 22% of its net accounts receivable balance that has since been collected within typical business terms. As of December 31, 2021, no customer accounted for more than 10% of the Company’s net accounts receivable balance.

New Accounting Pronouncements Recently Adopted

Coursera is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, the unaudited condensed consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

The JOBS Act does not preclude an emerging growth company from early adopting new or revised accounting standards. We early adopted Accounting Standards Update (“ASU”) 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, effective July 1, 2021. The Company expects to use the extended transition period for any other new or revised accounting standards during the period for which the Company remains an emerging growth company.

In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This standard simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC Topic 740, Income Taxes, related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. The guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill and the allocation of consolidated income taxes to separate financial statements of entities not subject to income tax. Upon adoption, certain aspects of this standard are applied retrospectively for all periods presented while other aspects are applied on a modified retrospective basis through a cumulative-effect adjustment to accumulated deficit as of the beginning of the fiscal year of adoption. We adopted ASU 2019-12 effective January 1, 2022, and the adoption did not have a material impact on our unaudited condensed consolidated financial statements and related disclosures.

New Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses, which provides new authoritative guidance with respect to the measurement of credit losses on financial instruments. This update changes the impairment model for most financial assets and certain other instruments by introducing a current expected credit loss (“CECL”) model. The CECL model is a forward-looking approach based on expected losses rather than incurred losses, requiring entities to estimate and record losses expected over the remaining contractual life of an asset. The guidance will be effective for the Company in 2023 and early adoption beginning in 2019 is permitted. The Company is currently evaluating the impact of adopting this guidance on the consolidated financial statements and related disclosures.

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Revenue Recognition

3 Months Ended

Mar. 31, 2022

Revenue Recognition [Abstract]

Revenue Recognition

3. REVENUE RECOGNITION

Contract Balances—The Company’s contract assets and liabilities as of March 31, 2022, December 31, 2021, and January 1, 2021 were as follows:

	March 31, 2022		December 31, 2021		January 1, 2021
Contract assets:
Billed accounts receivable, net of allowance for doubtful accounts	$	44,532	$	22,286	$	39,976
Unbilled accounts receivable		9,653		12,110		745
Total contract assets	$	54,185	$	34,396	$	40,721
Contract liabilities:
Deferred revenue	$	109,945	$	98,488	$	80,642
Total contract liabilities	$	109,945	$	98,488	$	80,642

Revenue recognized during the three months ended March 31, 2022 and 2021 that was included in the deferred revenue balances at the beginning of the year was $47,160 and $37,522, respectively.

Remaining Performance Obligations—Remaining performance obligations represent future promises to transfer goods or services under noncancelable contracts for which revenue has not yet been recognized and we do not yet have the right to bill. As of March 31, 2022, the Company had remaining performance obligations of $273,107 and expects to recognize approximately 64% as revenue over the next 12 months and the remainder thereafter.

Costs to Obtain and Fulfill a Contract—During the three months ended March 31, 2022 and 2021, the Company capitalized $2,493 and $2,289, respectively, of commissions and related payroll tax expenditures and amortized $2,744 and $1,666, respectively, to sales and marketing expense. As of March 31, 2022 and December 31, 2021, the amount of deferred commissions and related payroll tax expenditures included in deferred costs and in other assets was $10,087 and $8,240, and $9,761 and $8,817, respectively.

During the three months ended March 31, 2022, the Company recognized an impairment loss of $1,886 relating to deferred partner fees associated with content from Russian educator partners that the Company does not expect to recover. This was recorded within general and administrative expenses in the unaudited condensed consolidated statements of operations.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

4. FAIR VALUE MEASUREMENTS

The Company’s assets and liabilities that were measured at fair value by level within the fair value hierarchy as of March 31, 2022 and December 31, 2021 were as follows:

	March 31, 2022
	Fair Value		Level 1
Financial assets:
Cash equivalents—money market funds	$	315,453	$	315,453
Marketable securities:
U.S. government Treasury bills		419,104		419,104
Total financial assets	$	734,557	$	734,557

	December 31, 2021
	Fair Value		Level 1
Financial assets:
Cash equivalents—money market funds	$	539,091	$	539,091
Marketable securities:
U.S. government Treasury bills		241,117		241,117
Total financial assets	$	780,208	$	780,208

The Company remeasures certain assets, including intangible assets and its equity-method investment in a private company, at fair value on a nonrecurring basis when there are identifiable events or changes in circumstances that may have a significant adverse impact on the fair value of these assets. No such events or changes occurred during the three months ended March 31, 2022 and 2021.

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Marketable Securities

3 Months Ended

Mar. 31, 2022

Investments, Debt and Equity Securities [Abstract]

Marketable Securities

5. MARKETABLE SECURITIES

The following table presents the Company’s available-for-sale marketable securities as of March 31, 2022 and December 31, 2021:

	March 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. government Treasury bills	$	420,968	$	—	$	(1,864	)	$	419,104
Total marketable securities	$	420,968	$	—	$	(1,864	)	$	419,104

	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. government Treasury bills	$	241,369	$	—	$	(252	)	$	241,117
Total marketable securities	$	241,369	$	—	$	(252	)	$	241,117

The gross realized gains and losses related to the Company’s marketable securities were not material for the three months ended March 31, 2022 and 2021.

The following table presents the amortized cost and fair value of available-for-sale marketable securities by contractual maturity date as of March 31, 2022 and December 31, 2021:

	March 31, 2022				December 31, 2021
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	420,968	$	419,104	$	241,369	$	241,117

Investments in an unrealized loss position consisted of the following as of March 31, 2022 and December 31, 2021:

	March 31, 2022					December 31, 2021
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. government Treasury bills	$	419,104	$	(1,864	)	$	241,117	$	(252	)
Total investments in an unrealized loss position	$	419,104	$	(1,864	)	$	241,117	$	(252	)

As of March 31, 2022 and December 31, 2021, no investments were in a continuous unrealized loss position for more than 12 months. The Company does not intend to sell any of these investments, and it is not more likely than not that the Company would be required to sell these investments before recovery of their amortized cost basis, which may be at maturity.

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Consolidated Balance Sheet Components

3 Months Ended

Mar. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Consolidated Balance Sheet Components

6. CONSOLIDATED BALANCE SHEET COMPONENTS

Property, Equipment, and Software—Property, equipment, and software, net as of March 31, 2022 and December 31, 2021 consisted of the following:

	Estimated Useful Life	March 31, 2022			December 31, 2021
Internal-use software	2 to 5 years	$	40,301		$	35,508
Computer equipment and software	2 years		4,566			4,163
Leasehold improvements	Shorter of useful life and remaining lease term		7,140			7,119
Furniture and fixtures	5 years		3,051			3,051
Total property, equipment, and software			55,058			49,841
Less accumulated depreciation and amortization			(28,655	)		(25,116	)
Property, equipment, and software—net		$	26,403		$	24,725

Depreciation and amortization expense related to property, equipment, and software for the three months ended March 31, 2022 and 2021 was $3,539 and $2,504, respectively, which included amortization expense for internal-use software of $2,811 and $1,830, respectively, that is recorded within cost of revenue in the unaudited condensed consolidated statements of operations.

Intangible Assets—Intangible assets, net as of March 31, 2022 and December 31, 2021 consisted of the following:

		March 31, 2022							December 31, 2021
	Estimated Useful Life	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Gross Carrying Value		Accumulated Amortization			Net Carrying Value
Assembled workforce	3 years	$	181	$	(158	)	$	23	$	181	$	(143	)	$	38
Developed technology	6 years		8,446		(3,683	)		4,763		8,446		(3,337	)		5,109
Content assets	5 years		5,976		(1,059	)		4,917		5,721		(777	)		4,944
Intangible assets		$	14,603	$	(4,900	)	$	9,703	$	14,348	$	(4,257	)	$	10,091

During the three months ended March 31, 2022 and 2021, the Company capitalized $255 and $170 of content assets, respectively. Intangible assets amortization expense was $643 and $427 for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, the weighted-average remaining amortization period was 0.4 years for assembled workforce, 3.4 years for developed technology, and 4.1 years for content assets. Amortization of assembled workforce is included in research and development expenses, and amortization of developed technology and content assets is included in cost of revenue in the unaudited condensed consolidated statements of operations.

As of March 31, 2022, future expected amortization expense for intangible assets was as follows:

Years Ending December 31
Remainder of 2022	$	1,980
2023		2,602
2024		2,609
2025		2,081
2026		415
2027		16
Total	$	9,703

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Income Taxes

3 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

7. INCOME TAXES

The provision or benefit from income taxes for interim periods is determined using an estimate of the Company’s annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the Company updates the estimate of the annual effective tax rate, and if the estimated tax rate changes, the Company records a cumulative adjustment.

Income tax expense for the three months ended March 31, 2022 and 2021 resulted in an effective tax rate of (2.7)% and (2.1)%, respectively. The difference between the effective tax rate and the U.S. federal statutory rate is primarily due to a valuation allowance established on the Company’s federal and state net deferred tax assets, foreign operations and excess tax benefits (deficiencies) related to stock-based compensation. Due to tax losses and the offsetting valuation allowance, the Company did not record a provision for U.S. income taxes in either period.

As of March 31, 2022, the Company has provided a valuation allowance against certain federal and state deferred tax assets. Management continues to evaluate the realizability of deferred tax assets and the related valuation allowance. If management’s assessment of the deferred tax assets or the corresponding valuation allowance were to change, the Company would record the related adjustment to income during the period in which management makes the determination.

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Redeemable Convertible Preferred Stock

3 Months Ended

Mar. 31, 2022

Temporary Equity Disclosure [Abstract]

Redeemable Convertible Preferred Stock

8. REDEEMABLE CONVERTIBLE PREFERRED STOCK

Redeemable Convertible Preferred Stock—Upon the closing of the Company’s initial public offering on April 4, 2021 (the "IPO"), all outstanding shares of its redeemable convertible preferred stock automatically converted into 75,305,400 shares of common stock on a one-for-one basis. As of March 31, 2022, there were no shares of redeemable convertible preferred stock issued and outstanding.

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Stockholders' Equity (Deficit)

3 Months Ended

Mar. 31, 2022

Stockholders' Equity Note [Abstract]

Stockholders' Equity (Deficit)

9. STOCKHOLDERS’ EQUITY (DEFICIT)

Preferred Stock—In connection with the IPO, the Company authorized the issuance of 10,000,000 shares of undesignated preferred stock with a par value of $0.00001 per share, with rights and preferences, including voting rights, to be designated from time to time by the board of directors. As of March 31, 2022, there were no shares of preferred stock issued or outstanding.

Stock Incentive Plans—In 2013, the Company adopted the Coursera, Inc. Stock Incentive Plan (“Stock Incentive Plan”) and in 2014, adopted the Coursera, Inc. 2014 Executive Stock Incentive Plan (together, the “Predecessor Plans”), pursuant to which the Company granted a combination of incentive and nonstatutory stock options and restricted stock units (“RSUs”).

The Predecessor Plans were terminated in March 2021 in connection with the IPO but continue to govern the terms and conditions of the outstanding awards granted pursuant to the Predecessor Plans. No further equity awards will be granted under the Predecessor Plans.

The Company adopted the 2021 Stock Incentive Plan (the “2021 Plan”) and 2021 Employee Stock Purchase Plan (the “ESPP”) in February 2021, which became effective on March 30, 2021 when the registration statement for the IPO was declared effective (collectively, the 2021 Plan, the ESPP, and the Predecessor Plans are referred to as the “Plans”). The 2021 Plan provides for the granting of incentive and nonstatutory stock options, RSUs, and other equity awards. Pursuant to the ESPP, participants may contribute up to 15 percent of their eligible compensation to purchase shares of common stock at 85 percent of the lower of the market price of the Company’s common stock on the date of commencement of the applicable offering period or on the last day of each six-month purchase period. The offering periods start on the first trading day on or after May 11 and November 11 of each year, except for the first offering period, which commenced on the Company’s IPO effective date, or March 30, 2021, and ends on May 10, 2023.

As of March 31, 2022, 21,039,110 shares of the Company’s common stock, plus certain automatic annual increases in the number of shares of the Company’s common stock reserved for future issuance under the 2021 Plan, and any shares subject to outstanding awards under the Predecessor Plans after the effective date of the 2021 Plan that are subsequently (i) forfeited or terminated, (ii) not issued because such award is settled in cash, or (iii) withheld or reacquired to satisfy the applicable exercise, strike, or purchase price, or a tax withholding obligation, were reserved for future issuance under the 2021 Plan. As of March 31, 2022, 3,991,012 shares of the Company’s common stock, plus certain automatic annual increases in the number of shares of the Company’s common stock, were reserved for issuance under the ESPP.

Stock Options—The Company may grant options at prices not less than the grant date fair value. These options generally expire 10 years from the grant date. Incentive stock options and nonstatutory options generally vest ratably over a four-year service period.

Stock option activity under the Plans for the three months ended March 31, 2022 was as follows:

	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in Years)		Aggregate Intrinsic Value
Balance—December 31, 2021		23,000,872		$	5.62		6.81	$	436,630
Granted		—			—
Exercised		(1,728,006	)		3.73
Canceled		(360,985	)		6.73
Balance—March 31, 2022		20,911,881		$	5.75		6.62	$	366,105
Options vested		13,445,692		$	3.60		5.82	$	261,336

Aggregate intrinsic value represents the difference between the exercise price of the options and the estimated fair value of the Company’s common stock as determined by the board of directors. The aggregate intrinsic value of options exercised was $29,924 for the three months ended March 31, 2022.

RSUs—During the year ended December 31, 2020, the Company began granting RSUs to its employees and directors. RSUs granted prior to the IPO had service-based and performance-based vesting conditions, both of which must be satisfied in order for RSUs to vest. The service-based vesting condition for these awards is typically satisfied over four years with a cliff vesting period of one year and continued vesting quarterly thereafter. The performance-based vesting condition is satisfied on the earlier of (i) a change in control event or (ii) the first sale of the Company’s common stock pursuant to an initial public offering. Both events were not deemed probable until consummated. Upon the first sale of the Company’s common stock pursuant to the IPO on April 5, 2021, the performance-based vesting condition was satisfied, and therefore, the Company recognized cumulative stock-based compensation expense of $16,803 using the accelerated attribution method for the portion of the awards for which the service-based vesting condition had been satisfied. RSUs granted after the IPO do not contain the performance-based vesting condition described above, and the related stock-based compensation expense is recognized on a straight-line basis over the requisite service period.

RSU activity during the three months ended March 31, 2022 was as follows:

	Number of Shares			Weighted-Average Grant Fair Value		Aggregate Intrinsic Value
Unvested balance—December 31, 2021		7,387,288		$	29.68	$	180,545
Granted		1,075,008			21.01
Released		(322,335	)		30.81
Forfeited		(198,372	)		31.31
Unvested balance—March 31, 2022		7,941,589		$	28.42	$	182,974

Stock-Based Compensation Expense—The Company records stock-based compensation expense based on the fair value as determined on the grant date. The Company estimates the fair value of stock options and shares of common stock to be issued under the ESPP utilizing the Black-Scholes valuation model. Key assumptions of the Black-Scholes valuation model are the risk-free interest rate, expected volatility, expected term, and expected dividends. The Company recognizes such compensation expense on a straight-line basis over the vesting period for each award. The fair value of restricted stock awards equals the market value of the underlying stock on the grant date. These amounts are estimates and, thus, may not be reflective of actual future results, nor amounts ultimately realized by recipients of these grants.

Stock-based compensation expense for the three months ended March 31, 2022 and 2021 is classified in the unaudited condensed consolidated statements of operations as follows:

	Three Months Ended March 31,
	2022		2021
Cost of revenue	$	577	$	107
Research and development		9,743		2,028
Sales and marketing		6,274		1,347
General and administrative		5,384		1,802
Total	$	21,978	$	5,284

The Company capitalized $1,249 and $526 of stock-based compensation related to its internal-use software during the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, there was a total of $44,960 unrecognized employee compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of approximately 2.1 years. In addition, as of March 31, 2022, total unrecognized compensation cost related to unvested RSUs was $158,969, which is expected to be recognized over a weighted-average period of approximately 2.5 years. Total unrecognized compensation cost related to the ESPP as of March 31, 2022 was $12,611, which is expected to be recognized over a weighted-average period of approximately 0.8 years.

Common Stock Reserved for Issuance—The Company’s common stock reserved for future issuance as of March 31, 2022 and December 31, 2021 was as follows:

	March 31, 2022		December 31, 2021
Stock options outstanding		20,911,881		23,000,872
RSUs outstanding		7,941,589		7,387,288
Shares available for future grants		25,030,122		16,905,525
Total shares of common stock reserved		53,883,592		47,293,685

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Net Loss Per Share

3 Months Ended

Mar. 31, 2022

Earnings Per Share [Abstract]

Net Loss Per Share

10. NET LOSS PER SHARE

The following table presents the calculation of basic and diluted net loss per share for the three months ended March 31, 2022 and 2021:

	Three Months Ended March 31,
	2022			2021
Numerator:
Net loss	$	(38,268	)	$	(18,663	)
Denominator:
Weighted-average shares used in computing net loss per share—basic and diluted		143,026,907			41,218,355
Net loss per share—basic and diluted	$	(0.27	)	$	(0.45	)

The following potentially dilutive securities were excluded from the computation of diluted net loss per share calculations for the periods presented because the impact of including them would have been anti-dilutive:

	Three Months Ended March 31,
	2022		2021
Redeemable convertible preferred stock		—		75,305,400
Common stock options		20,911,881		29,308,725
RSUs		7,941,589		6,151,271
Shares subject to repurchase		2,607		39,584
ESPP		175,078		—
Total		29,031,155		110,804,980

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Leases

3 Months Ended

Mar. 31, 2022

Leases [Abstract]

Leases

11. LEASES

The Company has entered into various non-cancelable office space operating leases with lease periods expiring through November 2024. These leases do not contain residual value guarantees, covenants, or other restrictions.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

12. COMMITMENTS AND CONTINGENCIES

Purchase Obligations—Purchase obligations relate mainly to a third-party cloud infrastructure agreement and subscription arrangements as well as service agreements used to facilitate the Company’s operations. As of March 31, 2022, the Company had approximately $49,143 of future minimum payments under the Company’s non-cancelable purchase obligations, which are expected to be paid through 2026.

Litigation—The Company continually evaluates uncertainties associated with litigation and records a charge equal to at least the minimum estimated liability for a loss contingency when both of the following conditions are met: (i) information available prior to issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and (ii) the loss or range of loss can be reasonably estimated. If the Company determines that a loss is possible and a range of the loss can be reasonably estimated, the Company discloses the range of the possible loss in the notes to the unaudited condensed consolidated financial statements. The Company evaluates, on a quarterly basis, developments in its legal matters that could affect the amount of liability that has been previously accrued, if any, and the matters and related ranges of possible losses disclosed, and makes adjustments and changes to our disclosures as appropriate. Significant judgment is required to determine both likelihood of there being, and the estimated amount of, a loss related to such matters. Until the final resolution of such matters, there may be an exposure to loss, and such amounts could be material. For legal proceedings for which there is a reasonable possibility of loss (meaning those losses for which the likelihood is more than remote but less than probable), the Company has determined it does not have material exposure on an aggregate basis at this time.

Indemnifications—In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provides for the potential of general indemnification obligations. The Company’s exposure under these agreements is unknown because it involves future claims that may be made against the Company but have not yet been made. To date, the Company has not paid any material claims or has been required to defend any actions related to its indemnification obligations; however, the Company may record charges in the future as a result of these indemnification obligations. In addition, the Company has indemnification agreements with certain of its directors, executive officers, and other employees that require it, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service with the Company. The terms of such obligations may vary.

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401(k) Plan

3 Months Ended

Mar. 31, 2022

Retirement Benefits [Abstract]

401(K) Plan

13. 401(k) PLAN

The Company has a 401(k) savings plan (the “401(k) Plan”) that qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Under the 401(k) Plan, participating employees may elect to contribute up to 100% of their eligible compensation, subject to certain limitations. The 401(k) Plan provides for a discretionary employer-matching contribution. The Company has made $667 and $0 matching contributions to the 401(k) Plan for the three months ended March 31, 2022 and 2021, respectively.

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Related Party Transaction

3 Months Ended

Mar. 31, 2022

Related Party Transactions [Abstract]

Related Party Transaction

14. RELATED-PARTY TRANSACTION

During the year ended December 31, 2017, the Company entered into a content sourcing agreement with a related party in the normal course of business. Content fees earned by the related party during the three months ended March 31, 2022 and 2021 were $1,630 and $1,679, respectively. As of March 31, 2022 and December 31, 2021, outstanding educator partner payables related to this content sourcing agreement were $1,630 and $1,502, respectively.

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Segment and Geographic Information

3 Months Ended

Mar. 31, 2022

Segment Reporting [Abstract]

Segment and Geographic Information

15. SEGMENT AND GEOGRAPHIC INFORMATION

The Company’s Chief Executive Officer is its CODM. For the purposes of allocating resources and assessing performance, the CODM examines three segments, which are the Company’s three revenue sources: Consumer, Enterprise, and Degrees. This is also consistent with how the Company disaggregates revenue.

Financial information for each reportable segment was as follows:

	Three Months Ended March 31,
Revenue	2022		2021
Consumer	$	68,096	$	51,908
Enterprise		39,046		24,493
Degrees		13,291		11,961
Total revenue	$	120,433	$	88,362
Segment gross profit
Consumer	$	48,296	$	29,655
Enterprise		27,952		16,581
Degrees		13,291		11,961
Total segment gross profit	$	89,539	$	58,197
Reconciliation of segment gross profit to gross profit
Platform and support costs	$	7,893	$	6,312
Stock-based compensation		577		107
Amortization of internal-use software		2,811		1,830
Amortization of intangible assets		628		412
Total reconciling items		11,909		8,661
Gross profit	$	77,630	$	49,536

Geographic Information:

Revenue: The following table summarizes the revenue by region based on the billing address of the Company’s customers:

	Three Months Ended March 31,
	2022		2021
United States	$	62,775	$	45,446
Europe, Middle East, and Africa		30,616		24,580
Asia Pacific		16,017		10,889
Other		11,025		7,447
Total	$	120,433	$	88,362

No single country other than the United States represented 10% or more of the Company’s total revenue during the three months ended March 31, 2022 and 2021.

Long-lived assets: The following table presents the Company’s long-lived assets, consisting of property, equipment, and software, net of depreciation and amortization, and operating lease right-of-use assets, by geographic region:

	As of March 31, 2022		As of December 31, 2021
United States	$	40,654	$	40,245
Rest of World		799		801
Total	$	41,453	$	41,046

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Basis of Presentation and Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation—The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and following the requirements of the Securities and Exchange Commission (“SEC”), for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP can be condensed or omitted. These unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, that are necessary for a fair statement of the Company’s financial information. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any other interim period or for any other future year. The balance sheet as of December 31, 2021 has been derived from audited consolidated financial statements at that date but does not include all information required by GAAP for annual consolidated financial statements.

These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the SEC on March 3, 2022.

Principles of Consolidation

Principles of Consolidation—The unaudited condensed consolidated financial statements include the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Segment Information

Segment Information—The Company defines its segments as those operations the chief operating decision maker (“CODM”), determined to be the Chief Executive Officer of the Company, regularly reviews to allocate resources and assess performance. For the three months ended March 31, 2022 and 2021, the Company operated under three segments: Consumer, Enterprise, and Degrees. The Company continually monitors and reviews its segment reporting structure in accordance with Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting, to determine whether any changes have occurred that would impact its reportable segments. For further information on the Company’s segment reporting, see Note 15 “Segment and Geographic Information.”

Use of Estimates

Use of Estimates—The preparation of these unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and related disclosures at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, the Company evaluates its estimates, including those related to the fair value of common stock and stock-based awards; period of benefit for capitalized commissions; internal-use software costs; useful lives of long-lived assets; the carrying value of operating lease right-of-use assets; valuation of intangible assets and income tax expense, including the valuation of deferred tax assets and liabilities, among others.

Concentration of Credit Risk

Concentration of Credit Risk—Financial instruments that potentially subject the Company to concentration of credit risk consist of cash, cash equivalents, and marketable securities. The Company invests only in high-credit-quality instruments and maintains its cash equivalents and marketable securities in fixed-income securities. The Company places its cash primarily with domestic financial institutions that are federally insured within statutory limits.

For purposes of assessing concentration of credit risk and significant customers, a group of customers under common control or customers that are affiliates of each other are regarded as a single customer. For the three months ended March 31, 2022 and 2021, the Company did not have any customers that accounted for more than 10% of the Company’s revenue. As of March 31, 2022, the Company had one customer that accounted for 22% of its net accounts receivable balance that has since been collected within typical business terms. As of December 31, 2021, no customer accounted for more than 10% of the Company’s net accounts receivable balance.

New Accounting Pronouncements Recently Adopted and Not Yet Adopted

New Accounting Pronouncements Recently Adopted

Coursera is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, the unaudited condensed consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

The JOBS Act does not preclude an emerging growth company from early adopting new or revised accounting standards. We early adopted Accounting Standards Update (“ASU”) 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, effective July 1, 2021. The Company expects to use the extended transition period for any other new or revised accounting standards during the period for which the Company remains an emerging growth company.

In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This standard simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC Topic 740, Income Taxes, related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. The guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill and the allocation of consolidated income taxes to separate financial statements of entities not subject to income tax. Upon adoption, certain aspects of this standard are applied retrospectively for all periods presented while other aspects are applied on a modified retrospective basis through a cumulative-effect adjustment to accumulated deficit as of the beginning of the fiscal year of adoption. We adopted ASU 2019-12 effective January 1, 2022, and the adoption did not have a material impact on our unaudited condensed consolidated financial statements and related disclosures.

New Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses, which provides new authoritative guidance with respect to the measurement of credit losses on financial instruments. This update changes the impairment model for most financial assets and certain other instruments by introducing a current expected credit loss (“CECL”) model. The CECL model is a forward-looking approach based on expected losses rather than incurred losses, requiring entities to estimate and record losses expected over the remaining contractual life of an asset. The guidance will be effective for the Company in 2023 and early adoption beginning in 2019 is permitted. The Company is currently evaluating the impact of adopting this guidance on the consolidated financial statements and related disclosures.

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Revenue Recognition (Tables)

3 Months Ended

Mar. 31, 2022

Revenue Recognition [Abstract]

Summary of Contract Assets and Liabilities

The Company’s contract assets and liabilities as of March 31, 2022, December 31, 2021, and January 1, 2021 were as follows:

	March 31, 2022		December 31, 2021		January 1, 2021
Contract assets:
Billed accounts receivable, net of allowance for doubtful accounts	$	44,532	$	22,286	$	39,976
Unbilled accounts receivable		9,653		12,110		745
Total contract assets	$	54,185	$	34,396	$	40,721
Contract liabilities:
Deferred revenue	$	109,945	$	98,488	$	80,642
Total contract liabilities	$	109,945	$	98,488	$	80,642

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements at Fair Value by Level Within Fair Value Hierarchy

The Company’s assets and liabilities that were measured at fair value by level within the fair value hierarchy as of March 31, 2022 and December 31, 2021 were as follows:

	March 31, 2022
	Fair Value		Level 1
Financial assets:
Cash equivalents—money market funds	$	315,453	$	315,453
Marketable securities:
U.S. government Treasury bills		419,104		419,104
Total financial assets	$	734,557	$	734,557

	December 31, 2021
	Fair Value		Level 1
Financial assets:
Cash equivalents—money market funds	$	539,091	$	539,091
Marketable securities:
U.S. government Treasury bills		241,117		241,117
Total financial assets	$	780,208	$	780,208

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Marketable Securities (Tables)

3 Months Ended

Mar. 31, 2022

Investments, Debt and Equity Securities [Abstract]

Summary of Available-for-Sale Marketable Securities

The following table presents the Company’s available-for-sale marketable securities as of March 31, 2022 and December 31, 2021:

	March 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. government Treasury bills	$	420,968	$	—	$	(1,864	)	$	419,104
Total marketable securities	$	420,968	$	—	$	(1,864	)	$	419,104

	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. government Treasury bills	$	241,369	$	—	$	(252	)	$	241,117
Total marketable securities	$	241,369	$	—	$	(252	)	$	241,117

Schedule of the Cost Basis and Fair Value of Available-for-sale Securities by Contractual Maturity Date

The following table presents the amortized cost and fair value of available-for-sale marketable securities by contractual maturity date as of March 31, 2022 and December 31, 2021:

	March 31, 2022				December 31, 2021
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	420,968	$	419,104	$	241,369	$	241,117

Schedule of Investments in an Unrealized Loss Position

Investments in an unrealized loss position consisted of the following as of March 31, 2022 and December 31, 2021:

	March 31, 2022					December 31, 2021
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. government Treasury bills	$	419,104	$	(1,864	)	$	241,117	$	(252	)
Total investments in an unrealized loss position	$	419,104	$	(1,864	)	$	241,117	$	(252	)

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Consolidated Balance Sheet Components (Tables)

3 Months Ended

Mar. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Property, Equipment and Software

Property, equipment, and software, net as of March 31, 2022 and December 31, 2021 consisted of the following:

	Estimated Useful Life	March 31, 2022			December 31, 2021
Internal-use software	2 to 5 years	$	40,301		$	35,508
Computer equipment and software	2 years		4,566			4,163
Leasehold improvements	Shorter of useful life and remaining lease term		7,140			7,119
Furniture and fixtures	5 years		3,051			3,051
Total property, equipment, and software			55,058			49,841
Less accumulated depreciation and amortization			(28,655	)		(25,116	)
Property, equipment, and software—net		$	26,403		$	24,725

Schedule of Intangible Assets

Intangible assets, net as of March 31, 2022 and December 31, 2021 consisted of the following:

		March 31, 2022							December 31, 2021
	Estimated Useful Life	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Gross Carrying Value		Accumulated Amortization			Net Carrying Value
Assembled workforce	3 years	$	181	$	(158	)	$	23	$	181	$	(143	)	$	38
Developed technology	6 years		8,446		(3,683	)		4,763		8,446		(3,337	)		5,109
Content assets	5 years		5,976		(1,059	)		4,917		5,721		(777	)		4,944
Intangible assets		$	14,603	$	(4,900	)	$	9,703	$	14,348	$	(4,257	)	$	10,091

Schedule of Future Expected Amortization Expense for Intangible Assets

As of March 31, 2022, future expected amortization expense for intangible assets was as follows:

Years Ending December 31
Remainder of 2022	$	1,980
2023		2,602
2024		2,609
2025		2,081
2026		415
2027		16
Total	$	9,703

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Stockholders' Equity (Deficit) (Tables)

3 Months Ended

Mar. 31, 2022

Share-based Payment Arrangement [Abstract]

Schedule of Stock Option Activity under the Plans

Stock option activity under the Plans for the three months ended March 31, 2022 was as follows:

	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in Years)		Aggregate Intrinsic Value
Balance—December 31, 2021		23,000,872		$	5.62		6.81	$	436,630
Granted		—			—
Exercised		(1,728,006	)		3.73
Canceled		(360,985	)		6.73
Balance—March 31, 2022		20,911,881		$	5.75		6.62	$	366,105
Options vested		13,445,692		$	3.60		5.82	$	261,336

Schedule of Share-based Compensation, Restricted Stock Units Award Activity

RSU activity during the three months ended March 31, 2022 was as follows:

	Number of Shares			Weighted-Average Grant Fair Value		Aggregate Intrinsic Value
Unvested balance—December 31, 2021		7,387,288		$	29.68	$	180,545
Granted		1,075,008			21.01
Released		(322,335	)		30.81
Forfeited		(198,372	)		31.31
Unvested balance—March 31, 2022		7,941,589		$	28.42	$	182,974

Summary of Stock-Based Compensation Expense in the Consolidated Statements of Operations

Stock-based compensation expense for the three months ended March 31, 2022 and 2021 is classified in the unaudited condensed consolidated statements of operations as follows:

	Three Months Ended March 31,
	2022		2021
Cost of revenue	$	577	$	107
Research and development		9,743		2,028
Sales and marketing		6,274		1,347
General and administrative		5,384		1,802
Total	$	21,978	$	5,284

Summary of Shares of Common Stock Reserved for Future Issuance

The Company’s common stock reserved for future issuance as of March 31, 2022 and December 31, 2021 was as follows:

	March 31, 2022		December 31, 2021
Stock options outstanding		20,911,881		23,000,872
RSUs outstanding		7,941,589		7,387,288
Shares available for future grants		25,030,122		16,905,525
Total shares of common stock reserved		53,883,592		47,293,685

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Net Loss Per Share (Tables)

3 Months Ended

Mar. 31, 2022

Earnings Per Share [Abstract]

Schedule of Basic and Diluted Net Loss Per Share

The following table presents the calculation of basic and diluted net loss per share for the three months ended March 31, 2022 and 2021:

	Three Months Ended March 31,
	2022			2021
Numerator:
Net loss	$	(38,268	)	$	(18,663	)
Denominator:
Weighted-average shares used in computing net loss per share—basic and diluted		143,026,907			41,218,355
Net loss per share—basic and diluted	$	(0.27	)	$	(0.45	)

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following potentially dilutive securities were excluded from the computation of diluted net loss per share calculations for the periods presented because the impact of including them would have been anti-dilutive:

	Three Months Ended March 31,
	2022		2021
Redeemable convertible preferred stock		—		75,305,400
Common stock options		20,911,881		29,308,725
RSUs		7,941,589		6,151,271
Shares subject to repurchase		2,607		39,584
ESPP		175,078		—
Total		29,031,155		110,804,980

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Segment and Geographic Information (Tables)

3 Months Ended

Mar. 31, 2022

Segment Reporting [Abstract]

Schedule of Financial Information for Each Reportable Segment

Financial information for each reportable segment was as follows:

	Three Months Ended March 31,
Revenue	2022		2021
Consumer	$	68,096	$	51,908
Enterprise		39,046		24,493
Degrees		13,291		11,961
Total revenue	$	120,433	$	88,362
Segment gross profit
Consumer	$	48,296	$	29,655
Enterprise		27,952		16,581
Degrees		13,291		11,961
Total segment gross profit	$	89,539	$	58,197
Reconciliation of segment gross profit to gross profit
Platform and support costs	$	7,893	$	6,312
Stock-based compensation		577		107
Amortization of internal-use software		2,811		1,830
Amortization of intangible assets		628		412
Total reconciling items		11,909		8,661
Gross profit	$	77,630	$	49,536

Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area

The following table summarizes the revenue by region based on the billing address of the Company’s customers:

	Three Months Ended March 31,
	2022		2021
United States	$	62,775	$	45,446
Europe, Middle East, and Africa		30,616		24,580
Asia Pacific		16,017		10,889
Other		11,025		7,447
Total	$	120,433	$	88,362

Schedule of Geographic Areas, Long-Lived Assets in Individual Foreign Countries by Country

The following table presents the Company’s long-lived assets, consisting of property, equipment, and software, net of depreciation and amortization, and operating lease right-of-use assets, by geographic region:

	As of March 31, 2022		As of December 31, 2021
United States	$	40,654	$	40,245
Rest of World		799		801
Total	$	41,453	$	41,046

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Basis of Presentation and Summary of Significant Accounting Policies - Additional Information (Details)	3 Months Ended		12 Months Ended
	Mar. 31, 2022 Customer Segment	Mar. 31, 2021 Segment	Dec. 31, 2021 Customer
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Number of operating segments | Segment	3	3
Sales Revenue | Customer Concentration Risk | No Customers | Minimum
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Concentrations of credit risk, percentage	10.00%	10.00%	10.00%
Accounts Receivable
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Number of customers | Customer	1		0
Accounts Receivable | Customer Concentration Risk | Customer One
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Concentrations of credit risk, percentage	22.00%

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Revenue Recognition - Summary of Contract Assets and Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021	Jan. 01, 2021
Contract assets:
Billed accounts receivable, net of allowance for doubtful accounts	$ 44,532	$ 22,286	$ 39,976
Unbilled accounts receivable	9,653	12,110	745
Total contract assets	54,185	34,396	40,721
Contract liabilities:
Deferred revenue	109,945	98,488	80,642
Total contract liabilities	$ 109,945	$ 98,488	$ 80,642

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Revenue Recognition - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Disaggregation of Revenue [Line Items]
Revenue Recognized	$ 47,160	$ 37,522
Commissions and related payroll tax expenditures	2,493	2,289
Amortization, sales and marketing expenses	2,744	$ 1,666
Deferred costs	10,087		$ 8,240
Other assets	9,761		$ 8,817
Russian Educator Partners [Member]
Disaggregation of Revenue [Line Items]
Impairment losses on deferred partner fees.	$ 1,886

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Revenue Recognition - Additional Information (Details 1) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2021-10-01 $ in Thousands	Mar. 31, 2022 USD ($)
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items]
Remaining performance obligation	$ 273,107
Percent of remaining performance obligations to be recognized	64.00%
Period for satisfaction of remaining performance obligation	12 months

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Fair Value Measurements - Fair Value Measurements at Fair Value by Level Within Fair Value Hierarchy (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial assets	$ 734,557	$ 780,208
Money Market Funds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	315,453	539,091
U.S. Government Treasury Bills
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Marketable securities	419,104	241,117
Level 1
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial assets	734,557	780,208
Level 1 | Money Market Funds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	315,453	539,091
Level 1 | U.S. Government Treasury Bills
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Marketable securities	$ 419,104	$ 241,117

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Marketable Securities - Summary of Available-for-Sale Marketable Securities (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	$ 420,968	$ 241,369
Gross Unrealized Losses	(1,864)	(252)
Estimated Fair Market Value	419,104	241,117
U.S. Government Treasury Bills
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	420,968	241,369
Gross Unrealized Losses	(1,864)	(252)
Estimated Fair Market Value	$ 419,104	$ 241,117

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Marketable Securities - Schedule of the Cost Basis and Fair Value of Available-for-sale Securities by Contractual Maturity Date (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Investments, Debt and Equity Securities [Abstract]
Amortized Cost	$ 420,968	$ 241,369
Estimated Fair Market Value	$ 419,104	$ 241,117

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Marketable Securities - Schedule of Investments in an Unrealized Loss Position (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Schedule Of Available For Sale Securities [Line Items]
Fair Value	$ 419,104	$ 241,117
Gross Unrealized Losses	(1,864)	(252)
U.S. Government Treasury Bills
Schedule Of Available For Sale Securities [Line Items]
Fair Value	419,104	241,117
Gross Unrealized Losses	$ (1,864)	$ (252)

XML

Marketable Securities - Additional Information (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Investments, Debt and Equity Securities [Abstract]
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	$ 0	$ 0

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Consolidated Balance Sheet Components - Schedule of Property, Equipment and Software (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Property Plant And Equipment [Line Items]
Total property, equipment, and software	$ 55,058	$ 49,841
Less accumulated depreciation and amortization	(28,655)	(25,116)
Property, equipment, and software—net	26,403	24,725
Internal-use Software
Property Plant And Equipment [Line Items]
Total property, equipment, and software	$ 40,301	35,508
Internal-use Software | Maximum
Property Plant And Equipment [Line Items]
Property, equipment, and software, Useful Life	5 years
Internal-use Software | Minimum
Property Plant And Equipment [Line Items]
Property, equipment, and software, Useful Life	2 years
Computer Equipment and Software
Property Plant And Equipment [Line Items]
Property, equipment, and software, Useful Life	2 years
Total property, equipment, and software	$ 4,566	4,163
Leasehold Improvements
Property Plant And Equipment [Line Items]
Total property, equipment, and software	$ 7,140	7,119
Property, equipment, and software, Useful Life	Shorter of useful life andremaining lease term
Furniture and Fixtures
Property Plant And Equipment [Line Items]
Property, equipment, and software, Useful Life	5 years
Total property, equipment, and software	$ 3,051	$ 3,051

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Consolidated Balance Sheet Components - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Property Plant And Equipment [Line Items]
Depreciation and amortization	$ 4,182	$ 2,931
Amortization expenses of intangible assets	643	427
Intangible assets	$ 9,703		$ 10,091
Assembled Workforce
Property Plant And Equipment [Line Items]
Weighted average remaining amortization period for intangible asset	4 months 24 days
Developed Technology
Property Plant And Equipment [Line Items]
Weighted average remaining amortization period for intangible asset	3 years 4 months 24 days
Content Asset
Property Plant And Equipment [Line Items]
Intangible assets	$ 255	170
Weighted average remaining amortization period for intangible asset	4 years 1 month 6 days
Property, Equipment and Software
Property Plant And Equipment [Line Items]
Depreciation and amortization	$ 3,539	2,504
Internal-use Software
Property Plant And Equipment [Line Items]
Amortization expenses of intangible assets	$ 2,811	$ 1,830

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Consolidated Balance Sheet Components - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Finite Lived Intangible Assets [Line Items]
Gross carrying value	$ 14,603	$ 14,348
Accumulated amortization	(4,900)	(4,257)
Net carrying value	$ 9,703	10,091
Assembled Workforce
Finite Lived Intangible Assets [Line Items]
Estimated useful life	3 years
Gross carrying value	$ 181	181
Accumulated amortization	(158)	(143)
Net carrying value	$ 23	38
Developed Technology
Finite Lived Intangible Assets [Line Items]
Estimated useful life	6 years
Gross carrying value	$ 8,446	8,446
Accumulated amortization	(3,683)	(3,337)
Net carrying value	$ 4,763	5,109
Content Asset
Finite Lived Intangible Assets [Line Items]
Estimated useful life	5 years
Gross carrying value	$ 5,976	5,721
Accumulated amortization	(1,059)	(777)
Net carrying value	$ 4,917	$ 4,944

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Consolidated Balance Sheet Components - Schedule of Future Expected Amortization Expense for Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Remainder of 2022	$ 1,980
2023	2,602
2024	2,609
2025	2,081
2026	415
2027	16
Net carrying value	$ 9,703	$ 10,091

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Income Taxes - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Income Tax Disclosure [Abstract]
Effective tax rate	(2.70%)	(2.10%)
Provision for income taxes	$ 0

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Redeemable Convertible Preferred Stock - Additional Information (Details) - shares	Apr. 04, 2021	Mar. 31, 2022	Dec. 31, 2021	Mar. 31, 2021	Dec. 31, 2020
Redeemable Convertible Preferred Stock
Temporary Equity [Line Items]
Temporary equity, shares issued (in shares)		0
Temporary equity, shares outstanding (in shares)		0	0	75,305,400	75,305,400
IPO | Common Stock
Temporary Equity [Line Items]
Redeemable convertible preferred stock, shares issued upon conversion	75,305,400
Redeemable convertible preferred stock, conversion rate	one-for-one

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Stockholders' Equity (Deficit) - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Apr. 05, 2021
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Preferred stock, shares authorized (in shares)	10,000,000		10,000,000
Preferred stock, par value (in dollars per share)	$ 0.00001		$ 0.00001
Preferred stock, shares issued (in shares)	0		0
Preferred stock, shares outstanding (in shares)	0		0
Shares available for grant	25,030,122		16,905,525
Employees percentage of eligible compensation may elect to contribute	100.00%
Shares reserved for issuance	53,883,592		47,293,685
Aggregate intrinsic value of employee options exercised	$ 29,924
cumulative stock-based compensation expense	16,803
Share-based Payment Arrangement, Expense	21,978	$ 5,284
Compensation cost related to the nonvested awards not yet recognized	$ 44,960
Weighted average period for recognition of compensation cost	2 years 1 month 6 days
Internal-use Software
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
cumulative stock-based compensation expense	$ 1,249	$ 526
Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share based compensation, expiration period	10 years
Vesting period	4 years
Restricted Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period	4 years
Cliff vesting period	1 year
Compensation cost related to the nonvested awards not yet recognized	$ 158,969
Weighted average period for recognition of compensation cost	2 years 6 months
2013 and 2014 Executive Stock Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares available for grant	0
2021 Employee Stock Purchase Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares reserved for issuance	21,039,110
Employee Stock Purchase Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Employees percentage of eligible compensation may elect to contribute	15.00%
Percent of the lower of the market price for Purchase shares of common stock	85.00%
Shares reserved for issuance	3,991,012
Compensation cost related to the nonvested awards not yet recognized	$ 12,611
Weighted average period for recognition of compensation cost	9 months 18 days
IPO
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Preferred stock, shares authorized (in shares)				10,000,000
Preferred stock, par value (in dollars per share)				$ 0.00001

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Stockholders' Equity (Deficit) - Schedule of Stock Option Activity under the Plans (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of Shares, Beginning balance	23,000,872
Number of Shares, Ending balance	20,911,881	23,000,872
Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of Shares, Beginning balance	23,000,872
Number of Shares, Options exercised	(1,728,006)
Number of Shares, Options canceled	(360,985)
Number of Shares, Ending balance	20,911,881	23,000,872
Number of Shares, Options vested	13,445,692
Weighted Average Exercise Price, Beginning balance	$ 5.62
Weighted Average Exercise Price, Options exercised	3.73
Weighted Average Exercise Price, Canceled	6.73
Weighted Average Exercise Price, Ending balance	5.75	$ 5.62
Weighted Average Exercise Price, Options vested	$ 3.60
Weighted Average Remaining Contractual Term	6 years 7 months 13 days	6 years 9 months 21 days
Weighted Average Remaining Contractual Term, Options vested	5 years 9 months 25 days
Aggregate Intrinsic Value, Beginning balance	$ 436,630
Aggregate Intrinsic Value, Ending balance	366,105	$ 436,630
Aggregate Intrinsic Value, Options vested	$ 261,336

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Stockholders' Equity (Deficit) - Schedule of Share-based Compensation, Restricted Stock Units Award Activity (Details) - Restricted Stock Units - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of Shares, Unvested beginning balance	7,387,288
Number of Shares, Granted	1,075,008
Number of Shares, Released	(322,335)
Number of Shares, Forfeited	(198,372)
Number of Shares, Unvested ending balance	7,941,589
Weighted- Average Grant Fair Value, Unvested beginning balance	$ 29.68
Weighted- Average Grant Fair Value, Granted	21.01
Weighted- Average Grant Fair Value, Released	30.81
Weighted- Average Grant Fair Value, Forfeited	31.31
Weighted- Average Grant Fair Value, Unvested ending balance	$ 28.42
Aggregate Intrinsic Value, Unvested balance	$ 182,974	$ 180,545

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Stockholders' Equity (Deficit) - Summary of Stock-Based Compensation Expense in the Consolidated Statements of Operations (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Cost of revenue	$ 21,978	$ 5,284
Cost of Revenue
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Cost of revenue	577	107
Research and Development
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Cost of revenue	9,743	2,028
Sales and Marketing
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Cost of revenue	6,274	1,347
General and Administrative
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Cost of revenue	$ 5,384	$ 1,802

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Stockholders' Equity (Deficit) - Summary of Shares of Common Stock Reserved for Future Issuance (Details) - shares	Mar. 31, 2022	Dec. 31, 2021
Equity [Abstract]
Stock options outstanding	20,911,881	23,000,872
RSUs outstanding	7,941,589	7,387,288
Shares available for future grants	25,030,122	16,905,525
Total shares of common stock reserved	53,883,592	47,293,685

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Net Loss Per Share - Calculation of Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Numerator:
Net loss	$ (38,268)	$ (18,663)
Denominator:
Weighted average shares used in computing net loss per share-basic and diluted	143,026,907	41,218,355
Net loss per shares-basic and diluted	$ (0.27)	$ (0.45)

XML

Net Loss Per Share - Schedule of Securities with a Potentially Dilutive Impact (Details) - shares	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of dilutive earnings per share (in shares)	29,031,155	110,804,980
Redeemable Convertible Preferred Stock
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of dilutive earnings per share (in shares)	0	75,305,400
Common Stock Options
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of dilutive earnings per share (in shares)	20,911,881	29,308,725
RSUs
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of dilutive earnings per share (in shares)	7,941,589	6,151,271
Shares Subject to Repurchase
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of dilutive earnings per share (in shares)	2,607	39,584
ESPP
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of dilutive earnings per share (in shares)	175,078	0

XML

Commitments and Contingencies (Additional Information) (Details) $ in Thousands	Mar. 31, 2022 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Non-cancelable purchase obligations	$ 49,143

XML

401(k) Plan (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Retirement Benefits [Abstract]
Employees percentage of eligible compensation may elect to contribute	100.00%
Employer discretionary contribution amount	$ 667	$ 0

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Related Party Transaction - Additional Information (Details) - Content Sourcing Agreement - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Related Party Transaction [Line Items]
Related party content fees	$ 1,630	$ 1,679
Outstanding to educator partner payables	$ 1,630		$ 1,502

XML

Segment and Geographic Information - Segment Results of Operations (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Revenue
Revenue	$ 120,433	$ 88,362
Segment gross profit
Total segment gross profit	89,539	58,197
Platform and support costs	7,893	6,312
Stock-based compensation expense	577	107
Segment amortization	643	427
Total reconciling items	11,909	8,661
Gross profit	77,630	49,536
Internal Use Software [Member]
Segment gross profit
Segment amortization	2,811	1,830
Acquired Intangibles [Member]
Segment gross profit
Segment amortization	628	412
Consumer Segment [Member]
Revenue
Revenue	68,096	51,908
Segment gross profit
Total segment gross profit	48,296	29,655
Enterprise Segment [Member]
Revenue
Revenue	39,046	24,493
Segment gross profit
Total segment gross profit	27,952	16,581
Degrees Segment [Member]
Revenue
Revenue	13,291	11,961
Segment gross profit
Total segment gross profit	$ 13,291	$ 11,961

XML

Segment and Geographic Information - Summary of Revenue By Region Based On Billing Address (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Segment Reporting Information [Line Items]
Revenue	$ 120,433	$ 88,362
United States [Member]
Segment Reporting Information [Line Items]
Revenue	62,775	45,446
Europe, Middle East, and Africa [Member]
Segment Reporting Information [Line Items]
Revenue	30,616	24,580
Asia Pacific [Member]
Segment Reporting Information [Line Items]
Revenue	16,017	10,889
Other [Member]
Segment Reporting Information [Line Items]
Revenue	$ 11,025	$ 7,447

XML

Segment and Geographic Information - Additional Information (Details)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Segment Reporting Information [Line Items]
Concentration risk, benchmark description	No single country other than the United States represented 10% or more of the Company’s total revenue during the three months ended March 31, 2022 and 2021.
Revenue | Geographic Concentration Risk | United States [Member] | Minimum
Segment Reporting Information [Line Items]
Concentration risk, percentage	10.00%	10.00%

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Segment and Geographic Information - Summary of Long Lived Assets By Geographic Region (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Segment Reporting Information [Line Items]
Noncurrent Assets	$ 41,453	$ 41,046
United States [Member]
Segment Reporting Information [Line Items]
Noncurrent Assets	40,654	40,245
Rest of World [Member]
Segment Reporting Information [Line Items]
Noncurrent Assets	$ 799	$ 801